News Archive


Fosun set to raise offer in Club Med bid battle: source


PARIS (Reuters) – Chinese conglomerate Fosun (0656.HK), controlled by billionaire Guo Guangchang, is set to raise its bid for holiday company Club Mediterranee (CMIP.PA) on Monday to trump Italian tycoon Andrea Bonomi, a source familiar with the process said.

Bonomi’s latest offer in the long-running battle stands at 23 euros per share and values the French company at 874 million euros ($1.1 billion). Fosun had previously offered 22 euros a share in a takeover leapfrog saga that dates back to an offer from Fosun in May 2013. [ID:nL6N0T14FX]

Monday is the last day Guo, China’s richest man, can come back with a higher offer, according to rules set by the French regulator AMF.

Both Guo and Bonomi see turnaround potential in a business that has been hit by the weak economy in its core market of Europe, and by a stalled attempt to move upmarket. Both also hope to develop the brand in faster-growing China.

Guo said earlier this month he was joining forces with Brazilian investor Nelson Tanure to outbid Bonomi. [ID:nL6N0TB3OV]

The source said Tanure would be involved in Monday’s proposal but would not put a figure on the new offer or give further details.

Guo’s Gaillon Invest takeover vehicle is controlled by his Fosun group and it also includes French private equity partner Ardian, the management of Club Med, and Chinese travel agency U-Tour.

The Bonomi camp owns 18.9 percent of Club Med, which pioneered the all-inclusive holiday concept in the 1950s and 60s, but fell on hard times in recent years. Fosun’s stake is 18.3 percent.

Club Med shares have been trading above Bonomi’s offer on hopes Fosun would make a higher bid. They are up more than 70 percent since the bid saga began.

Club Med said in its latest results statement that weaker demand in Europe, unrest in the Middle East and Ebola fears in Africa hit bookings and helped push it to an annual loss.[ID:nL6N0TI0BB]

($1 = 0.8019 euros)

(Additional reporting by Dominique Vidalon; writing by Andrew Callus; editing by Kevin Liffey and David Clarke)

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EU insurance watchdog warns on low interest rate threat


FRANKFURT (Reuters) – Nearly one in four European insurers could have trouble meeting financial obligations to policy holders in the coming years if rock bottom interest rates persist, the EU’s insurance watchdog EIOPA said on Sunday.

The watchdog spent seven months testing how well insurers’ capital buffers would hold up in hypothetical challenges, to see if policy holders could be at risk in a financial meltdown.

“A continuation of the current low yield conditions could see some insurers having problems in fulfilling their promises to policy holders in 8-11 years’ time,” the European Insurance and Occupational Pensions Authority (EIOPA) said in a statement.

EIOPA did not name the companies that failed its tests, in contrast to the European review of banks that prompted several lenders to raise capital.

However, EIOPA said 24 percent of insurers would not meet its solvency capital requirement (SCR), a key regulatory threshold, in its “Japanese-like” scenario where interest rates remain low for a prolonged period.

ECB interest rates are effectively at zero, with further easing of credit conditions under preparation.

Low yields on relatively safe government and covered bonds hurt insurers’ investment income, making it increasingly difficult to meet future obligations to policy holders.

The companies most at risk were those with a mismatch in the maturity of their assets and liabilities and life insurers that had given long-term guaranteed interest rates on savings policies, it said.

EIOPA will had a news conference about the results at 0800 GMT in Frankfurt on Monday.

DOUBLE-HIT SCENARIO

EIOPA calculated a baseline for its tests using insurance capital safety rules known as Solvency II, which take effect in January 2016. That baseline showed the sector was generally well capitalized, though some firms came up short even before the stress test scenarios.

“Nevertheless, 14 percent of the companies, representing 3 percent of total assets, had an SCR (solvency capital requirement) ratio below 100 percent,” EIOPA said.

Industry observers say big diversified insurers such as Allianz, Axa and Generali are well prepared for Solvency II rules.

EIOPA concluded that smaller firms appeared more at risk in its most severe “double-hit” stress scenario, involving a drop in asset values combined with a rise in the value of future obligations.

Industry lobby group Insurance Europe said the tests demonstrated insurers’ resilience ahead of the implementation of Solvency II.

“The stresses used were very severe and covered all the major risks that insurers take on to protect their policy holders,” said Insurance Europe Deputy Director General Olav Jones.

EIOPA said 60 insurance groups and 107 individual companies took part in its core stress test, representing 55 percent of premiums at the EU level. Companies from all 28 EU member states, plus Norway, Switzerland and Iceland were involved.

(Editing by Emma Thomasson and David Clarke)

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Bricks-and-mortar sales edge lower at start of holiday season; online surges: data


(Reuters) – U.S. shoppers spent slightly less money at brick-and-mortar stores on Thanksgiving Day and Black Friday than across the same two days in 2013, while online sales surged to record highs, data showed on Saturday.

Sales at retail stores totaled about $12.29 billion on Thursday and Friday, down 0.5 percent from the $12.35 billion spent last year, according to estimates by ShopperTrak. The research firm stuck by its forecast for November and December sales to increase 3.8 percent.

The data highlights the waning importance of Black Friday, which until a few years ago kicked off the holiday shopping season, as more retailers open their doors on Thanksgiving Day and start discounting earlier in the month.

It also points to the intense price competition among retailers, which have been discounting by 40 to 70 percent this year compared with 30 to 50 percent in the recent past, ShopperTrak founder Bill Martin told Reuters.

“I think what we are seeing is those early promotions coupled with some pretty deep discounts,” he said. Martin said he had expected a 0.5 to 1 percent sales gain.

Customer traffic rose 27.3 percent on Thanksgiving Day from a year earlier, reflecting the sharp increase in retailers opening for business on that day. Traffic fell 5.6 percent on Black Friday, ShopperTrak said.

Martin cautioned against taking the two days’ figures as sign of slack holiday demand. He noted that Thanksgiving and Black Friday combined for just 1 percent growth last year, underperforming growth of 3.1 percent during the entire season spanning the months of November and December.

Reflecting the decreased significance of Black Friday, ShopperTrak expects “Super Saturday” on Dec. 20 to rank as the busiest shopping day this year and says seven of the top 10 sales days of the season are still to come.

Separate data underscored the ongoing shift of shopping to online retailers.

Online Thanksgiving and Black Friday sales tracked by Adobe Systems Inc were a record $1.33 billion and $2.4 billion, up 25 percent and 24 percent from a year earlier, respectively. Between Nov. 1 and Nov. 28, $32 billion has been spent online, up 14 percent from 2013, Adobe said.

The proliferation of smartphones has made consumers more likely to shop online, with 29 percent of Thanksgiving sales via mobile devices, up from 21 percent on the same day last year. Adobe said its findings were based on more than 350 million visits to 4,500 retail websites.

“So much more mobile shopping is happening and that’s part of what’s driving e-commerce activity to new heights every year,” said Tamara Gaffney, principal analyst at Adobe Digital Index.

Several traditional bricks-and-mortar retailers reported strong online growth, a reflection of efforts to compete more aggressively on price with Amazon.com. Target Corp, which is offering free shipping for online orders during the holiday season, said it had record online sales on Thursday, up more than 40 percent from 2013.

Protesters have urged shoppers to boycott stores as the holiday season gets underway, saying economic inequality in the United States contributes to incidents such as the Ferguson, Missouri, shooting of an unarmed black teenager by a white policeman.

Martin, however, told Reuters he did not think the protests have so far had a significant impact on sales on a national level.

(Reporting by Nathan Layne in Chicago; Editing by Lisa Shumaker and Dan Grebler)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/Ma_Mnh2oO1Q/story01.htm

German pilots’ union calls Lufthansa strike for December 1 and 2


BERLIN (Reuters) – German pilots’ union VC is calling a strike at carrier Deutsche Lufthansa for Monday and Tuesday after talks broke down over retirement benefits.

The dispute, over proposed changes to an early retirement scheme for pilots that was developed decades ago, has resulted in repeated strikes this year, affecting thousands of passengers of Germany’s largest airline.

The VC union said the Germany-wide strike would last from midday (1100 GMT) on Monday to 2359 CET (2259 GMT) on Tuesday for short- and medium-haul flights, as well as from 0300 CET (0200 GMT) to 2359 CET on Tuesday for long-haul flights.

Pilots flying for Lufthansa Cargo will also strike from 0300 CET to 2359 CET on Tuesday. Flights of budget arm Germanwings are not affected.

Lufthansa said the strike was completely disproportionate and called for an immediate resumption of talks.

It said it made concessions in recent talks, including a 5 percent pay rise, but reiterated that it would not accept a demand that new pilots, as well as those already with the company, should be able to retire at 55.

Eight walkouts by staff this year wiped 160 million euros ($200 million) off the carrier’s operating profit, adding to pressure from a stuttering global economy and increased competition.

Lufthansa, which last month lowered its profit guidance for 2015 for the second time this year, is expanding low-cost operations to better compete with budget carriers and Gulf rivals and to outflank the pilots’ union.

Lufthansa plans to use other pilots from within the group who are not on expensive collective labor agreements to staff tourist routes, where the brand, which usually focuses on business travelers, is trying to reduce costs.

Passenger transport in Germany has also been disrupted by train drivers’ strikes this year. The latest walkout earlier this month thwarted many Germans’ plans to travel by rail to celebrations marking the 25th anniversary of the Berlin Wall’s fall.

Like the pilots, train drivers have yet to reach a deal with their employers.

(Additional reporting by Olaf Brenner; Editing by Rosalind Russell)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/A5M9-l9ou_E/story01.htm

Inside Takata, tantrums, but little sense of crisis over air bags


TOKYO (Reuters) – Shigehisa Takada, the third-generation head of Takata Corp, shows little sense of the crisis engulfing the Japanese air bag maker at the center of one of the auto industry’s biggest safety recalls, according to three people who have met him recently.

Just days before a Nov. 21 U.S. congressional hearing on defective Takata air bags that have been linked to at least five deaths, Takada told business associates he was personally dealing with the quality issues, and his company had identified and fixed the main cause of the defect – which he said was mainly a flawed manufacturing process, the people said.

He told them that Takata had significantly improved its air bag propellant chemistry for bags it is using to replace defective ones, and the company now just has to step up and replace all suspect air bags as quickly as possible.

“He acts like this recall is going to blow by in due time and harbors little sense of crisis,” said one of the associates, none of whom wanted to be named given the sensitive nature of their comments.

More than 16 million vehicles have been recalled worldwide since 2008 over Takata’s air bag inflators, which can explode with too much force and spray metal fragments into the car.

LOW PROFILE

Takata’s handling of the massive safety recall has frustrated U.S. politicians and regulators and has confused drivers as to whether their cars need fixing or not.

Takada, the Tokyo-based company’s 48-year-old chairman and CEO, apologized at the annual shareholders’ meeting in late-June, which was closed to the media, but has otherwise not been seen in public.

“He’s a nice man, very sincere and seemingly capable, but he doesn’t view this as a crisis spiraling out of control,” said another of the business associates.

The scale of the recalls looks certain to escalate after U.S. safety regulators ordered Takata last Wednesday to expand piecemeal regional recalls of driver-side air bags to cover the entire United States, not just hot and humid areas where the inflators are thought to become more volatile.

Takada did not explain to the business associates exactly what Takata had done to improve the propellant chemistry and manufacturing process, and they said he should be explaining these changes publicly.

They said his reluctance or inability to do so may in part be due to the influence his 74-year-old mother retains at Takata, which was founded by his grandfather more than 80 years ago as a textile mill.

Shigehisa joined the family firm straight from university, became president in 2007, aged 41, and moved to the top executive post after the death in 2011 of his father, Juichiro, who built Takata into Japan’s leading auto safety manufacturer.

Juichiro, known in the U.S. as “Jim Takada”, was a rolled-up sleeves executive who donned a hard hat on site visits and once was spotted down on his hands and knees checking a faulty machine in a noisy textile plant in South Carolina, recalled a former colleague of the current CEO.

His son, he added, is very different – “painfully shy, bookish and into computers … very good with statistics.”

“BIG WIFE”

His mother Akiko, a former Takata executive, now heads the non-profit Takata Foundation, but remains vocal as a special adviser to the company. Some managers call her “O-okusan”, or “big wife”, underscoring her influence, while Shigehisa is referred to as “the son”, or “Shige-chan” – a familiar, short form of his name with a suffix normally reserved for children.

“In a business situation, she could be very forceful and tries to impose her way in just about every way possible,” said one of Shigehisa’s business associates who has worked with Akiko on a project. Two of the three associates recalled how she once engaged in a tit-for-tat negative campaign with a rival.

“Imagine being her son and trying to exercise leadership with her buzzing around you,” the person said. “He’s paralyzed to make decisions on his own.”

Takada is also under pressure from big automaker clients such as Honda Motor and Toyota Motor which try to control and influence how Takata deals with the recalls, two of the business associates said. Also, external legal advisers hired in the United States have focused on minimizing potential court damage rather than on repairing a battered public image.

The business associates said the lawyers restrict what Takada and other executives say and do publicly.

“Takata management’s ability is not hindered by any forces from within the company or from outside,” spokesman Toyohiro Hishikawa said in response to Reuters queries for this article.

In response to criticism that Takata’s leadership has not been more visible, Hishikawa said: “That doesn’t rule out the possibility of our top management team explaining our stance on and response to the recalls more publicly in the future.”

Takata, which has around 43,000 employees globally, has seen its market value slump almost 60 percent this year to just above $900 million.

In one recent incident, Shigehisa went “missing for a few hours” from Takata’s Tokyo headquarters after a row with his mother, said one person familiar with the matter.

“He was yelled at by his mother and went missing. Nobody knows where he went. He came back after a few hours,” the person said.

(Additional reporting by Paul Lienert in Detroit and Antoni Slodkowski in Tokyo; Editing by Ian Geoghegan)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/PJR4mQJsaB4/story01.htm

Iran: OPEC decision not good for all members but won’t protest


DUBAI (Reuters) – OPEC’s decision to retain its production ceiling is not beneficial to all OPEC member states, but Iran has refrained from protesting to maintain group solidarity, Iranian oil ministry news agency Shana reported the oil minister as saying.

“I don’t think that this decision is beneficial to all OPEC member countries because some countries in OPEC were against this decision,” Shana quoted oil minister Bijan Zanganeh as saying, citing an interview he gave to CNN.

“But because of the unity and solidarity of OPEC, we decided not to protest against this decision.”

Iran has said the steep fall in oil prices this year is the result of deliberate moves by some exporters around the Persian Gulf, which have kept production high to undermine Tehran’s sanctions-hit economy.

On Thursday, Saudi Arabia’s oil minister told fellow OPEC members they must combat the U.S. shale oil boom, arguing against cutting crude output in order to depress prices and undermine the profitability of North American producers.

The energy minister of the United Arab Emirates, Iran’s neighboring OPEC member, voiced support for the OPEC decision.

“We don’t support being a swing producer whenever the price falls; the decision benefits the market, the customers and the world economy‎,” Suhail bin Mohammed al-Mazroui said on his twitter feed on Saturday.

“OPEC countries will compensate any decline in the world supply as we are the most cost-effective producers compared to unconventional,” Mazroui said, echoing Saudi’s position.

Oil hit a fresh four-year low beneath $70 per barrel on Friday [O/R]. A boom in shale oil production and weaker growth in China and Europe have sent prices down by over a third since June.

“The market will dictate the right sustainable and stable price …‎ We need to allow enough time for market stability,” Mazroui added.

(Reporting By Michelle Moghtader and Rania El Gamal; editing by Jane Baird)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/hmcDs-mDHCs/story01.htm

GSK to axe U.S. jobs as part of $1.6 billion cost cuts: sources


LONDON (Reuters) – GlaxoSmithKline will this week inform U.S. staff of hundreds of job cuts in its biggest market as the drugmaker starts implementing a major cost-saving program, sources familiar with the matter said on Sunday.

Britain’s top drugmaker announced at third-quarter results on Oct. 22 that the new restructuring scheme would save 1 billion pounds ($1.56 billion) in annual costs over three years, but it has yet to tell employees where the axe will fall.

Staff in the United States, where GSK has been struggling with falling sales of respiratory drugs, will be briefed on the changes on Wednesday by the company’s head of North American pharmaceuticals Deirdre Connelly, the sources said.

A GSK spokesman declined to go into details but said the aim of the restructuring program was to improve performance by reducing complexity and establishing a smaller, more focused and lower-cost organization.

“Each business unit is currently deciding how to respond to this challenge. When we do have proposals, we will first share those with our employees,” he said in an e-mailed statement.

Respiratory medicine has traditionally been GSK’s strongest business and Advair – an inhaled therapy for asthma and chronic lung disease – is its biggest seller. But Advair sales are now tumbling the United States, while new lung drugs Breo and Anoro are proving slow to take off.

Advair has been hit by competition from rivals and an increasing trend by U.S. health insurers to use hardball tactics to get drugmakers to cut prices for older products.

French drugmaker Sanofi has reported similar pressures from U.S. insurers in the diabetes market.

U.S. insurers, who themselves are under pressure to keep premiums in check, are pushing back particularly hard on prices for medicines in areas like diabetes and respiratory diseases where there are multiple options for doctors and patients.

The revamped GSK operation in the United States is designed to defend the company’s margins in this tough environment. The changes will also take into account the movement of some pharmaceuticals staff as a result of a complex asset swap deal with Switzerland’s Novartis, which is taking over GSK’s oncology business.

(Reporting by Ben Hirschler; Editing by Jon Boyle)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/UkI33yBKBG4/story01.htm

QE or not QE? Spotlight on the ECB as inflation dips


PARIS (Reuters) – The ECB’s monthly rate meeting will focus minds this week on the debate over quantitative easing in the euro zone, as a series of data releases on both sides of the Atlantic sheds more light on European woes and U.S. strength.

Final purchasing manager indices for Europe and the United States, U.S. monthly jobs data and the European Central Bank’s updated forecasts will all provide clues to assessing the relative health of both regions.

The ECB staff inflation and growth estimates for the 18-nation single currency union are much awaited after data showed on Friday that inflation in the bloc was back to a five-year low, putting more pressure on the bank to take action.

Particular attention will be paid to internal debate within the ECB over quantitative easing and to ECB chief Mario Draghi’s comments on the data at his monthly news conference on Thursday, after his pledge to act to lift “excessively low” inflation.

The ECB is expected to leave key rates unchanged and wait for next year to decide whether to take the leap to government bond-buying.

A decision on QE may come as early as the first quarter, Vice President Vitor Constancio said last week. But arch-hawk German ECB policymaker Jens Weidmann responded that there were “legal limits” on printing money to buy government bonds.

“The ECB’s communication has not always been crystal clear this year, but overall it has moved steadily towards a more dovish stance despite internal tensions within the Governing Council,” French bank Credit Agricole wrote in a note.

“We expect no sovereign QE announcement at the December 4 meeting but a more formal, albeit conditional commitment to broader asset purchases.”

JOBS AND OIL

Friday’s monthly U.S. job figures will be the key data in the United States. Non-farm payrolls are expected to show an increase of 228,000 in November, according to a Reuters poll.

The unemployment rate fell to a six-year low in October, underscoring the economy’s resilience in the face of slowing global demand. Wage growth remained tepid, though, suggesting little need for the Federal Reserve to hurry to start lifting interest rates.

On Thursday, the Bank of England looks set to keep interest rates on hold at a record low 0.5 percent – that’s the unanimous expectation of analysts polled by Reuters. The day before that, Finance Minister George Osborne will deliver his Autumn budget update to parliament.

The first hike in British interest rates is expected to come in the third quarter of 2015, six months later than previously thought, owing to low inflation, sluggish pay growth and a weak euro zone economy, a Reuters poll showed.

Final purchasing managers indices are published after flash estimates came in lower than expected for the euro zone. New orders fell for the first time in more than a year.

The U.S. flash PMI showed a fifth consecutive monthly slowing in growth in services, although the pace of expansion remained robust by historical standards.

In China, the official manufacturing purchasing managers’ index is likely to show on Monday that manufacturing slowed slightly in November as demand remained sluggish, a Reuters poll showed.

However China’s central bank will wait until fourth-quarter economic data is out and monitor U.S. and Japanese monetary policy before considering any more rate cuts or easing, a central bank adviser said on Tuesday.

Falling oil prices will be another point of focus, after producer group OPEC decided not to cut crude production last week despite global oversupply.

Besides adding to Draghi’s headaches as it pushes inflation in Europe even lower, the fall in oil prices is also hurting the economies, currencies and financial markets of many producer countries.

(Reporting by Ingrid Melander; Editing by Mark John, Larry King)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/catYpyPQ5Iw/story01.htm

Bricks-and-mortar sales edge lower at start of holiday season; online surges- data


(Reuters) – U.S. shoppers spent slightly less money at brick-and-mortar stores on Thanksgiving Day and Black Friday than across the same two days in 2013, while online sales surged to record highs, data showed on Saturday.

Sales at retail stores totaled about $12.29 billion on Thursday and Friday, down 0.5 percent from the $12.35 billion spent last year, according to estimates by ShopperTrak. The research firm stuck by its forecast for November and December sales to increase 3.8 percent.

The data highlights the waning importance of Black Friday, which until a few years ago kicked off the holiday shopping season, as more retailers open their doors on Thanksgiving Day and start discounting earlier in the month.

It also points to the intense price competition among retailers, which have been discounting by 40 to 70 percent this year compared with 30 to 50 percent in the recent past, ShopperTrak founder Bill Martin told Reuters.

“I think what we are seeing is those early promotions coupled with some pretty deep discounts,” he said. Martin said he had expected a 0.5 to 1 percent sales gain.

Customer traffic rose 27.3 percent on Thanksgiving Day from a year earlier, reflecting the sharp increase in retailers opening for business on that day. Traffic fell 5.6 percent on Black Friday, ShopperTrak said.

Martin cautioned against taking the two days’ figures as sign of slack holiday demand. He noted that Thanksgiving and Black Friday combined for just 1 percent growth last year, underperforming growth of 3.1 percent during the entire season spanning the months of November and December.

Reflecting the decreased significance of Black Friday, ShopperTrak expects “Super Saturday” on Dec. 20 to rank as the busiest shopping day this year and says seven of the top 10 sales days of the season are still to come.

Separate data underscored the ongoing shift of shopping to online retailers.

Online Thanksgiving and Black Friday sales tracked by Adobe Systems Inc were a record $1.33 billion and $2.4 billion, up 25 percent and 24 percent from a year earlier, respectively. Between Nov. 1 and Nov. 28, $32 billion has been spent online, up 14 percent from 2013, Adobe said.

The proliferation of smartphones has made consumers more likely to shop online, with 29 percent of Thanksgiving sales via mobile devices, up from 21 percent on the same day last year. Adobe said its findings were based on more than 350 million visits to 4,500 retail websites.

“So much more mobile shopping is happening and that’s part of what’s driving e-commerce activity to new heights every year,” said Tamara Gaffney, principal analyst at Adobe Digital Index.

Several traditional bricks-and-mortar retailers reported strong online growth, a reflection of efforts to compete more aggressively on price with Amazon.com. Target Corp, which is offering free shipping for online orders during the holiday season, said it had record online sales on Thursday, up more than 40 percent from 2013.

Protesters have urged shoppers to boycott stores as the holiday season gets underway, saying economic inequality in the United States contributes to incidents such as the Ferguson, Missouri, shooting of an unarmed black teenager by a white policeman.

Martin, however, told Reuters he did not think the protests have so far had a significant impact on sales on a national level.

(Reporting by Nathan Layne in Chicago; Editing by Lisa Shumaker and Dan Grebler)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/Ma_Mnh2oO1Q/story01.htm