News Archive

Zhongwang USA to buy aluminum products maker Aleris

Aleris Corp (ALSD.PK), a U.S.-based aluminum rolled products maker, said it would be bought by Zhongwang USA LLC, a division of Zhongwang International Group Ltd, in a $2.33 billion deal.

Zhongwang International is also the parent of China Zhongwang Holdings Ltd (1333.HK), the world’s second-largest producer of aluminum extrusions.

Zhongwang USA, which is majority-owned by Liu Zhongtian, the founder of China Zhongwang, will pay $1.11 billion in cash and take on Aleris’s $1.22 billion in net debt, Aleris said in a statement.

Aleris supplies fabricated products to the aerospace, construction, automotive and defense industries. It has plants in the United States, Europe and Asia.

The company has been owned by Oaktree Capital Management LP since it emerged from bankruptcy in 2010.

The deal is expected to close in the first quarter of 2017.

Credit Suisse was financial adviser to Aleris, while Moelis Co advised Aleris on certain aspects of the deal.

(Reporting by Ankit Ajmera in Bengaluru and Josephine Mason in Beijing; Editing by Saumyadeb Chakrabarty)

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Mylan to launch generic EpiPen at half the price of original

Mylan NV (MYL.O) said it would launch the first generic version of its allergy auto-injector EpiPen at half the price of the branded product, the drugmaker’s second step in less than a week to counter a wave of criticism over the product’s high price.

The company reduced the out-of-pocket costs of EpiPen for some patients last week, but kept the list price at about $600, a move that lawmakers said was not enough. EpiPen cost about $100 in 2008.

Mylan said on Monday it expected to launch the generic product “in several weeks” at a list price of $300, an highly unusual move considering the branded product is still under patent protection and rival treatments have failed to get regulatory clearances.

Chief Executive Heather Bresch has defended EpiPen’s high price, saying Mylan had spent hundreds of millions of dollars improving the product, including making the needle invisible, since acquiring it from Germany’s Merck KGaA (MRCG.DE).

The company has said that it recoups less than half of EpiPen’s list price because pharmacy benefit managers, which often require discounted prices or rebates from drugmakers, are involved, along with insurers and others.

“Our decision to launch a generic alternative to EpiPen is an extraordinary commercial response,” Bresch said on Monday. “We determined that bypassing the brand system in this case and offering an additional alternative was the best option.”

Netherlands-based Mylan said it also intends to continue to market and distribute branded EpiPen.

EpiPen is a preloaded injection of epinephrine (adrenaline) used in case of a dangerous allergic reaction known as anaphylaxis that could cause death if untreated.

Anaphylaxis can occur in as little as a couple of minutes of exposure to the allergen, which can come in the form of food such as peanuts or insects such as bees.

U.S. health regulators rejected Adamis Pharmaceuticals Corp’s (ADMP.O) rival treatment to EpiPen in June. Sanofi (SASY.PA) has pulled its device from the market and Teva Pharmaceutical Industries Ltd (TEVA.TA) was forced to delay the launch of its version.

Mylan is the latest company to be caught up in the growing outrage, including from Presidential candidate Hillary Clinton, at apparently egregious drug price increases.

Valeant Pharmaceuticals International Inc (VRX.TO) and privately held Turing Pharmaceuticals have both been publicly excoriated for similar price increases.

Mylan’s shares were up about 2 percent at $43.90 in premarket trading. The stock had fallen 12 percent last week.

(Reporting by Ankur Banerjee in Bengaluru; Editing by Savio D’Souza)

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Automobiles boost U.S. consumer spending; inflation still tame

WASHINGTON U.S. consumer spending increased for a fourth straight month in July amid strong demand for automobiles, pointing to a pickup in economic growth that could pave the way for the Federal Reserve to raise interest rates this year.

The Commerce Department said on Monday that consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 0.3 percent last month after a 0.5 percent gain in June.

July’s increase was in line with economists’ expectations. When adjusted for inflation, consumer spending also rose 0.3 percent in July after advancing 0.4 percent in June.

Consumer spending appears to have retained some of its momentum from the second quarter, when it grew at a 4.4 percent annual rate, the fastest in nearly two years. That jump helped to mitigate some of the impact of a sharp inventory drop and prolonged business investment downturn.

The economy grew at a lackluster 1.1 percent annual rate in the second quarter.

U.S. stock futures rose after Monday’s data, while prices for U.S. Treasuries held earlier gains. The dollar .DXY was trading higher against a basket of currencies. July’s consumer spending data added to reports on the goods trade deficit, industrial production, durable goods orders and residential construction that have pointed to an acceleration in economic growth early in the third quarter.

The Atlanta Fed is currently estimating third-quarter GDP growth rising at a 3.4 percent annual pace.

Consumer spending is being driven by a tightening labor market, which is steadily lifting wages. Rising home values and stock market prices, which are boosting household wealth, are also supporting consumption.

Fed Chair Janet Yellen told a gathering of global central bankers on Friday that she believed the case for raising interest rates had been strengthened in recent months by the “solid performance of the labor market and our outlook for economic activity and inflation.”

Last month, there was little sign of inflation pressures even as consumer spending firmed.

The personal consumption expenditures (PCE) price index, excluding the volatile food and energy components, edged up 0.1 percent after a similar gain in June.

In the 12 months through July the core PCE increased 1.6 percent. It has risen by the same margin every month since March. The core PCE is the Fed’s preferred inflation measure and is running below its 2 percent target.

Consumer spending last month was lifted by a 1.6 percent surge in purchases of long-lasting manufactured goods such as automobiles. Spending on services rose 0.4 percent, but outlays on non-durable goods slipped 0.5 percent.

Personal income increased 0.4 percent in July after rising 0.3 percent in June. Wages and salaries advanced 0.5 percent. Savings rose to $794.7 billion from $776.2 billion in June.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

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BlackRock withheld support from two key Exxon directors: filings

BOSTON BlackRock Inc withheld support from two high-profile directors at Exxon Mobil Corp, (XOM.N) securities filings show, a rare spat apparently driven by a board communications policy at the world’s largest energy company.

Because top fund managers like BlackRock rarely discuss their votes in detail, filings in late August to the U.S. Securities and Exchange Commission provide a rare window into the influential ballots they cast at springtime shareholder meetings like the one held by Exxon on May 25, one of this year’s more contentious.

BlackRock, (BLK.N) which manages nearly $5 trillion, has been criticized for largely supporting company managers on matters like executive pay or electing directors. BlackRock funds have backed corporate directors around 97 percent of the time since 2013, according to research firm Proxy Insight, and mostly backed Exxon at this year’s meeting such as opposing shareholder proposals addressing climate change.

BlackRock executives say they prefer to press companies behind the scenes, and vote against management only when such engagement fails. But in a rare break, filings on Friday showed funds including the $45 billion BlackRock Global Allocation Fund (MALOX.O) withheld support from Exxon directors Jay Fishman and Kenneth Frazier this year.

Fishman, who recently passed away, had been CEO of insurer Travelers. (TRV.N) Frazier is CEO of drugmaker Merck Co.(MRK.N)

While spokesman for BlackRock and Exxon declined to comment, BlackRock’s reasoning for the votes appears to be spelled out in a recent governance report on its website. The report describes how BlackRock executives tried to discuss strategy and capital allocation with independent directors of an unnamed “large oil and gas corporation,” but were rebuffed because of a policy against such talks.

As a result, BlackRock said it withheld support from the company’s lead independent director and the chair of the committee that set the policy. Fishman had been Exxon’s “presiding director,” meant to provide independent board leadership according to Exxon’s proxy statement, while Frazier led its board affairs committee.

The two were re-elected with 88 and 90 percent of votes cast, respectively, down from 95 and 98 percent in 2015. BlackRock is Exxon’s second-largest shareholder with about 6 percent of its stock, according to the proxy. Exxon’s other directors got no less than 95 percent support this year.

How much contact independent directors should have with outsiders has become a loaded issue because of the rise of activist investors pushing disruptive agendas.

Asked about BlackRock’s concern, Exxon spokesman Alan Jeffers cited a webpage outlining board communications procedures, which do not directly address the matter. But Tim Smith, who leads shareholder engagement efforts at Walden Asset Management, said Exxon executives have described at meetings the sort of policy criticized by BlackRock.

Filings also showed BlackRock funds did not back resolutions at 3M Co, (MMM.N) Illinois Tool Works Inc (ITW.N) or Xerox Corp (XRX.N) calling on the companies to exclude the impact of share buybacks when calculating executive pay, even though the resolutions cited the concerns about buybacks raised by BlackRock CEO Larry Fink.

(Reporting by Ross Kerber in Boston; Editing by Andrea Ricci)

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Cyber threat grows for bitcoin exchanges

NEW YORK When hackers penetrated a secure authentication system at a bitcoin exchange called Bitfinex earlier this month, they stole about $70 million worth of the virtual currency.

The cyber theft — the second largest by an exchange since hackers took roughly $350 million in bitcoins at Tokyo’s MtGox exchange in early 2014 — is hardly a rare occurrence in the emerging world of crypto-currencies.

New data disclosed to Reuters shows a third of bitcoin trading platforms have been hacked, and nearly half have closed in the half dozen years since they burst on the scene.

This rising risk for bitcoin holders is compounded by the fact there is no depositor’s insurance to absorb the loss, even though many exchanges act like virtual banks.

Not only does that approach cast the cyber security risk in stark relief, but it also exposes the fact that bitcoin investors have little choice but to do business with under-capitalized exchanges that may not have the capital buffer to absorb these losses the way a traditional and regulated bank or exchange would.

“There is a general sense in the bitcoin community that any centralized repository is at risk,” said a U.S.-based professional trader who lost about $1,000 in bitcoins when Bitfinex was hacked. He declined to be named for this article.

“So when investing, you always have that expectation at the back of your head. I lost a small amount compared to the others, but I know of traders who lost millions of dollars worth of bitcoins,” the trader said.

The security challenge for the bitcoin world does not appear to be letting up, according to experts in the currency.

“I am skeptical there’s going to be any technological silver bullet that’s going to solve security breach problems. No technology, crypto-currency, or financial mechanism can be made safe from hacks,” said Tyler Moore, assistant professor of cyber security at the University of Tulsa’s Tandy School of Computer Science who will soon publish the new research on the vulnerability of bitcoin exchanges.

His study, funded by the U.S. Department of Homeland Security and shared with Reuters, shows that since bitcoin’s creation in 2009 to March 2015, 33 percent of all bitcoin exchanges operational during that period were hacked. The figure represents one of the first estimates of the extent of security breaches in the bitcoin world.

In contrast, data from the Privacy Rights Clearinghouse, a non-profit organization, showed that of the 6,000 operational U.S. banks, only 67 banks experienced a publicly-disclosed data breach between 2009 and 2015. That’s roughly 1 percent of U.S. banks.

Among the world’s stock exchanges, however, security breaches are much higher, with hackers attracted to the large pools of cash moving in and out of these trading venues. The latest survey of 46 securities exchanges released three years ago by the International Organization of Securities Commissions and World Federation of Exchanges found that more than half had experienced a cyber attack.

Moore collaborated on the research with Nicolas Christin, associate research professor at Carnegie Mellon University and Janos Szurdi, a Ph.D. student also at Carnegie.

  In 2013, Moore and Christin wrote a research paper on security risks surrounding bitcoin exchanges when Moore was still a professor at Southern Methodist University. That research entitled “Beware of the Middleman: Empirical Analysis of Bitcoin Exchange Risk” was peer-reviewed and presented at the 17th International Financial Cryptography and Data Security Conference in Okinawa, Japan in 2013.

In the most recent study, the rate of closure for bitcoin exchanges in Moore’s research edged up to 48 percent among those operating from 2009 to March 2015. Hacking did not necessarily trigger the closure in each case.

“A 48 percent closure is not acceptable, but not surprising given that bitcoin is a new technology,” said Richard Johnson, vice president of market structure and technology at Greenwich Associates. Johnson has written reports on risk and security issues in the crypto-currency world.

Profitability is a big problem for bitcoin exchanges, with many of them unable to generate enough volume to keep afloat.

Bitcoin exchanges overall could be launched for as low as $100,000 up to $1 million, said Erik Voorhees, founder and chief executive officer of digital currency exchange ShapeShift. That is a fraction of what U.S. forex exchanges’ are required to put up.

Retail FX trading platform FXCM, for instance, is required by the Commodity Futures Trading Commission to have at least $25 million in capital at all times.


A key factor tied to the risk posed by exchanges is whether customers are reimbursed after closure or after the loss of bitcoins following a hack. Each closure and breach have been handled differently, but Tandy’s Moore said the risk of losing funds stored in exchanges are real.

In the case of Bitfinex, which is now up and running after the hack August 2, customers lost 36 percent of the assets they had on the platform and were compensated for the losses with tokens of credit that would be converted into equity in the parent company.

At Tokyo’s MtGox, customers have yet to recover their investments more than two years after closure.

Experts say trading venues acting like banks such as Bitfinex will remain vulnerable. These exchanges act as custodial wallets in which they control users’ digital currencies like banks control customer deposits.

“The big exchanges that hold customer deposits are a big target for hackers,” said ShapeShift’s Voorhees, “and unfortunately most bitcoin exchanges store user funds.”

When customers’ checking accounts are hacked, there is always a third party at the bank that can step in to deal with the theft.

Not so with bitcoin, said Seattle-based Darin Stanchfield, chief executive officer at KeepKey, a hardware wallet provider. He expects more of these attacks to happen despite efforts to improve security at bitcoin exchanges.

“Unfortunately because of its irreversible nature, bitcoin requires near perfect security.”

(Reporting by Gertrude Chavez-Dreyfuss; Editing by Edward Tobin)

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Australia’s Woolworths says hardware JV partner Lowe’s takes it to court

SYDNEY Woolworths Ltd (WOW.AX) said on Monday the U.S. company with which it had a hardware retail joint venture had started legal proceedings, five days after Australia’s No.1 grocery chain said it was exiting the business.

Woolworths’s joint venture partner, Lowe’s Companies Inc (LOW.N), has filed a court application in relation to their hardware chain, the company said in a statement.

The Australian company did not give details of the court application but said it “is yet to be served with documents relating to this application”.

In a statement, Lowe’s said “Woolworths has engaged in oppressive conduct, including by invalidly and in bad faith attempting to terminate” the joint venture.

Woolworths said last week its three-way plan to shut down and sell parts of its home wares business will proceed as planned.

(Reporting by Byron Kaye; Editing by Gopakumar Warrier)

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Oil prices fall on rising Iraq output, doubt over producer talk prospects

SINGAPORE Oil prices fell early on Monday as output from Iraq rose and as Iran said it would only cooperate in upcoming producer talks to freeze output if fellow exporters recognized its right to fully regain market share.

International Brent crude oil futures LCOc1 were trading at $49.54 per barrel at 0043 GMT (8.43 p.m. ET), down 38 cents from their previous close.

U.S. West Texas Intermediate (WTI) crude futures were down 43 cents at $47.21 a barrel.

Traders said the price falls were a result of climbing output from the Middle East, where oil exports from Iraq’s southern ports have averaged 3.205 million barrels per day (bpd) in August, exceeding the average level seen in July, according to two officials from state-run South Oil Company said. Exports in July averaged 3.202 million bpd.

Also, Iran said late last week that it would only cooperate in upcoming producer talks in September if other exporters recognized Tehran’s right to regain market share lost during international sanctions that were only lifted in January.

Analysts said that disagreements within the Organization of the Petroleum Exporting Countries (OPEC), and especially its key members Saudi Arabia and Iran, meant few expected a significant impact on global output from the upcoming talks.

“The market is increasingly likely to discount the outcome of the event, given, even in the instance of a freeze being agreed, compliance will be an issue,” Barclays said.

Despite this, the British bank said that it saw “incoming oil market data (both demand and supply) as a source for price strength in Q4”.

(Reporting by Henning Gloystein; Editing by Joseph Radford)

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Most Asia stocks slide on Fed officials’ rate comments, dollar firms

SINGAPORE Most Asian share markets slipped on Monday while the U.S. dollar held firm on Monday after U.S. Federal Reserve Chair Janet Yellen indicated an interest rate increase remains on the cards for this year.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS slid 0.7 percent.

Japan’s Nikkei .N225, bucked the trend and climbed 2.2 percent as the yen weakened against the resurgent dollar.

The case for a rate hike has strengthened in recent months, with a lot of new jobs being created, and economic growth is looking likely to continue at a moderate pace, Yellen said in a speech at the Fed’s annual monetary policy conference in Jackson Hole, Wyoming, on Friday.

While Yellen did not give guidance on what the central bank needs to see before raising rates, she said the Fed already thinks it is close to meeting its goals of maximum employment and stable prices. She described consumer spending as “solid” but noted that business investment was weak and exports hurt by a strong dollar.

Comments by the Fed’s No. 2 policymaker, Vice Chair Stanley Fischer, following Yellen’s speech also bolstered the case for a hike this year.

Asked on CNBC whether a rate hike in September and more than one policy tightening before year end should be expected, Fischer said Yellen’s comments were “consistent with answering yes” to both questions, albeit still data-dependent.

Traders remained cautious, however. The odds of a hike in September rose to 30 percent following the comments from 21 percent on Thursday, according to CME Group’s FedWatch tool. Traders were pricing in a 60.2 percent chance of a hike in December, up from 51.8 percent on Thursday.

“While the move towards another Fed rate hike will likely cause bouts of consternation in investment markets I don’t see the same degree of uncertainty that we saw around last year’s Fed rate hike,” Shane Oliver, head of investment strategy at AMP Capital in Sydney, wrote in a note.

“It’s clear from the Fed’s actions this year that it is aware of global risks, the impact of its own actions on those risks and any potential blow back to the U.S. economy and of the impact of a rising U.S. dollar in doing some of its work for it.”

The comments from Yellen and Fischer dragged Wall Street lower at the close.

But they proved a boon for the U.S. currency, with the dollar index .DXY, which tracks the greenback against six global peers, jumping 0.8 percent on Friday. It held steady at 95.561 in early trading on Monday.

The dollar surged 1.3 percent against the yen JPY=D4 on Friday to a two-week high, its biggest one-day advance in almost seven weeks. It extended those gains by 0.1 percent to 101.99 yen early on Monday.

The euro EUR=EBS was little changed at $1.1194 after tumbling 0.8 percent on Friday, its biggest one-day slide since July 15.

In commodities, the rally in the dollar drove crude lower. U.S. crude futures CLc1 fell 0.9 percent to $47.22 in early Asian trade.

Investors will be looking to Japan household spending and retail sales on Tuesday, global factory activity readings on Thursday and the U.S. non-farm payrolls report on Friday.

(Editing by Kim Coghill)

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Union votes for strike mandate in Canadian auto talks

TORONTO The union representing most Canadian autoworkers has voted for a strike mandate, it said on Sunday, bolstering its position in contract negotiations with the Big Three U.S. carmakers.

Unifor, which represents more than 20,000 autoworkers, is pushing General Motors Co (GM.N), Fiat Chrysler Automobiles (FCHA.MI) and Ford Motor Co (F.N) to invest further in the province of Ontario, home to nearly all of Canada’s auto industry, in talks that began this month.

Members voted close to 100 percent in favor of granting Unifor a mandate to strike, according to a statement from the union.

That means workers are in a position to walk off the job if the parties cannot come to terms. The union’s current four-year contract with automakers expires on Sept. 19.

Unifor President Jerry Dias has said the union is asking for higher wages and would not agree to a deal unless GM commits to building new vehicles in Oshawa, and Ford decides to keep its engine plant operating in Windsor.

GM’s Oshawa plant could shut one of its two assembly lines, with several vehicles already produced elsewhere or expected to move in 2017.

Between 2001 and 2013, some 14,300 jobs were lost in vehicle manufacturing in Canada, according to Hamilton’s Automotive Policy Research Center. Some automakers have found cheaper labor in places such as the southern United States and Mexico.

GM Canada has said the negotiations are separate from the carmaker’s future investments because labor is not the only cost it considers when deciding where to make new products.

GM said it will make future product decisions for Oshawa only after a labor agreement.

Automakers, however, had agreed to make investments during bargaining with the United Auto Workers in the United States. GM’s 2015 deal with the UAW generated $1.9 billion in additional investment in U.S. plants.

GM, Fiat Chrysler and Ford did not immediately respond to requests for comment.

(Reporting by Ethan Lou in Toronto; Editing by Bill Trott)

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