News Archive

VW has fixed fewer than half of UK cars hit by diesel scandal

LONDON Volkswagen (VOWG_p.DE) said it has so far fixed fewer than half of the 1.2 million cars affected by the diesel emissions scandal in Britain, 18 months after the revelations first came to light.

The German carmaker admitted in September 2015 to using software to cheat diesel emission tests in the United States and has since paid out compensation to U.S. motorists but has refused to do so in Europe.

In Britain, Europe’s second biggest autos market where Volkswagen Group is the top seller, the firm has faced pressure from lawmakers who have repeatedly questioned the brand’s managing director.

In a response to lawmakers’ latest letter, VW’s Paul Willis said the firm was nearly half way to fixing all models.

“We have implemented the technical measures in more than 540,000 UK vehicles,” Willis told lawmakers in a letter dated Mar. 24, which was released on Friday. In February, he said the total stood at 470,000.

VW has not set a firm deadline to complete the work but hopes to have most of it done by the autumn.

Willis also denied that any of the changes made had negatively affected the performance of vehicles, an issue at the heart of attempts by some law firms to take legal action against the company.

“The technical measures have been rigorously tested and the relevant authorities have confirmed that there is no adverse impact on the vehicles’ MPG, CO2 emissions, engine output, maximum torque and noise emissions” he said.

(Reporting by Costas Pitas; Editing by Keith Weir)

Article source:

J&J declares Actelion tender offer a success, sees closing in second quarter

ZURICH Johnson Johnson (JNJ.N) declared its $30 billion tender offer for Swiss biotechnology company Actelion (ATLN.S) successful on Friday, reporting it controlled 77.2 percent of the voting rights after the main offer period.

The price of the offer, which JJ announced on Jan. 26, was $280 per share for Actelion. It said it expected the transaction to close in the second quarter.

JJ has said it intends to delist Actelion, while a new research and development company being spun out of Actelion, to be called Idorsia and led by Actelion founder Jean-Paul Clozel, will have a separate Swiss listing.

(Reporting by Michael Shields; editing by Brenna Hughes Neghaiwi)

Article source:

Toshiba offered $17.9 billion for chip unit by Silver Lake and Broadcom: Nikkei

TOKYO U.S. private equity firm Silver Lake Partners LP [SILAK.UL] and U.S. chipmaker Broadcom Ltd have offered Toshiba Corp about 2 trillion yen ($17.9 billion) for its chip unit, the Nikkei business daily reported on Friday.

About 10 potential bidders are interested in buying a stake in the NAN flash memory maker, a source with knowledge of the planned sale told Reuters earlier.

Suitors include Western Digital Corp which operates a chip plant with Toshiba in Japan, Micron Technology Inc, South Korean chipmaker SK Hynix Inc and financial investors.

Toshiba wants to make at least 1 trillion yen from the sale of part or all of the business to cover writedowns at its Westinghouse nuclear unit. It says it expects investors to value its chip operations at about 2 trillion yen.

Toshiba is also asking potential bidders whether they intend to resell their stakes and wants to make a decision on the sale before a shareholders meeting in June, the Nikkei said, without saying where it obtained the information.

Toshiba shareholders on Thursday agreed to split off its prized chip unit, paving the way for the sale.

(Reporting by Kaori Kaneko; Editing by Stephen Coates)

Article source:

Wells Fargo must face litigation on defective mortgages: U.S. judge

NEW YORK A federal judge on Thursday said Wells Fargo Co (WFC.N) must face litigation seeking to hold it responsible for billions of dollars of claimed investor losses stemming from its alleged failures as a trustee overseeing risky residential mortgage-backed securities.

U.S. District Judge Katherine Polk Failla in Manhattan said the plaintiffs, including a few dozen funds from BlackRock Inc (BLK.N), Pacific Investment Management Co (ALVG.DE), Prudential Financial Inc (PRU.N) and TIAA-CREF, may pursue breach of contract and conflict of interest claims related to 53 trusts.

Failla also said the investors may pursue some claims alleging breaches of fiduciary duty and due care, but she dismissed claims alleging general negligence and the violation of a New York law governing mortgage trusts. Failla also denied Wells Fargo’s bid to dismiss claims by Germany’s Commerzbank AG (CBKG.DE).

Ancel Martinez, a Wells Fargo spokesman, declined to comment. A lawyer for many of the plaintiffs did not immediately respond to requests for comment.

Failla’s 80-page decision covers five lawsuits, which comprise one of the largest remaining pieces of U.S. litigation seeking to hold banks liable for risky mortgage securities that were a major cause of the 2008 global financial crisis.

Much of this litigation targeted lenders, but some targeted trustees that oversaw the securities’ performance.

Investors accused Wells Fargo of having taken “virtually no action” to require lenders to buy back or fix defaulted or poorly underwritten loans that backed their securities, despite knowing of shortfalls.

They said the San Francisco-based bank’s resistance stemmed from concern that acting would have exposed its own “misconduct” in other residential mortgage-backed securities trusts, and jeopardized its business dealings with lenders and servicers, court papers show.

Failla said the plaintiffs “more than met” the legal standard for letting the breach of contract claims proceed, having pointed to internal Wells Fargo documents to suggest the bank knew about many loan defects but did nothing.

“It is plaintiffs’ contention that such allegations go far beyond many other RMBS trustee complaints, which themselves have been found sufficient to state a claim,” Failla wrote, without ruling on the merits. “The court agrees.”

Failla also said the National Credit Union Administration may pursue various claims against Wells Fargo on behalf of five failed credit unions.

The NCUA has already recouped roughly $4.3 billion in litigation against many banks over securities that the credit unions bought. A spokesman could not be reached for comment.

The cases in the U.S. District Court, Southern District of New York are: BlackRock Allocation Target Shares Series S Portfolio et al v. Wells Fargo Bank NA et al, No. 14-09371; Royal Park Investments SA/NV et al v. Wells Fargo Bank NA et al, No. 14-09764; National Credit Union Administration Board v Wells Fargo Bank NA, No. 14-10067; Phoenix Light SF Ltd et al v. Wells Fargo Bank NA, No. 14-10102; and Commerzbank AG v. Wells Fargo Bank NA, No. 15-10033.

(Reporting by Jonathan Stempel in New York; Editing by Leslie Adler)

Article source:

FCC to reverse rules on TV station purchases

WASHINGTON The U.S. Federal Communications Commission said on Thursday it would vote in April to reverse a 2016 rule adopted by the Obama administration that limits the number of television stations some companies can buy.

Under rules adopted in 1985, broadcasters could partially count some stations with weaker over-the-air signals against ownership caps. The FCC under President Barack Obama said those rules were outdated after the 2009 conversion to digital broadcasting and revoked them in September.

The 2016 rule did not require any company to sell existing stations but could bar new acquisitions.

Twenty-First Century Fox, Inc [NWSNA.UL] in September challenged the FCC rule.

FCC Chairman Ajit Pai said in a statement the FCC was likely to lose the legal challenge before the U.S. Court of Appeals. He said he wanted to revoke the rule and “launch a comprehensive review of the national ownership cap” later this year.

Current rules limit companies to owning stations serving no more than 39 percent of U.S. television households, but the Republican FCC could seek to eliminate or revise them.

The broad FCC ownership review could launch a new wave of consolidation in the broadcast television industry, analysts and companies said.

Sinclair Broadcast Group Inc has approached rival U.S. broadcaster Tribune Media Co to discuss a potential combination, Reuters reported earlier this month, citing sources, in a deal that would hinge on regulations being relaxed. [nL2N1GE1EM]

Sinclair and Tribune opposed the decision to relax the rule for certain stations last year. The FCC said in September it was time to abolish the 32-year-old regulation because it “restores meaning to the rule in today’s marketplace where technological change has eliminated the justification.”

Restoring the previous rule would not be enough for Sinclair and Tribune to merge, analysts said, noting that they would either need to divest some stations or win additional regulatory changes.

Tribune already is above the FCC cap, reaching 44 percent of U.S. households, while Sinclair is at 38 percent, Jefferies LLC analyst John Janedis said.

Sinclair Chief Executive Christopher Ripley said on an earnings call last month the company expected “this new FCC to tackle the ownership rules more broadly.”

Another U.S. broadcaster, Tegna Inc, told investors in February the company expected “a long overdue break in the logjam on outdated TV ownership rules this year” that “will likely allow both vertical and horizontal consolidation.”

(Editing by Jeffrey Benkoe and Richard Chang)

Article source:

Trump helps make cross-border M&A great again

Cross-border MA had its strongest start since 2007, driving first-quarter global volumes up 7 percent, as optimism over U.S. President Donald Trump’s economic agenda buoyed the stock market and the dollar, making foreign acquisitions cheaper than some U.S. targets.

Many U.S. CEOs are feeling richer and more confident thanks to a rally in their companies’ stock. Yet potential U.S. acquisition targets often feel they are worth a lot too, while uncertainty over Trump’s tax policies makes planning a merger more difficult for the companies involved.

To be sure, U.S. MA was still up 3 percent in the first quarter. Some acquirers brushed off the political uncertainty, and often got around disagreements over the cash value of a company by using their stock as currency to pay for deals. Nonetheless, a few acquirers chose to cast their net overseas.

The biggest deal since the start of the year was U.S. healthcare and consumer conglomerate Johnson Johnson’s (JNJ.N) $30 billion agreement in January to acquire Swiss biotechnology firm Actelion Ltd (ATLN.S).

Other major cross-border deals were attempted unsuccessfully. Anglo-Dutch consumer goods giant Unilever Plc (ULVR.L) snubbed a $143 billion acquisition offer from U.S. food conglomerate Kraft Heinz Co (KHC.O), while Dutch paint maker Akzo Nobel NV (AKZO.AS) rejected a sweetened $24 billion bid from U.S. coatings manufacturer PPG Industries Inc (PPG.N).

Some cross-border MA even headed in the other direction. British consumer products company Reckitt Benckiser Group Plc (RB.L), for example, agreed in February to acquire baby milk manufacture Mead Johnson Nutrition Company (MJN.N) for $17.9 billion.

“We saw an increase in outbound deals from the United States into Europe, as the outlook on the European economy has improved. Transactions for European targets are also less impacted by uncertainty around potential U.S. tax reform,” said Gary Posternack, global head of mergers acquisitions at Barclays Plc (BARC.L).

Preliminary Thomson Reuters data show that global MA totaled $726.5 million in the first quarter, up 7 percent year-on-year. Cross-border MA totaled $323.1 billion year-to-date, the highest level since 2007, accounting for 45 percent of total MA activity so far this year.

Acquisitions by U.S. companies abroad reached $114.1 billion so far in 2017, a triple-digit percentage increase compared with a year ago, surpassing the year-to-date record set in 2007 of $97.1 billion. Europe inbound cross-border MA reached $127.1 billion, topping the year-to-date record of $104.5 billion set last year.

In the United States, the biggest questions CEOs faced when considering MA were around mulled policy reforms that would affect deductibility of interest expense, corporate tax rates, overseas cash repatriation, and the potential cross-border adjustment tax.

“There are a number of people who are saying I want to wait until this fleshes out a bit, until questions around tax or certain healthcare policies get reformed over time, it’s harder to do a deal,” said Robin Rankin, co-head of global MA at Credit Suisse Group AG (CSGN.S).

Nevertheless, most MA advisers appear optimistic. About 44 percent of dealmakers expected MA to increase in 2017, an uptick from just 13 percent a year ago, according to a survey published this week by financial communications firm Brunswick Group.


After two years of particularly robust MA activity – 2016 and 2015 saw the biggest and third biggest MA volumes on record, respectively – and historically high corporate valuations, the main impediment to deals is price concerns, dealmakers said.

With his ruling Republican party divided along ideological fault lines, it was also not clear what impact Trump’s failed bid to reform the U.S. healthcare system earlier this month would have on his ability to implement tax proposals.

“While the strategic dialogue is as good as it has been in quite some time, many assets are richly valued and uncertainty still exists around tax reform and the regulatory environment,” said Jack MacDonald, co-head of Global MA at Bank of America Corp (BAC.N).

Recovering oil prices boosted energy MA, which reached 118.4 billion so far in 2017, up 41 percent year-on-year.

Credit markets remained wide open, favoring not just big corporate deals but also leveraged buyouts. Global private equity-backed MA activity totaled $57.5 billion, the strongest year-to-date period for such deals since 2014, and a 38 percent increase from a year ago.

(Reporting by Lauren Hirsch and Greg Roumeliotis; Editing by Andrew Hay)

Article source:

Sour Lululemon results may signal squeeze for athletic leisure lines

The steep drop in Lululemon Athletica’s (LULU.O) stock price, following a sales warning that resulted from poor color choices in the company’s spring collection, turns the spotlight on slowing growth in the athleisure category pioneered by the Canadian yogawear retailer.

Shares of rivals Nike Inc (NKE.N) and Under Armour (UAA.N) also were down on Thursday, raising questions of whether athletic leisure wear can maintain its torrid growth amid competition from denim and possible shopper fatigue with the now decade-old fashion category.

In the age of fast fashion, when trends change overnight, athletic leisure wear is showing signs of age. Industry-wide sales in North America have grown 39.2 percent to $26.05 billion in the last five years, according to Euromonitor.

However, sales in the category are expected to grow at 5.2 percent in 2017, slower than the average 6.9 percent rate at which the category had grown in the last five years.

The latest quarterly results have also indicated a slowdown from the marquee manufacturers.

The last few years have seen a surge in the number of retailers offering athleisure clothes, ranging from mass-market products sold by retailers such as Gap Inc (GPS.N) to $1,000 leggings from designers such as Alexander McQueen.

“There is no more the growth that was there before and there are way more competitors for the brand (Lululemon) compared to when they’d started 10 years ago,” Jan Rogers Kniffen, chief executive of consulting firm J. Rogers Kniffen WWE, said.

A hash of celebrity brand launches, including Beyonce’s Ivy Park line in April last year, has also competed for sales at the traditional retailers.

“Nordstrom (JWN.N) has got a private label on athleisure, (J.C.) Penney (JCP.N) has also got a private label on athleisure, Kohl’s (KSS.N) has got a private label on athleisure. Everybody is doing it at every price point,” Kniffen said.

A comeback in denim, led by 1970s-inspired wider leg denim pants and higher waist jeans from Forever 21 and HM (HMb.ST), is also eating into demand for athleisure wear.

“We continue to believe trend shifts away from athleisure to denim will present stiffening headwinds to LULU,” Canaccord Genuity analyst Camilo Lyon said.

The stock market is giving the industry little room for error. Nike’s shares fell as much as 7.3 percent after the company reported lower-than-expected quarterly revenue last month, while Under Armour’s shares fell 28 percent in January after it forecast 2017 sales well below analysts’ estimates.

“Over the past 12-24 months, other athletic wear bellwethers such as NKE and UA have seen meaningful multiple contraction once sales started slowing and margins stopped expanding,” said Ike Boruchow, analyst with Wells Fargo, in a research note.

The market on Thursday showed little patience for Lululemon’s disappointing results, too. The company’s shares closed down 23.4 percent at $50.76.

(Additional reporting by Anya George Tharakan and Jessica Kuruthukulangara in Bengaluru; Editing by David Greising)

Article source:

Wall Street rises, aided by growth data; Nasdaq ends at record

Wall Street gained on Thursday, led by financial shares, after data showed U.S. economic growth was stronger than previously reported last quarter, helped by robust consumer spending, and the tech-heavy Nasdaq set a record closing high.

The energy sector .SPNY rose for a third straight day, supported by stronger oil prices CLc1 and a 8.8-percent gain for ConocoPhillips (COP.N), the biggest percentage riser on the SP 500 after it agreed to sell oil and gas assets.

The SP 500 gained for a third straight day, rebounding after its worst week of the year last week.

U.S. economic growth slowed less than previously reported in the fourth quarter as robust consumer spending provided a boost, the Commerce Department said. Gross domestic product increased at a 2.1 percent annualized rate instead of the previously-reported 1.9 percent pace.

A record-setting rally for stocks in the wake of President Donald Trump’s November election stalled somewhat this month, with some investors pointing to risks to Trump’s agenda, including tax reform, after his fellow Republicans failed to pass a healthcare bill.

The GDP report is “basically an affirmation that, hey, at the end of the day, Washington will do and say whatever they are going to do, but the economy is marching forward,” said Karyn Cavanaugh, senior market strategist at Voya Investment Management in New York.

“It’s not just the U.S. economy, but we do see definitely improvement throughout the world,” Cavanaugh said.

The Dow Jones Industrial Average .DJI rose 69.17 points, or 0.33 percent, to 20,728.49, the SP 500 .SPX gained 6.93 points, or 0.29 percent, to 2,368.06 and the Nasdaq Composite .IXIC added 16.80 points, or 0.28 percent, to 5,914.34.

The Nasdaq closed at a record high after rising for a fifth straight session.

Financial shares .SPSY surged 1.2 percent, with Bank of America (BAC.N) and Citigroup (C.N) propping up the SP 500.

The defensive utilities sector .SPLRCU was the worst-performing group, falling 0.7 percent.

Investors are also turning their attention to the impending first-quarter earnings season to justify lofty valuations for stocks. The SP 500 is trading at about 18 times earnings estimates for the next 12 months against its long-term average of 15.

First-quarter earnings for SP 500 companies are expected to rise 10.1 percent, according to Thomson Reuters I/B/E/S.

“We continue to see decent-to-improving economic data primarily in employment,” said Tim Ghriskey, chief investment officer of Solaris Asset Management in New York. “We are likely to see a good quarter in terms of earnings, so I think there is some anticipation perhaps in the market here.”

In corporate news, Lululemon Athletica (LULU.O) shares plunged 23.4 percent after the Canadian yoga and leisure apparel retailer said first-quarter comparable sales were expected to fall.

About 6 billion shares changed hands in U.S. exchanges, below the 6.8 billion daily average over the last 20 sessions.

Advancing issues outnumbered declining ones on the NYSE by a 1.56-to-1 ratio; on Nasdaq, a 1.49-to-1 ratio favored advancers.

The SP 500 posted 20 new 52-week highs and 1 new lows; the Nasdaq Composite recorded 99 new highs and 19 new lows.

(Additional reporting by Tanya Agrawal in Bengaluru; Editing by Sriraj Kalluvila and Nick Zieminski)

Article source:

FCC to vote to reform $45 billion business data market

WASHINGTON The Republican head of the Federal Communications Commission on Thursday proposed easing regulatory requirements in the $45 billion business data services market, a win for companies like ATT Inc, CenturyLink Inc, Verizon Communications Inc and others.

The proposal is a blow to companies like Sprint Corp and others that claim prices for business data are too high and backed a plan under President Barack Obama that would have cut prices but was never approved.

Small businesses, schools, libraries and others rely on business data services, or special-access lines, to transmit large amounts of data quickly, for instance connecting banks to ATM machines or gasoline pump credit card readers. Wireless carriers rely on them for the backhaul of mobile traffic. Reuters reported details of the proposal Wednesday.

FCC chairman Ajit Pai said in a blog post the commission will vote April 20 to reform the rule that telecommunications experts say would deregulate the market in most of the country but would retain regulations in some places.

“Where this competition exists, we will relax unnecessary regulation, thereby creating greater incentives for the private sector to invest in next-generation networks. But where competition is still lacking, we’ll preserve regulations necessary to prevent anti-competitive price increases,” Pai said.

Consumer groups Public Knowledge and Consumer Federation of America called Pai’s proposal a “bonanza” for big telecommunications companies that “will drain consumer pocketbooks of tens of billions of dollars per year.” 

Under President Barack Obama, then FCC Chairman Tom Wheeler in April 2016 proposed a sweeping reform plan for business data services that aimed to reduce prices paid.

Wheeler had proposed maintaining and lowering lower price caps using legacy data systems with a one-time 11 percent reduction in prices phased in over three years.

Sprint, which backed Wheeler’s proposal, told the FCC in a March 22 letter that “thousands of large and small businesses across the country are paying far too much for broadband because of inadequate competition.”

Sprint argued “a small handful of companies are overcharging the very investors and employers that are critical to our economic growth and are using anticompetitive tactics to ensure that these businesses never have access to competitive alternatives.”

ATT argued Wheeler’s plan was “little more than a wealth transfer to companies that have chosen not to invest in last mile fiber infrastructure.”

(Reporting by David Shepardson; Editing by Cynthia Osterman)

Article source: