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Uber’s Kalanick rekindles power struggle, names two to board

SAN FRANCISCO (Reuters) – Uber Technologies Inc [UBER.UL] co-founder Travis Kalanick said he had appointed two new directors, a surprise move that publicly reignited a board battle over the role of the ousted former chief executive.

Kalanick’s move on Friday sought to pre-empt a move by new Chief Executive Dara Khosrowshahi to restructure the board and gain greater control, a person familiar with the co-founder’s decision said.

Uber said in a statement on Friday the company was surprised by Kalanick’s action.

Company investors are divided over whether Kalanick should remain on the board and whether he should be allowed to name two other directors.

Benchmark Capital, which had pressured Kalanick to resign as CEO in the wake of several governance scandals, did not respond to a request for comment.

Khosrowshahi is scrambling to portray Uber as a reformed company that is turning a page on concerns including sexual harassment claims and a U.S. bribery probe. Investors have described diluting Kalanick’s power as a necessary step on the path to making amends.

Kalanick, still one of the largest shareholders, said in a statement he had appointed former Xerox Chief Executive Ursula Burns and former Merrill Lynch Chief Executive John Thain as directors.

“I am appointing these seats now in light of a recent board proposal to dramatically restructure the board and significantly alter the company’s voting rights. It is therefore essential that the full board be in place for proper deliberation to occur, especially with such experienced board members as Ursula and John,” he said. He did not specify the proposals he opposed.

Uber had nine directors before Kalanick’s Friday appointments. The person familiar with the matter said that Kalanick acted after Khosrowshahi had outlined a plan to directors, which is scheduled to be voted on October 3, that would give him control of four board seats in addition to his own on a panel that now has 11 directors.

Khosrowshahi’s plan calls for transferring one of the two Kalanick-controlled positions to SoftBank Group Corp, which is considering an investment in Uber, the source said. Khosrowshahi effectively could put a person of his choosing in the other seat, as well as three other existing ones, according to the source. A third of directors also would be elected each year under the plan.

Uber did not respond on Saturday to a request to comment about the Khosrowshahi plan. But the company said earlier in a statement that Kalanick’s appointments were a “complete surprise” to Uber and its board. “That is precisely why we are working to put in place world-class governance to ensure that we are building a company every employee and shareholder can be proud of,” the statement said.

Yucaipa Companies managing partner Ron Burkle, an investor who has supported Kalanick, praised Burns and Thain as “smart, high-quality people.”

Division among Uber investors exploded in public in August, when Benchmark Capital filed a lawsuit to force Kalanick off the board and rescind his ability to fill two other seats on the panel, accusing him of concealing a range of misdeeds. Yucaipa and other Uber investors defended Kalanick and asked Benchmark to divest its own shares and step down from the board.

A Delaware judge later that month stayed the Benchmark lawsuit and sent it to arbitration, pushing the dispute out of public view and delivering Kalanick a victory.

Kalanick’s action on Friday could be subject to a new legal challenge. Benchmark or other Uber investors could attempt to block the appointments by asking the Delaware judge to issue a so-called “status-quo order.” The judge last month did not grant such a request.

Kalanick’s lawyer at the time told the court that Kalanick had not rushed to fill the seats. The New York Times also quoted Kalanick’s lawyer as telling the court Kalanick had the power to fill the seats under the pre-arbitration “status quo.”

Reporting by Liana B. Baker and Paresh Dave; Writing by Peter Henderson; Editing by David Gregorio and Lisa Shumaker

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/BVf0eIFTkco/ubers-kalanick-rekindles-power-struggle-names-two-to-board-idUSKCN1C500R

Qatar Airways expects Meridiana to be Italy’s ‘real’ national carrier

DOHA (Reuters) – Qatar Airways will back Meridiana to be Italy’s top airline, supplying it with wide and narrow bodied jets to help expand its network, the Middle East carrier’s chief executive said on Saturday.

Qatar Airways announced on Thursday it had acquired a 49 percent stake in Meridiana’s new parent AQA Holding, with previous sole owner Alisarda retaining 51 percent. [nL8N1M95QA]

Qatar Airways will “massively grow” the Italian airline, including a relaunch with new aircraft and new branding and an expansion of its European and international network, Chief Executive Akbar al-Baker told Reuters in Doha.

Meridiana, Italy’s second biggest airline, will “over the next six months” start taking delivery of widebody Boeing 787s or Airbus (AIR.PA) A330s, and narrowbody Boeing (BA.N) 737 MAXs ordered by Qatar Airways, he said.

He did not say how many aircraft Merdiana would take.

Qatar Airways has 26 A330 passenger jets in its fleet and 30 787s, with a further 30 787s on order, according to its website. It has also ordered 20 737 MAXs, and al-Baker said on Sept. 26 that the airline would confirm options for 40 more. [nL2N1M61P2]

The Middle East carrier made its third airline investment after more than a year of negotiations.

Contract terms for Meridiana employees, including salaries, benefits and working hours, were renegotiated as a condition of the deal, al-Baker said. He did not say how those terms had changed, but said the changes followed a “a very frank talk with the unions,” which had been “very accommodating.”

“They realized we are not going to just shrink the airline in the beginning, but that we are going to massively grow the carrier to become the real national carrier of Italy,” al-Baker said.

Italy’s number one airline Alitalia [CAITLA.UL] filed for administration in May after management was unable to reach an agreement with employees over its latest bailout plan. Minority owner Etihad Airways, a Middle East rival of Qatar Airways, subsequently said it would no longer financially support the Italian carrier.

Al-Baker said that Meridiana “should make sure that the Italian public is properly connected” as Alitalia goes through its bankruptcy proceedings.

State-owned Qatar Airways is also a minority shareholder in British Airways parent International Airlines Group (ICAG.L) (IAG) and South America’s LATAM Airlines LAN.SN.

Qatar Airways has previously expressed interest in Morocco’s Royal Air Maroc [RAM.UL], and al-Baker said it would soon apply to launch a domestic airline in India, which he has said would involve sovereign wealth fund the Qatar Investment Authority.

Reporting by Alexander Cornwell; Editing by Catherine Evans

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/Z1BJ-J3nU_g/qatar-airways-expects-meridiana-to-be-italys-real-national-carrier-idUSKCN1C50NT

Sears Canada asks court for more time to close deal with chairman

(Reuters) – Sears Canada Inc (SRSCQ.PK) said late on Friday that it has asked a court to extend creditor protection that expires on Wednesday by another month so it can finish negotiating a deal that would keep the iconic brand running in Canada.

The company, which in 2012 was spun off from U.S. retailer Sears Holdings Corp (SHLD.O), filed for creditor protection in June and laid out a restructuring plan that included cutting 2,900 jobs and closing roughly a quarter of its stores.

The company said late on Friday that it is in negotiations with its executive chairman Brandon Stranzl, who submitted a conditional bid on Aug. 31 that he amended last week.

The statement did not identify any other bidders.

Sears Canada also said it will ask the court to approve deals to sell assets from its trucking firm, S.L.H. Transport Inc, and home improvement units that provide duct cleaning, oil, and heating and cooling services.

The statement did not identify financial terms of the potential deals, which it said it hopes the Ontario Superior Court of Justice will approve on Wednesday.

Reporting by Jim Finkle in Toronto and Ahmed Farhatha in Bengaluru; Editing by Chizu Nomiyama

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/hbsP2JbOWKE/sears-canada-asks-court-for-more-time-to-close-deal-with-chairman-idUSKCN1C50HT

EU declines to rank rival bids for agencies leaving Britain over Brexit

BRUSSELS (Reuters) – The European Commission has shied away from ranking which cities should host Europe’s drugs regulator and banking authority after Brexit, saying the decision is up to the 27 member states which will remain.

The EU executive said its assessment, published on Saturday, was wholly based on the information provided by governments in their bidding war to host the two agencies, which will be forced to relocate from Britain when it leaves the bloc.

“It (the assessment) respects the member states’ decision that the criteria should be unweighted and does not provide a ranking or shortlist of any kind,” the Commission said in a statement.

Nineteen member states have bid to host the European Medical Agency (EMA) and eight want the European Banking Authority (EBA).

The final say on where to move the agencies rests with EU leaders who will try to reach a deal at their next summit in three weeks’ time, with a final decisions a month later.

Candidate cities will be appraised based on their ability to have an office ready in time, their accessibility, the quality of schools, healthcare and jobs for the families of staff, and how disruptive the move would be.

In their eagerness to host the agencies, some governments have offered tax breaks or rent-free headquarters for the EU institutions – a big break for the bloc’s budget.

However, the EU’s need to ensure business continuity could clash with another EU ambition – spreading the bloc’s agencies more evenly across Europe and giving newer, eastern member states a chance to catch up.

The EMA on Tuesday warned that it could lose more than 70 percent of its staff, making it unable to function, if politicians pick an unpopular base for the London-based agency once Britain leaves the European Union.

Amsterdam, Barcelona or Vienna were the top three choices of staff, according to a survey of around 900 of its workers. The Netherlands, Spain and Austria all already host one or more EU agencies.

The EMA has said it would take at least three years to recover fully from the disruption to its operations. It sees retaining staff as key to maintaining essential services such as new drug approval and monitoring side effects.

(This version of the story corrects paragraph 10 to show that all three countries, not cities, host EU agencies)

Reporting by Alissa de Carbonnel; Editing by Andrew Bolton

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/7YlXrc-4_Cc/eu-declines-to-rank-rival-bids-for-agencies-leaving-britain-over-brexit-idUSKCN1C50DB

When it comes to U.S. stocks, growth trumps quality

NEW YORK (Reuters) – U.S. investors are not rewarding companies for generating good earnings consistently, opting instead for a stockpicking strategy that might be called “growth at a high cost.”

High-quality stocks selected for their strong balance sheets and stable earnings have appreciated just 12 percent this year, according to Goldman Sachs Group Inc (GS.N), while the broader SP 500 .SPX benchmark index has returned 13.8 percent.

But investors cannot seem to stop throwing money at companies improving their sales fastest: a group of such equities tracked by Goldman Sachs has surged 20 percent. Put another way, discriminating investors who have chosen companies with stable earnings prospects are being punished.

This lagging interest in quality stocks has even whipsawed well-known fund managers; Whitney Tilson said this week he was shutting down his Kase Capital Management LLC hedge fund.

“Historically, I have invested in high-quality, safe stocks at good prices as well as lower-quality ones at distressed prices,” Tilson wrote to investors.

“Given the high prices and complacency that currently prevail in the market, however, my favorite safe stocks (like Berkshire Hathaway (BRKa.N) and Mondelez (MDLZ.O)) don’t feel cheap, and my favorite cheap stocks (like Hertz (HTZ.N) and Spirit Airlines (SAVE.O)) don’t feel safe. Hence, my decision to shut down.”

Yet some managers are betting that complacent markets could be shaken from their zombie-like slumber as easy monetary policy and its backdrop of lower interest rates comes to an end.

“In an environment like we’re in now – where no one really cares what things are worth – you may underperform, but over time reality will set in,” said Sean O‘Hara, director at Pacer Financial Inc. “It always does.”

REVERSAL OF STIMULUS

O‘Hara said quality investments underperform when investors are willing to buy stocks without regard to their value, and that markets have been supported by the U.S. Federal Reserve’s extraordinarily loose policies.

Earlier this month, the Fed, as expected, said it would begin to reverse some of those policies by gradually reducing its bond holdings.

Pacer Financial is one of a several investment firms betting that quality will matter again. Its “Cash Cows” ETFs buy companies with strong cash flows and healthy balance sheets.

Goldman Sachs’ global investment research unit included companies such as retailer Ross Stores Inc (ROST.O), pharmacist CVS Health Corp (CVS.N) and oil driller Schlumberger NV (SLB.N) in its high-quality group earlier this year.

Yet these companies have mostly not been star performers.

The market has been led by so-called “FANG” stocks – like Facebook Inc (FB.O), Amazon.com Inc (AMZN.O), Netflix Inc (NFLX.O) and Google parent Alphabet Inc (GOOGL.O) – and a small winner’s circle of lesser-known names like Celgene Corp (CELG.O) and Equinix Inc (EQIX.O).

These companies have all enjoyed robust sales growth in a U.S. economy that’s below its boiling point, even as many factors disqualify some of them as quality stocks. Netflix has had 12 straight quarters of negative free cash flow, and the company warned it may not see positive free cash flow “for many years” as it invests in original content like the science-fiction drama “Stranger Things.”

Still, its subscriber growth continues to exceed estimates, and the stock has rocketed more than 45 percent this year.

LUXURY OF GROWTH

Investors are paying a premium for the luxury of revenue growth: $24 for every dollar of earnings per share anticipated over the next 12 months, compared to $20 for quality names and $13 for high adjusted free-cash-flow yield equities, according to Goldman Sachs data.

Raffaele Savi, a portfolio manager for BlackRock Inc’s (BLK.N) $647 million Global Long/Short Equity Fund (BDMAX.O), said strong revenue growth is “more rare than at many points in the past,” given U.S. gross domestic product growth averaging around 2 percent annually. The fund’s recent performance commentary said investors have been shunning company fundamentals.

With the Fed’s interest-rate hiking cycle taking hold, investors are bracing for market dynamics to change.

“When you see these huge headlines on big investors and hedge funds throwing in the towel because they can’t make sense of the market, that is a sign that things are about to turn,” said Guggenheim Partners LLC global chief investment officer Scott Minerd.

Part of the reason quality does not work as well as it once did may be that more assets follow “quantitative” funds that rely on the same statistics measuring quality, said Brian Hayes, equity strategist at Morgan Stanley Co LLC (MS.N).

Plus, it’s harder for investors to assess what an earnings report is saying. Technology giants, for instance, derive more of their worth these days from services, patents and brand value, intangibles that can be hard to value.

Editing by Jennifer Ablan and Bernadette Baum

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/qAAZLp-O5yY/when-it-comes-to-u-s-stocks-growth-trumps-quality-idUSKCN1C42A4

Citigroup to settle dispute with Lehman Brothers for $1.74 billion: Bloomberg

(Reuters) – Citigroup Inc (C.N) and Lehman Brothers Holdings Inc resolved a fight over $2.1 billion that dates to the financial crisis era after Citigroup agreed to give back $1.74 billion to the estate of the investment bank, according to Bloomberg.

Citigroup had kept about $2.1 billion that Lehman had on deposit with it for trades following the Lehman bankruptcy, Bloomberg said.

The dispute arose because Citigroup said it was owed $2 billion as a result of Lehman’s bankruptcy, while Lehman argued that the money should go to its creditors, Bloomberg said.

Lehman Brothers Managing Director Steven Mullaney said in court papers that the pact was “reasonable in light of the complexities of the litigation,” according to Bloomberg.

Reuters was not able to get a comment from Citigroup or Lehman Brothers outside business hours.

Reporting by Mekhla Raina in Bengaluru; Editing by Richard Pullin

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/YgGmuoi7-H0/citigroup-to-settle-dispute-with-lehman-brothers-for-1-74-billion-bloomberg-idUSKCN1C503M

Uber’s Kalanick reignites power struggle, names two to board

SAN FRANCISCO (Reuters) – Uber Technologies Inc [UBER.UL] co-founder Travis Kalanick on Friday said he had appointed two new directors, a surprise move that publicly reignited a board battle over the role of the ousted former chief executive.

Uber investors are divided over whether Kalanick, who was pressured to step down as CEO earlier this year in the wake of several company scandals, should himself be on the board and whether he can name two other directors.

The company and new Chief Executive Dara Khosrowshahi are scrambling to portray Uber as a reformed company that is responding to concerns including sexual harassment claims and a U.S. bribery probe.

Kalanick, still one of the largest shareholders, said in a statement he had appointed former Xerox Chief Executive Ursula Burns and former Merrill Lynch Chief Executive John Thain as directors.

“I am appointing these seats now in light of a recent board proposal to dramatically restructure the board and significantly alter the company’s voting rights. It is therefore essential that the full board be in place for proper deliberation to occur, especially with such experienced board members as Ursula and John,” he said. He did not specify the proposals he opposed.

The appointments were a ”complete surprise“ to Uber and its board, the company said in a statement. ”That is precisely why we are working to put in place world-class governance to ensure that we are building a company every employee and shareholder can be proud of,” it added.

An investor who has supported Kalanick, Yucaipa Companies managing partner Ron Burkle, praised the appointments on Friday, calling Burns and Thain “smart, high-quality people.”

Division among Uber investors exploded in public in August, when Benchmark Capital filed a lawsuit to force Kalanick off the board and rescind his ability to fill two other seats on the panel, accusing him of concealing a range of misdeeds. Yucaipa and other Uber investors defended Kalanick and asked Benchmark to divest its own shares and step down from the board.

A Delaware judge later that month stayed the Benchmark lawsuit and sent it to arbitration, pushing the dispute out of public view and delivering Kalanick a victory.

Kalanick’s action on Friday could be subject to a new legal challenge. Benchmark or other Uber investors could attempt to block the appointments by asking the Delaware judge to issue a so-called “status-quo order.” The judge last month did not grant such a request.

Kalanick’s lawyer at the time told the court that Kalanick had not rushed to fill the seats. The New York Times also quoted Kalanick’s lawyer as telling the court Kalanick had the power to fill the seats under the pre-arbitration “status quo.”

Benchmark did not immediately respond to a request for comment.

Reporting by Liana B. Baker and Paresh Dave; Writing by Peter Henderson; Editing by David Gregorio and Lisa Shumaker

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/NAm7QAJrTug/ubers-kalanick-reignites-power-struggle-names-two-to-board-idUSKCN1C500R

U.S. fines HSBC $175 million for lax forex trading oversight

WASHINGTON (Reuters) – The U.S. Federal Reserve fined HSBC Holdings PLC (HSBA.L) $175 million on Friday for “unsafe and unsound practices” in its foreign exchange trading business, the latest in a series of fines for banks that fail to prevent market manipulation.

HSBC failed to monitor chat rooms where traders swapped information about investment positions, the U.S. central bank said, echoing findings by other regulators investigating the $5 trillion-a-day foreign exchange or FX market.

“The board levied the fine for deficiencies in HSBC’s oversight of and internal controls over FX traders,” the Fed said in a statement.

The fine follows others of more than $4.3 billion levied by the U.S. Commodity Futures Trading Commission and Britain’s Financial Conduct Authority on six banks including HSBC in November 2014.

“We are pleased to have resolved this matter related to practices in the FX market from 2008-2013,” said company spokesman Rob Sherman.

Authorities accused HSBC dealers of sharing confidential information about client orders and coordinating trades to boost their own profits. The foreign exchange benchmark they allegedly manipulated is used by asset managers and corporate treasurers to value their holdings.

The Fed’s enforcement action also requires HSBC to improve its controls and compliance risk management concerning the firm’s FX trading, the Fed said.

Reporting by Patrick Rucker; additional reporting by Lawrence White in London; Editing by Elaine Hardcastle and Tom Brown

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/VVmgHGL-ogk/u-s-fines-hsbc-175-million-for-lax-forex-trading-oversight-idUSKCN1C4283

S&P 500, Nasdaq hit records on tech lift

(Reuters) – The SP 500 and the Nasdaq advanced to record levels on Friday, buoyed by gains in technology stocks, while each of the major indexes closed out the quarter with solid gains.

Technology .SPLRCT was the best performing of the major SP sectors, up 0.75 percent, its fourth straight day of gains to recover from a selloff earlier in the week.

The SP and Nasdaq closed at records for the third straight day and the benchmark SP index posted its sixth straight month of gains.

“It really sums up kind of what we saw all month and all quarter, another calm day,” said Ryan Detrick, senior market strategist at LPL Financial in Charlotte, North Carolina.

“This is one of the least volatile Septembers in history, it is kind of a continuation of that real dull trading with a nice upward bias.”

For September, the Dow gained 2.1 percent, the SP rose 1.9 percent and the Nasdaq advanced 1.05 percent.

Facebook’s (FB.O) 1.23-percent gain provided the biggest lift to both the Nasdaq and the SP to help pace the advance.

Financials received a brief lift and hit their session high after reports President Donald Trump’s met with former Federal Reserve Governor Kevin Warsh to discuss his potential nomination as Fed chairman. The sector was up 0.34 percent.

Trump later said he has had four meetings in his search for a new chairman of the Federal Reserve Board and will decide in two or three weeks.

“Rates and equities have priced in the current Fed regime continuing, which is a relatively sanguine path for the economy,” said Shehriyar Antia, chief market strategist at Macro Insight Group in New York.  

“Any deviation from that path – or the suggestion that Yellen may not be re-appointed – causes the market to reconsider this presumption and reprice valuations.”

Rising expectations for another interest rate hike by the year-end and Trump’s tax-cut plan have dominated markets for most of the week.

Data on Friday showed U.S. consumer spending barely rose in August but the report did little to change expectations that the central bank would raise interest rates again in December.

Another report showed the Chicago purchasing management index, which gauges factory activity, came in better than expected for September.

The Dow Jones Industrial Average .DJI rose 23.89 points, or 0.11 percent, to 22,405.09, the SP 500 .SPX gained 9.3 points, or 0.37 percent, to 2,519.36 and the Nasdaq Composite .IXIC added 42.51 points, or 0.66 percent, to 6,495.96.

The SP and the Dow recorded eight straight quarters of gains, the Nasdaq five. The Dow climbed 4.9 percent for the third quarter, the SP advanced 4 percent and the Nasdaq gained 5.8 percent.

Meat processor Tyson Foods (TSN.N) jumped 7.64 percent after the company raised its full-year profit forecast. The stock was the biggest gainer on the SP.

Advancing issues outnumbered declining ones on the NYSE by a 1.50-to-1 ratio; on Nasdaq, a 1.35-to-1 ratio favored advancers.

About 6.01 billion shares changed hands in U.S. exchanges, compared with the 6.25 billion daily average over the last 20 sessions.

Additional Reporting by Rodrigo Campos; Editing by Nick Zieminski

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/gHO5LU1S90s/sp-500-nasdaq-hit-records-on-tech-lift-idUSKCN1C41OJ