News Archive


Logistics leader Prologis to acquire DCT Industrial for $8.4 billion

NEW YORK (Reuters) – Prologis Inc (PLD.N) (PLD.N), a logistics company with a global footprint, will acquire smaller U.S. rival DCT Industrial Trust Inc (DCT.N) in an $8.4 billion all-stock transaction, including the assumption of debt, the two companies said on Sunday.

FILE PHOTO: A general view of the main entrance of Prologis logistics complex which Amazon.com Inc is planning to rent in Cajamar, Brazil February 2, 2018. REUTERS/Gabriela Mello

The acquisition will deepen Prologis’ presence in high-growth markets including Southern California, the San Francisco Bay Area, New York, New Jersey, Seattle and South Florida, the companies said in a statement.

DCT shareholders will receive 1.02 Prologis shares for every DCT share they own. The transaction is expected to close in the third quarter and is subject to the approval of DCT stockholders, among other customary conditions, they said.

The board of directors of both companies unanimously approved the transaction, which is expected to create near-term savings of about $80 million, the statement said.

The deal is the largest for Prologis since it merged with AMB Property Corp in 2011 in an $8.7 billion transaction.

Prologis owned or managed more than 3,200 properties worldwide as of Dec. 31 and leased facilities to about 5,000 customers, the largest being Amazon.com followed by DHL. Seventy percent of its business is U.S. based.

Reporting by Herbert Lash; Editing by Peter Cooney and Daniel Wallis

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Walmart attempts international turnaround with UK, India tie-ups

NEW YORK (Reuters) – Walmart Inc’s (WMT.N) urgency to stem market share losses to rivals around the world is driving it to partner with local players in the UK and India, even as it scales back in some other markets like Brazil.

FILE PHOTO: A Walmart store is seen in Encinitas, California, U.S. on April 13, 2016. REUTERS/Mike Blake/File Photo

The world’s largest retailer is in talks to merge its UK arm ASDA with J Sainsbury Plc (SBRY.L) in which it will hold a minority stake. Walmart is also looking to acquire a majority stake in India’s leading online retailer Flipkart for $10 billion to $12 billion after years of underperformance there.

The moves underscore Walmart’s renewed focus on catching up with competitors, ranging from grocer Aldi Inc to Amazon.com Inc (AMZN.O), in key international markets. The retailer’s underperforming international business contributed less than a quarter to its total revenue of $500.3 billion in fiscal 2018.

“Walmart has simply been too slow to react when it comes to their overseas business,” said Burt Flickinger, managing director, Strategic Resource Group. “They have finally started taking corrective action and are now dedicating their resources to where they think they can grow,” he said.

It also marks a shift in Walmart’s traditional approach of building a business on its own.

“Walmart is clearly moving away from trying to crack tough foreign markets by itself to striking partnerships because it realizes that is the fastest way to bridge the gap with competitors,” said Laura Kennedy, vice president, retail sales and shopper practice at Kantar Consulting.

A Walmart spokesman declined to comment on the negotiations in the UK and India.

Overall, sales from Walmart International, which runs about 6,300 stores globally, stood at $118.07 billion in the fiscal year ended 2018, down nearly 14 percent from $136.5 billion in 2014. This was in large part due to adverse currency movements, which hurt the money repatriated from its foreign arms, but also because of a series of missteps in major markets around the world. In an effort to fix its international performance, Walmart in January appointed Chief Operating Officer Judith McKenna to run its international unit and has indicated it will focus on its core North American markets and growth markets like China and India.

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Walmart’s international woes have been exacerbated by slow decision-making over the years and even initial talks with India’s Flipkart began as far back as 2016. [reut.rs/2HYwFE3]

Walmart initially entered the Indian market in 2007 through a joint venture with India’s Bharti Enterprises, years before Amazon debuted there. That joint venture was called off in 2013 and its presence in India has remained largely static since then, at least in part due to restrictions around foreign investment in physical retail in India. [reut.rs/2HBgJbs] [reut.rs/2vRkrIC]

Meanwhile, Amazon jumped in with a less regulated online marketplace offering, retail consultants and investors said. Amazon now holds about 27 percent of India’s burgeoning e-commerce market, according to Euromonitor, where Walmart remains a footnote and only operates 21 cash-and-carry wholesale stores in the country that sell to businesses.

Walmart’s slow-footedness means if a deal is announced, Flipkart could be Walmart’s largest acquisition to date, potentially at a steep premium to what SoftBank Group (9984.T) paid for a stake in the company less than a year ago.

INTERNATIONAL BLUNDERS

Walmart’s international moves over the years have involved a series of blunders.

For example, Walmart bet on an unprofitable, second-tier online retailer in China in 2011 and has since been behind Alibaba Group Holding Ltd (BABA.N). In 2016, Walmart sold its online business in China to pick up a stake in China’s no 2 retailer JD.com.

In Brazil, Walmart has struggled to gain traction after a decade, while in the United Kingdom it has been unable to stem market share declines to hard discounters like Aldi Inc and Lidl.

Now, Walmart is trying to offload a majority stake in its Brazilian operations to private equity firm Advent International. And on Saturday, Sainsbury said it and Walmart’s British unit Asda are in talks to create the country’s biggest supermarket group.

Their combination, which some said shows Walmart’s retrenching in the market, would surpass Tesco’s (TSCO.L) grocery market share and be worth up to 15 billion pounds ($20.7 billion).

Whether Walmart’s latest moves will turn Walmart International into the growth engine it once was remains to be seen, consultants said. For now at least, investors have largely supported the decisions to jumpstart global growth made by Chief Executive Doug McMillon as exemplified by the market reaction to the talks in India.

“In the short term, the Flipkart deal may look pricey, but the markets haven’t punished Walmart because investors realize this is probably their best chance to have a fair fight with Amazon in India,” Ken Murphy, portfolio manager at Aberdeen Standard Investments, said.

Walmart’s shares fell 20 percent from an all-time high in January largely due to concerns around its online performance in the United States. They have, however, risen 27 percent in the past year, outperforming the wider SP 500 index, which rose 12 percent during the same period.

Reporting by Nandita Bose in New York, Editing by Vanessa O’Connell and Cynthia Osterman

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Saudi Aramco appoints first woman to the board

DUBAI (Reuters) – Saudi Aramco, the world’s top oil company which is preparing to go public, said on Sunday it has appointed new members to its board including a female executive, a milestone for Saudi Arabia and the oil industry where there are few women executives.

FILE PHOTO: A Saudi Aramco employee sits in the area of its stand at the Middle East Petrotech 2016, an exhibition and conference for the refining and petrochemical industries, in Manama, Bahrain, September 27, 2016. REUTERS/Hamad I Mohammed/File Photo

The appointments, which bring in more international experience, come as the Saudi government plans to float around 5 percent of Aramco in an initial public offering (IPO) – the world’s largest – later this year or early 2019.

Saudi Arabian Minister of Finance Mohammed al-Jadaan and Minister of Economy and Planning Mohammed al-Tuwaijri were appointed as members of the board of directors, Aramco said in a statement.

They are joined by Lynn Laverty Elsenhans, the former chairwoman, president and CEO of U.S. oil refiner Sunoco Inc. (SUN.N) from 2008 to 2012.

Other new members also include Peter Cella, former president CEO of Chevron Philips Chemical Co. LP, and Andrew Liveris, director of DowDuPont Inc, and the CEO of the Dow Chemical Company. Liveris’s appointment is effective as of July 1, Aramco said.

The five new members of Aramco’s board will join six returning members including Saudi Energy Minister Khalid al-Falih, who is also Aramco’s chairman, and Amin Nasser, Aramco’s CEO. Minister of State Ibrahim al-Assaf and Managing Director of the government-owned Public Investment Fund (PIF) Yasir al-Rumayyan also remain on the board.

The outgoing board members are Majid Al-Moneef, advisor to the Saudi Royal Court; Khaled al-Sultan, Rector of King Fahd University of Petroleum and Minerals; and Peter Woicke, former managing director of the World Bank and former vice president of the International Finance Corporation.

Appointment decisions to the new 11-member board of directors are made by the Saudi government.

FIRST WOMAN ON BOARD

Elsenhans was named by Forbes as one of the world’s most powerful women in 2008. Prior to her role at Sunoco, Elsenhans was the executive vice president of global manufacturing for Royal Dutch Shell (RDSa.L), where she worked for more than 28 years.

She also served on Baker Hughes’s board of directors from 2012 to July 2017 and sits on the board of GlaxoSmithKline (GSK.L).

Only a handful of Saudi women are appointed to the board of major Saudi companies but that is slowly changing in the conservative kingdom, where women are subject to a male guardianship system which in many cases restricts their opportunities to work.

Last year, the Saudi Stock Exchange appointed Sarah Al-Suhaimi, as its first female chair. She was the first woman to chair a major government financial institution in the kingdom.

In 2004, Lubna Olayan became the first woman to be elected to the board of Saudi Hollandi Bank, now called Alawwal Bank 1040.SE. In 2006, Lubna was one of four new appointments by PIF to the board of Ma’aden 1211.SE, the Gulf’s largest miner.

The Olayan family controls one of Saudi Arabia’s largest conglomerates.

Reporting by Rania El Gamal; editing by Ghaida Ghantous and Elaine Hardcastle

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China eases restrictions on foreign ownership of securities ventures

BEIJING (Reuters) – China’s securities regulator has released new guidelines for foreign investment in Chinese security joint ventures in which it eased some restrictions and launched an application process for more foreign ownership.

Investors look at an electronic board showing stock information at a brokerage house in Shanghai, China, March 7, 2016. REUTERS/Aly Song/File Photo

The consultation period for the new rules that began in March is now over and the final regulations have been officially released for immediate implementation, the regulator said in an announcement on its website late on Saturday.

During the review, restrictions limiting single foreign investors to a 30 percent stake in securities ventures, either directly or via a partner, were removed, according to the state-backed China Securities newspaper.

Foreign bankers had expressed concern over this particular restriction, saying it might have required Western banks to include a third partner in deals which might stymie broadening international participation in China’s domestic securities markets.

Foreign firms that wish to make changes to their equity ownership in local securities joint ventures or that wish to establish a new joint venture can now apply to the regulator, it said in a question-and-answer published online.

The move is one part of China’s pledge to ease foreign ownership curbs to allow major international banks to bolster their presence in the securities business – from underwriting to trading – in the world’s second-largest economy.

Previously, Western banks could only own up to 49 percent of their Chinese securities joint ventures. That lack of control and limited contribution to revenue have long been a source of frustration.

The regulator also said that applications for owning up to 51 percent of local fund management companies are already being accepted, though added that this was unrelated to the changes in securities guidelines.

It was unclear from the statement whether such applications are currently being accepted for all different types of Chinese fund management companies.

Peter Alexander, director of Z-Ben Advisors, a Shanghai-based consultancy, said that Chinese policy makers have been signaling that the fund management policy change would come for over year, but global managers may not be prepared.

“What we have is only a move in policy. There is now the commercial task of actually buying a controlling stake and that task will neither be easy nor cheap,” he said.

Reporting by Christian Shepherd and Matthew MillerEditing by Christopher Cushing

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Ex-Wynn Resorts CEO files defamation lawsuit against former employee

(Reuters) – Steve Wynn, who resigned in February as chief executive of Wynn Resorts Ltd (WYNN.O) following allegations of sexual misconduct, has filed a defamation lawsuit against a former employee of the casino company, the Wall Street Journal reported on Saturday.

FILE PHOTO: Steve Wynn, Chairman and CEO of Wynn Resorts, speaks during the Milken Institute Global Conference in Beverly Hills, California, U.S., May 3, 2017. REUTERS/Mike Blake/File Photo

The lawsuit, filed last week in Nevada state court, charges that Jorgen Nielsen, a former artistic director at the Wynn Las Vegas salon, made “false and defamatory” statements to the Wall Street Journal and ABC News, according to the report.

Reuters was not able to reach Nielsen for comment.

The Wall Street Journal reported that Nielsen said he was unaware of the lawsuit and had declined to further comment.

The sexual misconduct allegations against Wynn surfaced in a January Wall Street Journal article. Nielsen was one of the sources the newspaper identified by name.

Reuters has not independently verified the allegations against Wynn.

Wynn, 76, has denied the accusations as “preposterous.” The billionaire divested himself of his entire 11.8 percent stake in Wynn Resorts in March.

Reporting by Jim Finkle; Editing by Susan Thomas

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Canadian exchange operator TMX blames hardware failure for outage

TORONTO (Reuters) – Canada’s largest stock exchange operator said on Saturday that the failure of data storage equipment caused an outage that shut down the world’s sixth-largest stock market for several hours on Friday afternoon.

A darkened television studio is seen at the offices of TMX Group, which operates the Toronto Stock Exchange, after the company announced it was shutting down all markets for the rest of the day after experiencing issues with trading on all its exchange platforms in Toronto, Ontario, Canada April 27, 2018. REUTERS/Chris Helgren

TMX Group Ltd (X.TO), which operates the Toronto Stock Exchange and smaller Canadian trading platforms, said it had fixed the error.

“All systems are ready for the start of business on Monday,” TMX said in a statement.

The outage drew concern from investors and financial institutions in Canada and around the globe because such shutdowns are relatively rare. When technical glitches occur, exchanges typically quickly switch over to back-up systems to prevent interruptions in trading.

In this case, a failure in a central storage appliance linked to both primary and redundant systems prevented fail over procedures from engaging, TMX said in its statement.

The company replaced a defective storage module, verified the integrity of data of all impacted databases and conducted a successful start-up validation of the entire trading system, TMX said.

The statement did not identify the vendor of the equipment that failed, though it said the outage was not the result of a cyber attack.

Canada’s last major trading outage occurred nearly a decade ago, when a system fault linked to data feeds shut down trading for a full day in 2008, including on the small-cap TSX Venture Exchange.

Reporting by Jim Finkle in Toronto; Editing by Susan Thomas

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Outrage breaks out after Whole Foods partners with Yellow Fever eatery

LOS ANGELES (Reuters) – Amazon.com’s Whole Foods Market sparked social media outrage after its newest store in its 365 grocery chain partnered with an Asian restaurant with the racially charged name of Yellow Fever.

A Whole Foods Market store is seen in Santa Monica, California, U.S. March 19, 2018. REUTERS/Lucy Nicholson

The independently owned and operated eatery – whose name is taken from the slang term for a white man’s sexual attraction to Asian women – is located in the 365 store that opened in Long Beach, California, on Wednesday.

“An Asian ‘bowl’ resto called YELLOW FEVER in the middle of whitest Whole Foods — is this taking back of a racist image or colonized mind?” Columbia University professor and author Marie Myung-Ok Lee, wrote on Twitter.

Whole Foods, which has eight stores in its 365 chain that was launched with a no-frills concept to win over millennials, declined comment.

“Yellow Fever celebrates all things Asian: the food, the culture and the people and our menu reflects that featuring cuisine from Korea, Japan, China, Vietnam, Thailand and Hawaii,” said Kelly Kim, executive chef and co-founder of Yellow Fever, which also operates two Los Angeles-area restaurants.

“We have been a proud Asian, female-owned business since our founding over four and a half years ago in Torrance, California.”

Kim, who is Korean-American, in previous interviews said she was aware that the name choice would be attention-getting and controversial.

“One night, we just said ‘Yellow Fever!’ and it worked. It’s tongue-in-cheek, kind of shocking, and it’s not exclusive — you can fit all Asian cultures under one roof with a name like this. We just decided to go for it,” Kim told Asian American news site NextShark six months ago.

A year ago she told the Argonaut, a local Los Angeles news outlet, that Yellow Fever means “love of all things Asian” and that public push back over the name had not been as drastic as expected.

Some people on social media defended the news of the partnership with Whole Foods as part of a broader cultural trend.

“This is no more offensive than @abc naming an Asian sitcom Fresh of the Boat or FOB- which is considered racists [sic],” wrote Lorin Hart, who uses the Twitter handle @CubeProMH.

Reporting by Lisa Baertlein in Los Angeles; Editing by Marguerita Choy

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Sainsbury’s, Walmart’s Asda to create UK supermarket powerhouse

LONDON (Reuters) – Sainsbury’s and Walmart’s Asda are in talks to create Britain’s biggest supermarket group, a combination which would surpass Tesco’s grocery market share and be worth up to 15 billion pounds ($20.7 billion).

FILE PHOTO: A Sainsbury’s worker stacks a vegetable shelf in a store in Redhill, Britain, March 27, 2018. REUTERS/Peter Nicholls

Sainsbury’s confirmed on Saturday that it and Walmart, the world’s largest retailer, were in advanced discussions regarding a combination of the Sainsbury’s and Asda businesses, the UK’s No. 2 and 3 UK grocers. It said they will make a further announcement at 0600 GMT on Monday.

Britain’s big grocers, including No. 4 player Morrisons, have been losing share to German discounters Aldi and Lidl and must also deal with growing demand for internet grocery shopping and the march of Amazon.

Sainsbury’s gave no details of the deal’s structure but a source with knowledge of the situation told Reuters the holding company of the combined group would retain the Sainsbury’s name. Sainsbury’s Chief Executive Mike Coupe, who used to work for Asda, would lead it, the source said.

The source described the planned deal — which would consolidate a brutally competitive UK food market while helping Walmart address its underperforming UK arm through greater buying power — as a “merger”.

Three sources with knowledge of the situation said Walmart would take a minority stake in the combined business. Two said Walmart would be the biggest shareholder, with a stake of around 40 percent.

The Qatar Investment Authority, which has tried to buy Sainsbury’s in the past, is currently the supermarket group’s biggest shareholder with a 22 percent stake. The deal would probably dilute that holding.

Sainsbury’s invited media and analysts to presentations scheduled for Monday, indicating a done deal.

Walmart declined to comment. Asda did not respond to requests for comment.

Sky News, which first reported the news, said the deal could be worth over 10 billion pounds.

One of the sources who spoke to Reuters said the combined company would have an enterprise value, including debt, of around 15 billion pounds and would remain listed in London.

Sainsbury’s shares closed on Friday at 269 pence, giving the company an equity value of 6 billion pounds.

The deal would be the largest in the UK supermarket sector since Morrisons acquired the Safeway business in 2004.

FILE PHOTO: An ASDA employee walks beneath a company logo outside a store in Manchester, northern England, July 8 , 2016. REUTERS/Phil Noble/File Photo

PROFIT DECLINE

Sainsbury’s has reported three straight years of profit decline, and is forecast to report a fourth on Wednesday. Asda has seen two years of falls.

Asda, which Walmart bought in 1999 for 6.7 billion pounds, is one of the retail giant’s largest and worst-performing international businesses. Analysts reckon Asda was hurt the most by the rise of the discounters, which eroded its traditional price advantage.

“Asda doesn’t have discount and it doesn’t have convenience. This (deal) provides a potential solution for Walmart to deliver a more profitable Asda in the long run,” said Shore Capital analyst Clive Black.

In recent years Walmart has shifted its traditional approach from building overseas businesses itself to partnering with local players, for example in China.

In January, Walmart appointed Chief Operating Officer Judith McKenna to run its international unit with a remit that included fixing its UK operations. McKenna is a Briton and a veteran of Asda, where she served as both COO and finance chief.

Roger Burnley, who took over as Asda CEO in January, is a former Sainsbury’s executive, working under Coupe. One of the sources said he would stay at the combined group.

Tesco last month moved to strengthen its grip on the UK food sector, completing the 4 billion-pound purchase of wholesaler Booker. In 2016 Sainsbury’s purchased general merchandise retailer Argos for 1.1 billion pounds.

Sainsbury’s and the similarly-sized Asda would overtake Tesco with a combined market share of 31.4 percent versus Tesco’s 27.6 percent, according to the latest data from market researcher Kantar Worldpanel.

Asda stores would continue to trade under their own brand, separate from the more upmarket Sainsbury’s, the sources said.

REGULATORY HURDLES

A major uncertainty surrounding any combination would be whether the move secures approval from Britain’s competition regulator, the Competition and Markets Authority (CMA), given that the deal would effectively create a duopoly.

However, the CMA’s surprise unconditional waving through of Tesco’s Booker deal may have changed the regulatory landscape.

“It’s going to be a really big test of the CMA’s understanding of the market and whether it believes that this deal is in the consumer’s interest,” said Shore Capital’s Black.

“It’s hard to believe it would not require considerable store disposals and there aren’t many buyers out there.”

Additional reporting by Nandita Bose in New York; Editing by Georgina Prodhan and Catherine Evans

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Russia gives tentative nod to Schlumberger’s acquisition of EDC stake

MOSCOW (Reuters) – Russia has given preliminary approval to a bid by U.S. oilfield services giant Schlumberger to acquire up to 49 percent of Russia’s Eurasia Drilling Co (EDC), an unexpected decision given a chilling in U.S.-Russian relations.

FILE PHOTO: The exterior of the Schlumberger Corporation headquarters building is pictured in the Galleria area of Houston, Texas, U.S., January 16, 2015. REUTERS/Richard Carson/File Photo

Washington has introduced a number of sanctions, including restrictions on financing for Russian companies over Moscow’s role in Ukraine’s crisis and alleged meddling in the U.S. 2016 presidential election.

RIA news agency cited Igor Artemyev, head of Russia’s anti-monopoly body (FAS), as saying the regulator would quickly start talks with Schlumberger, the largest oilfield services company by revenue.

“We (will) immediately start the talks with Schlumberger and hope that we are moving to the final stretch,” he was quoted by RIA as saying after a Russian government meeting on foreign investments.

The FAS said later on Saturday that the government investment commission had decided to extend the time frame for examining the deal, but it was not immediately clear how long that could take.

Schlumberger had initially planned to buy 51 percent in EDC, but decided to scale down its bid. The deal has faced difficulties as relations between Russia and the United States have deteriorated.

This is a second attempt by Schlumberger to acquire Russia’s leading oilfield services provider. In 2015, Schlumberger agreed to buy 45.65 percent of EDC for $1.7 billion, but the deal fell through after the FAS repeatedly postponed its approval. Later that year, EDC delisted its shares on the London Stock Exchange.

For Schlumberger, the investment would mean access to the Russian oil market, one of the world’s largest, at a time of rising crude prices.

Reporting by Vladimir Soldatkin; Additional reporting by Maxim Rodionov; Editing by Helen Popper

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