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Saudi shelves $200 billion SoftBank Solar project: WSJ

(Reuters) – Saudi Arabia has shelved a $200 billion plan with SoftBank Group Corp (9984.T) to build the world’s biggest solar-power-generation project, the Wall Street journal reported on Sunday, citing Saudi government officials.

No one is actively working on the project, and instead, the Saudi kingdom is working up a broader, more practical strategy to boost renewable energy, to be announced in late October, the WSJ reported

SoftBank Chief Executive Masayoshi Son had announced in March a plan to invest in creating the world’s biggest solar power project in Saudi Arabia, a project expected to have the capacity to produce up to 200 gigawatts (GW) by 2030.

Softbank declined to comment.

Reporting by Ismail Shakil in Bengaluru and Tom Arnold in Dubai. Editing by Jane Merriman

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Trump to be briefed on NAFTA talks progress on Sunday: U.S. source

WASHINGTON (Reuters) – U.S. Trade Representative Robert Lighthizer and White House adviser Jared Kushner planned to brief President Donald Trump on Sunday on progress in talks between Canadian and U.S. officials on NAFTA, a U.S. source familiar with the discussions said.

Lighthizer and Kushner have been briefing Trump through the weekend on the intense bilateral negotiations on updating the North American Free Trade Agreement, said the source, who was not authorized to speak about the talks publicly.

Reporting by Roberta Rampton; Editing by Lisa Shumaker

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Germany’s Thyssenkrupp ends leadership vacuum, paves way for split

ESSEN/DUESSELDORF (Reuters) – Thyssenkrupp (TKAG.DE) acted to end its leadership and strategy crisis on Sunday, as its supervisory board filled its two top management posts and approved plans to split the German conglomerate in two.

The move follows months of turmoil at the elevators-to-submarines group, including a profit warning and pressure from activist shareholders Cevian and Elliott, and paves the way for the company’s largest restructuring in decades.

Bernhard Pellens, a member of Thyssenkrupp’s supervisory board since 2005, was unanimously appointed as new chairman to replace Ulrich Lehner, who left the group in July less than two weeks after CEO Heinrich Hiesinger quit.

Guido Kerkhoff, 50, was appointed CEO on a five-year contract, Thyssenkrupp said, confirming him in a role he had been filling on an acting basis since Hiesinger’s resignation.

“I would like to thank the supervisory board for the confidence and the clear support it has given to the planned new set-up of Thyssenkrupp proposed by the executive board,” Kerkhoff said in a statement.

“Our solution is responsible and equally serves the interests of employees, customers and shareholders. We will now decisively start implementation.”

Under the planned structure, Thyssenkrupp will spin off its capital goods business – elevators, car parts and plant engineering – into a separate listed entity called Thyssenkrupp Industrials.

Materials trading, shipbuilding and the group’s 50 percent stake in a planned joint steel venture with Tata Steel (TISC.NS) will remain part of Thyssenkrupp, which will be renamed Thyssenkrupp Materials.

Reuters was first to report last Thursday that Thyssenkrupp was considering a major overhaul, including a separation of business units.

Based on pro-forma figures for 2016/17, Thyssenkrupp Industrials had adjusted earnings before interest and taxation of 1.2 billion euros ($1.4 billion), while Thyssenkrupp Materials made 550 million euros, according to investor slides published on Sunday.


Thyssenkrupp Materials will initially hold a minority stake in Thyssenkrupp Industrials, which it will sell down completely at some point, the charts showed.

A framework deal between management and labor representatives rules our forced layoffs, supervisory board member Susanne Herberger told Reuters.

Approval for the landmark move, announced by the company later on Thursday, was widely expected after it was backed by the Alfried Krupp von Bohlen und Halbach foundation and Cevian, Thyssenkrupp’s two largest shareholders, and labor representatives.

The three parties account for 13 seats of the 20-member board, where two seats are vacant after the departure of Lehner and former Deutsche Telekom (DTEGn.DE) Chief Executive Rene Obermann.

The supervisory board’s nomination committee will continue its search to fill the two vacancies. Sources have told Reuters that Cevian, already represented by Jens Tischendorf, was looking to take a second board seat.

“With the new set-up, Thyssenkrupp is taking a courageous step forward. Thyssenkrupp now has a convincing plan to bring businesses closer to their customers and increase their performance,” Pellens, 62, said.

A professor of business administration and international accounting at the Ruhr University Bochum and honorary professor at Tongji University Shanghai, Pellens also serves as the chairman of the board’s audit committee.

Ingo Speich, fund manager at Thyssenkrupp shareholder Union Investment, cautioned that Pellens’ board membership should not exceed 15 years, 13 of which have already passed.

“Pellens may be acceptable as supervisory board chairman given the difficult circumstances and the fact that some candidates turned down the job. But he has never led a company and, therefore, can only be an interim candidate,” Speich said.

Cevian’s Tischendorf was also appointed to the audit committee, a person familiar with the matter said.

Ursula Gather, head of the Krupp foundation, Thyssenkrupp’s largest shareholder, welcomed the appointments of Kerkhoff and Pellens. She added that Pellens had successfully supported and shaped many strategic decisions during his time on the board.

Editing by Douglas Busvine, Jane Merriman and Adrian Croft

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Healthcare momentum rides on defensive appeal, earnings, election

NEW YORK (Reuters) – Healthcare company shares have taken the lead in the record-setting U.S. stock market, and a desire for investors to become more defensive combined with potentially strong upcoming earnings could drive them even higher.

One big uncertainty that threatens the sector’s run: the looming congressional elections in less than six weeks.

Healthcare .SPXHC has topped all other major SP 500 sectors in the third quarter, rising more than 13 percent, or nearly twice the gain of the overall market in the period.

The surge has propelled healthcare into the top echelon of sector performers for the year, trailing only tech .SLPRCT and consumer discretionary .SPLRCD, both of which are undergoing a major shake-up that could cause confusion for investors who make broad sector bets and lead to even more investment in healthcare.

“In sector reallocation, momentum certainly plays a role, and we are still very early in the momentum of the healthcare sector,” said David Lafferty, chief market strategist at Natixis Investment Managers.

Investors took advantage of particularly cheap valuations for healthcare shares this summer. They were further attracted by the many healthcare companies that surpassed expectations for second-quarter profit and revenue, making it one of the best sectors on those measures.

With fears that the economy may be on the verge of slowing, investors said healthcare, which represents 15 percent of the SP 500, has also benefited as a potential defensive play and relative safe haven in rocky market times.

“Healthcare really is giving investors a lot of bang for its buck right now,” said Martin Jarzebowski, healthcare sector head at Federated Investors.

As much as any sector, healthcare has a lot on the line with the upcoming Nov. 6 congressional elections. Investor worries about onerous regulations, particularly for prescription drug pricing, have abated recently, analysts said, allowing for a longtime policy cloud over the stocks to lift, even as U.S. President Donald Trump has sought to lower the cost of medicines for consumers.

Those fears would reemerge if expectations increase that Democrats were on track to seize control of both the Republican-held Senate and House of Representatives, as they are seen as more likely to impose tougher rules on industry.

“The biggest risk to the sector would be a Democratic sweep,” Jarzebowski said.

Following seven months of outflows, more than $4.6 billion has flowed into U.S.-based healthcare mutual and exchange traded funds since May, according to data from Lipper.

May is also when valuations for the sector reached their lowest point in more than a year, at 14.6 times forward earnings estimates, according to Thomson Reuters Datastream.

With its surge since then, healthcare now trades at 16.3 times earnings estimates for the next 12 months. That still makes it a bargain compared to the overall SP 500, which trades at 16.9 times.


Healthcare stocks could further benefit if investors become more wary of the economic outlook.

The sector has traditionally been viewed as having “defensive” characteristics, strategists said. Those include the need for medical services even in an uncertain economy, healthcare’s relatively lower volatility compared to other stock sectors and that many of the companies in the group have strong balance sheets.

“The later we get in the cycle, our enthusiasm for healthcare has only picked up,” Lafferty said.

For the third quarter, for which reports will start arriving next month, healthcare earnings growth is expected to slow to 10.8 percent from 16.2 percent and 18.3 percent in the first and second quarters, according to Thomson Reuters I/B/E/S.

Pharmaceutical companies, the biggest industry within the sector, are expected to see profit growth decline to 5.7 percent and 5 percent in the third and fourth quarters, respectively, from 12.1 percent and 19.8 percent in the first and second quarters, according to SP Capital IQ.

That pullback in growth is one reason Lindsey Bell, investment strategist at CFRA Research, rates the sector as “market weight.”

“I think it’s a sector that will probably start to slow down,” Bell said.

Steven DeSanctis, an equity strategist at Jefferies, also said the sector “needs a pause” given its recent run.

“The thing that is going to keep this group moving … is going to be very good earnings,” DeSanctis said.

Reporting by Lewis Krauskopf; Editing by Alden Bentley and Bill Berkrot

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Chinese regulator signs off on Linde-Praxair merger

FRANKFURT (Reuters) – Linde AG (LING.DE) said on Sunday that it had received approval for its proposed $83 billion merger with Praxair (PX.N) from the Chinese antitrust authorities.

Linde and U.S.-based Praxair are in the process of selling additional assets in an attempt to win approval for the tie-up by an Oct. 24 deadline from regulators in the United States, South Korea and the European Union.

Reporting by Douglas Busvine; Editing by Madeline Chambers

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Musk to resign as Tesla chairman, remain as CEO in SEC settlement

WASHINGTON/SAN FRANCISCO (Reuters) – Tesla Inc and Elon Musk have agreed to pay $20 million each to financial regulators and the billionaire will step down as the company’s chairman but remain as chief executive, under a settlement that caps a tumultuous two months for the carmaker.

The securities fraud agreement, disclosed by the U.S. Securities and Exchange Commission on Saturday, will come as a relief to investors, who had worried that a lengthy legal fight would only further hurt the loss-making electric car company.

The SEC on Thursday charged Musk, 47, with misleading investors with tweets on Aug. 7 that said he was considering taking Tesla private at $420 a share and had secured funding. The tweets had no basis in fact, and the ensuring market chaos hurt investors, it claimed.

Investors and corporate governance experts said the agreement could strengthen Tesla, which has been bruised by Musk’s recent behavior, which included smoking marijuana and wielding a sword on a webcast, and attacking a British rescue diver via Twitter.

The settlement should place more oversight on Musk while not taking the “devastating” measure of forcing him out, said Steven Heim, a director at Boston Common Asset Management, which owns shares in Tesla battery maker Panasonic Corp.

Tesla must appoint an independent chairman, two independent directors, and a board committee to set controls over Musk’s communications under the proposed agreement.

“The prompt resolution of this matter on the agreed terms is in the best interests of our markets and our investors, including the shareholders of Tesla,” SEC Chairman Jay Clayton said in a statement.

Thursday’s charges shaved about $7 billion off high-flying Tesla, knocking its market value to $45.2 billion on Friday, below General Motors Co’s $47.5 billion.

In the settlement, the agency pulled back from its demand that Musk, who is synonymous with the Tesla brand, be barred from running Tesla, a sanction that many investors said would be disastrous.

“I think this is the best possible outcome for everyone involved” said Ivan Feinseth of Tigress Financial Partners, who rates Tesla “neutral” and who called the SEC’s penalty “a slap on the wrist” for Musk.

“The fact that he can remain CEO is very important for the company.”

  • SEC chairman says Tesla settlement in ‘best interests’ of shareholders

Neither Musk nor Tesla admitted or denied the SEC’s findings as part of the settlement, which still must be approved by a court. Tesla and Musk did not immediately respond to requests for comment.


Musk had been directly involved in almost every detail of Tesla’s product design and technology strategy, and drove the company’s employees to extraordinary achievements – much as another Silicon Valley chief executive, Steve Jobs, did at Apple Inc.

The entrepreneur is now required to step down as chairman of Tesla within 45 days, and he is not permitted to be re-elected to the post for three years.

The SEC charged Tesla with failing to have required disclosure controls and procedures for Musk’s tweets. The SEC said the company had no way to determine if his tweets contained information that must be disclosed in corporate filings, or if they contained complete and accurate information.

Musk walked away at the last minute from an earlier settlement with the SEC that would have required him to give up key leadership roles at the company for two years and pay a nominal fine, according to media reports on Friday. Reuters on Friday reported that Musk could settle with the SEC but was ready for a court fight.

Investors said on Friday that it has been a mistake for Musk to turn down that settlement, especially at a time when the company has been pushing hard to meet aggressive production targets for its Model 3 sedan.

The settlement tasks the Tesla board, which critics have accused of failing to rein in Musk, with the tricky challenge of finding an independent chairman able to work closely with the sometimes unpredictable chief executive.

It was not immediately clear who would be appointed to the role. Antonio Gracias, the current lead independent director and CEO of Valor Equity Partners, has been criticized as being too close to Musk and his companies.

“The question is whether Musk’s buddies on the board decide to bring in a really strong chair who will stand up to Musk,” said Erik Gordon, a University of Michigan business professor who follows corporate governance.

Musk has driven the company to the verge of profitability with a costly ramp-up of production of its Model 3 over the past year. Electric vehicle news site Electrek reported that Tesla had produced 51,000 Model 3s with a couple of days left in the quarter, hitting its goal of 50,000 to 55,000.

The CEO, who has often turned to Twitter to promote Tesla and confront critics, said on Thursday that the SEC’s actions were unjustified. Tesla shares jumped after his Aug. 7 tweets, a blow to short-sellers betting on the stock’s decline.

As the public face of Tesla, Musk had gained legions of fans for his bold approach to business and technology. He used his Twitter account to promote the achievements of Tesla, his rocket launch company SpaceX, and other projects such as his tunnel venture, the Boring Co, to his nearly 23 million followers.

Reporting by Michelle Price and Alexandria Sage; Additional reporting by Ross Kerber and Pete Schroeder; Editing by Marguerita Choy and Alistair Bell

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SEC chairman says Tesla settlement in ‘best interests’ of shareholders

WASHINGTON (Reuters) – U.S. Securities and Exchange Commission chairman Jay Clayton said in a statement on Saturday that the agency’s settlement with carmaker Tesla was in the best interests of the U.S. markets and company shareholders.

Earlier on Saturday, the agency said it had fined Musk and Tesla $20 million each and required Musk to step down as chairman to settle securities fraud charges over Aug. 7 tweets in which Musk said he was taking the company private.

“I…fully support the settlements agreed today and believe that the prompt resolution of this matter…is in the best interests of our markets and our investors, including the shareholders of Tesla,” Clayton said.

Reporting by Michelle Price; Editing by Alistair Bell

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Tesla, Musk pay $40 million to settle Tweet charges, Musk to resign as chairman

WASHINGTON (Reuters) – The U.S. Securities and Exchange Commission said on Saturday that car-maker Tesla and Chief Executive Elon Musk had agreed to pay $20 million each under a settlement that will also see the billionaire step down as chairman after a tumultuous two months for the company.

But Musk, who is synonymous with the Tesla brand, will remain as chief executive under the settlement over tweets he posted on Aug. 7 about taking the company private, the SEC said.

The SEC alleged in a lawsuit on Thursday that the tweets about financing for a go-private plan he abandoned just weeks later had no basis in fact, and said the market chaos that ensued hurt investors.

Musk is now required to step down as chairman of Tesla within 45 days, and he is not permitted to be re-elected to the post for three years. Tesla is required to appoint two new independent directors to its board.

Saturday’s settlement saw the SEC pull back from its demand that Musk be barred from running Tesla, a sanction that many investors said would be disastrous for the loss-making electric carmaker.

The SEC charged Tesla with failing to have required disclosure controls and procedures for Musk’s tweets. The SEC said the company had no way to determine if his tweets contained information that must be disclosed in corporate filings, or if they contained complete and accurate information.

Neither Musk nor Tesla admitted or denied the SEC’s findings as part of the settlement. Tesla did not immediately respond to a request for comment and Musk could not immediately be reached for comment.

Reporting by Michelle Price and Pete Schroeder; Editing by Marguerita Choy and Alistair Bell

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Canada, U.S. make progress in bid to save NAFTA, no deal yet: sources

OTTAWA (Reuters) – Canada and the United States on Saturday narrowed their differences in last-ditch talks to save NAFTA but there is no guarantee an agreement will be forged, two Ottawa sources said.

The two nations are trying to find a way to update the North American Free Trade Agreement and prevent it from collapsing. The 1994 pact underpins $1.2 trillion in annual trade and its demise would be enormously damaging, say economists.

U.S. President Donald Trump is threatening to impose auto tariffs on Canada unless it signs a text of an updated agreement by the end of Sunday. Washington already has a deal with Mexico, the third member of NAFTA.

In a sign of the mounting pressure, Canadian Foreign Minister Chrystia Freeland postponed her country’s annual address to the U.N. General Assembly on Saturday to return to Ottawa. Freeland, who has spent many days in Washington over the last month, has no plans to fly back immediately, officials say.

The two sides are talking continuously by phone and a Canadian government source said the tone of the negotiations was positive and intense.

“The fact talks are still going on shows there are issues to be settled. A deal is not necessarily going to happen,” said the source, who requested anonymity given the sensitivity of the situation.

Trump blames NAFTA for causing U.S. manufacturing jobs to move to low-wage Mexico and is demanding major changes.

The office of Canadian Prime Minister Justin Trudeau declined to comment on Saturday’s talks.

A second Ottawa source said the two sides were still trying to resolve disagreements over a dispute resolution mechanism that Canada says is vital and the United States wants to scrap.

In exchange for a compromise on the mechanism, Ottawa is set to bow to a U.S. demand to offer significantly more access to Canada’s protected dairy market, said the source.

A third source familiar with the negotiations said the idea of a link between dispute resolution and dairy access was not currently being discussed.

Opening up the dairy market could cause problems for Trudeau, since the influential farming industry opposes the idea. The Dairy Farmers of Canada lobby group did not respond to a request for comment.

Sources familiar with the talks told Reuters on Sept. 11 that Canada was ready to give the United States limited dairy access. Ottawa has offered farmers compensation to make up for conceding market share in two earlier trade agreements.

A NAFTA deal had looked unlikely on Wednesday when, after a month of slow-moving discussions, Trump indicated he was fed up with Trudeau, who has insisted he will not sign a bad deal.

But late on Thursday, U.S. officials reached out to Canada to ask for details of Ottawa’s negotiating demands and where it might be able to make compromises, Reuters reported.

Trump is under increasing pressure from U.S. business groups and some members of the U.S. Congress, who say excluding Canada from NAFTA would play havoc with the three member nations’ increasingly integrated economies.

Reporting by David Ljunggren; Editing by Alistair Bell

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