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Unilever’s (ULVR.L) strategy was under the investor microscope on Thursday after the consumer goods giant effectively abandoned its $68 billion pursuit of GlaxoSmithKline’s (GSK.L) consumer healthcare business.

Shares in Unilever, the maker of a range of brands such as Dove soap and Hellmann’s mayonnaise, gained 2 per cent after the company said late on Wednesday that it would not raise its rejected 50 billion pound offer.

It said its view on the value of the healthcare business had not changed despite GSK lifting financial forecasts for the unit, which is 32 per cent owned by Pfizer (PFE.N) and makes products such as Sensodyne toothpaste and Panadol painkillers.

Many market watchers felt Unilever’s management, under pressure after a 31 per cent drop in its share price since highs seen in late 2019, had been wise to not get drawn into upping their bid for a business that GSK has said it wants to spin off.

Barclays analysts called it a “smart move,” saying that the decision “shows that whilst Unilever remains very keen on the asset, it is disciplined and will not do the deal at any price.”

Yet others said the proposed mega-deal – which would have been one of the largest ever on the London market – had been unexpected for many investors. They said it raised questions about the company’s plan under Chief Executive Alan Jope for a more gradual shift towards health, beauty and hygiene products and away from lower-margin goods.

“From our discussions with shareholders and Unilever share price action, we believe there is a clear discontent with management and the board over the changed strategy and focus on transformative M&A,” J.P. Morgan analysts said in a note.

Meanwhile, a group of Unilever investors said on Thursday they had filed a fresh resolution urging the company to fix a “crucial blind spot” in its strategy and set ambitious targets to sell healthier foods.

It came after fund manager Terry Smith, whose Fundsmith vehicle is a top-10 Unilever investor, lambasted the company last week for being “obsessed” with promoting its sustainability credentials at the expense of performance.

‘CALLED THEIR BLUFF’

GSK, led by Chief Executive Emma Walmsley, has stuck to its plans to spin off the consumer healthcare unit despite previous pressure from activist investors to consider alternatives such as a sale.

It had rejected three approaches from Unilever, and the final proposal made on Dec. 20 comprised 41.7 billion pounds in cash and 8.3 billion pounds in Unilever shares.

GSK shares were down 1.3 per cent by 12125 GMT, after having slipped just over 2 per cent earlier.

“In this condition Unilever cannot increase any offer, not because the value of GSK’s consumer (unit) would not warrant it, but simply because Unilever’s investors expressed a no-confidence vote on Unilever’s CEO doing any deal of this size,” an investor in GSK who declined to be named told Reuters.

Other large takeover targets could be available for Unilever to consider.

The consumer remedies industry, traditionally a part of the prescription drug sector, is in a phase of major transformation. Johnson & Johnson (JNJ.N) in November unveiled plans to spin off its consumer health division, owner of Listerine and Baby Powder brands, to focus on pharmaceuticals and medical devices.

Barclays analysts have questioned whether GSK had overplayed its hand.

“By saying (GSK) sees £50 billion as fundamentally undervaluing the business, it now makes it very difficult to accept the £50 billion on the table whilst still saving face,” they said.

“Some investors think that Glaxo may have overplayed their hand and Unilever has called their bluff.”

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Innovation is finally weakening the market grip of Britain’s “Big Four” banks, but “challenger” lenders are finding it slow and expensive to build up market share, the Financial Conduct Authority said on Thursday.

High street banking has long been dominated by HSBC, Barclays, Lloyds and NatWest, prompting Britain to make it easier for new banks to enter the market, and for customers to switch banks with little fuss.

“There are signs that some of the historic advantages of large banks may be starting to weaken through innovation and digitisation and changing consumer behaviour,” the FCA said in an update of its strategic review of retail banking business models.

But building market share has been an “expensive and slow process” for new banks and mid-tier lenders like Santander and Nationwide, though those based purely online such as Starling and Monzo are making progress with around 8 per cent of personal customer accounts, the FCA said.

“Despite this, traditional challengers have provided additional choice and value for those consumers that have opened accounts with these challengers,” the FCA said in its update of a 2018 report.

But customer inertia is acting as a barrier to expansion among challengers, and the Big Four banks continue to achieve higher returns on capital, a key measure of profitability, than most other banks, but the gap has narrowed, it added.

Purely digital challengers don’t appeal to everyone and are likely to co-exist alongside other business models for the foreseeable future, the review said.

Banking industry body UK Finance said the review showed that customers are benefitting from a competitive retail market giving them a much better incentive to shop around.

“Nearly 90 per cent of UK adults now use online, mobile or telephone banking services, but as the FCA highlights, technology is not for everyone, so the industry has set out commitments to ensure there is access to cash and banking services both now and in the future,” UK Finance said.

Competition in the mortgage market has intensified following the introduction of requirements on banks to “ring-fence” their retail deposits with extra capital, it said.

Critics say liquidity ‘trapped’ inside the fence is being used to offer cheap mortgages, increasing the Big Four’s market share.

“Smaller banks and building societies have struggled to compete with larger firms in the low-risk lending segment. Some have exited altogether; others have sought yields in other segments, including higher risk areas of the market,” the FCA said.

A government-sponsored review of ring-fencing said in an interim report on Wednesday the rules have not damaged competition in home loans.

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Germany’s Thyssenkrupp Marine Systems (TKAG.DE) will build three advanced submarines for the Israeli Navy in a deal worth 3 billion euros ($3.4 billion), the Israeli Defense Ministry said on Thursday.

The parties also signed an industrial strategic cooperation agreement that amounts to more than 850 million euros, the ministry said.

The first of the submarines, part of a new series called Dakar, will be delivered within nine years, the government said.

Israel’s Navy operates five German-built Dolphin-class submarines, with a sixth under construction in Germany. The three Dakar submarines will replace three of the ageing Dolphins.

“I would like to thank the German government for its assistance in advancing the agreement and for its commitment to Israel’s security,” said Defense Minister Benny Gantz.

“I am confident that the new submarines will upgrade the capabilities of the Israeli Navy and will contribute to Israel’s security superiority in the region.”

The agreement also includes the construction of a training simulator in Israel and the supply of spare parts.

“The Dakar class will be of a completely new design, which is to be specifically engineered to fulfil the operational requirements of the Israeli Navy,” Thyssenkrupp said.

The announcement comes only a few days before Israel’s cabinet is due to discuss forming a panel to investigate the decision-making process behind purchases of submarines and missile boats from Germany worth hundreds of millions of dollars.

Israeli prosecutors last year charged several Israelis, including a businessman, a former naval officer and a former cabinet minister, with bribery, money laundering and tax invasion in connection with deals from 2009 to 2016.

Thyssenkrupp has said an internal investigation found no evidence of corruption in its handling of the sales and Israeli authorities have taken no action against the conglomerate.

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Britain’s financial watchdog said on Wednesday it planned to introduce restrictions on marketing cryptoassets and other high-risk investments like crowdfunding and retail mini-bonds.

The changes would strengthen risk warnings on ads and ban incentives to invest, such as new joiner or refer-a-friend bonuses, the Financial Conduct Authority (FCA) said.

A surge in investment scams, particularly online since the coronavirus pandemic began in 2020, has prompted the regulator to take action, such as refusing one in five licence applications from consumer investment firms in the year ended March 2021.

“We are concerned that too many consumers are just ‘clicking through’ and accessing high‑risk investments without understanding the risks involved,” the FCA said.

The planned rules cover high-risk investments such as cryptoassets, including cryptocurrencies such as Bitcoin, as well as crowdfunding, peer-to-peer agreements, mini-bonds and speculative illiquid securities.

The draft rules, put out to public consultation, also prepare the ground for the government to bring in promotions of cryptoassets under the watchdog’s conduct remit for the first time following a finance ministry announcement on Tuesday.

“When it does, the FCA plans to categorise qualifying cryptoassets as ‘Restricted Mass Market Investments,’ meaning consumers would only be able to respond to cryptoasset financial promotions if they are classed as restricted, high net worth or sophisticated investors,” the FCA said in a statement.

“Firms issuing such promotions would have to adhere to FCA rules, such as the requirement to be clear, fair and not misleading.”

Under the proposed rules, firms that approve and publish promotions must have relevant experience and understanding of the investments being offered, the watchdog said.

“Those looking to make certain high-risk investments would also be asked more robust questions about their knowledge and investment experience, after research found many consumers were investing without being aware of the risks,” it added.

The FCA will set out final rules in the summer.

The crackdown is part of a wider FCA strategy to buttress consumer protection, including a proposed consumer duty on firms.

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Britain’s payments regulator on Tuesday fined five payments companies including Mastercard a total of 33 million pounds ($45.01 million) for cartel behaviour involving prepaid cards issued to vulnerable people on welfare benefits.

Mastercard received the largest fine of 31.56 million pounds ($43.04 million). The other companies fined were allpay, Advanced Payment Solution, Prepaid Financial Services and Sulion.

The Payment Systems Regulator (PSR) said the firms broke competition law by agreeing not to compete or poach each other’s customers on pre-paid cards offered by local authorities to distribute welfare payments to vulnerable people.

The cartel meant recipients of the cards – who included the homeless, victims of domestic abuse and asylum seekers – could have missed out on cheaper or better-quality products, the regulator said.

The PSR previously announced in March last year it planned to fine the five companies in preliminary findings. It said on Tuesday it had concluded the investigation.

The regulator said during the course of the investigation, all the parties settled and admitted breaking the law.

“This investigation and the significant fines we have imposed send a clear message that the PSR has zero tolerance for cartel behaviour,” said Chris Hemsley, Managing Director of the Payment Systems Regulator.

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Microsoft Corp (MSFT.O) is buying “Call of Duty” maker Activision Blizzard (ATVI.O) for $68.7 billion in the biggest gaming industry deal in history as global technology giants stake their claims to a virtual future.

The all-cash deal announced by Microsoft on Tuesday, its biggest-ever acquisition, will bolster its firepower in the booming videogaming market where it takes on leaders Tencent (0700.HK) and Sony (6758.T).

It also represents the American multinational’s bet on the “metaverse”, virtual online worlds where people can work, play and socialize, as many of its biggest competitors are already doing.

“Gaming is the most dynamic and exciting category in entertainment across all platforms today and will play a key role in the development of metaverse platforms,” Microsoft Chief Executive Satya Nadella said.

Microsoft’s offer of $95 per share represents a premium of 45 per cent to Activision’s Friday close. Its shares were up 27 per cent at $83.35 in early trading, still a steep discount to the offer price, reflecting concerns the deal could get stuck in regulators’ crosshairs.

Microsoft has so far avoided the type of scrutiny faced by Google and Facebook but this deal, which would make it the world’s third largest gaming company, will put them on lawmakers’ radars said Andre Barlow of the law firm Doyle, Barlow & Mazard PLLC.

“Microsoft is already big in gaming,” he said.

The tech major’s shares were down 0.7 per cent in early trading.

The deal comes at a time of weakness for Activision, maker of games such as “Overwatch” and “Candy Crush”. Before the deal was announced, its shares had slumped more than 37 per cent since reaching a record high last year, hit by allegations of sexual harassment of employees and misconduct by several top managers.

The company is still addressing those allegations and said on Monday it had fired or pushed out more than three dozen employees and disciplined another 40 since July.

CEO Bobby Kotick, who said Microsoft reached out to him for a possible buyout, would continue to be the CEO of Activision following the deal.

In a conference call with analysts, Microsoft boss Nadella did not directly refer to the scandal but talked about the importance of culture in the company.

“It’s critical for Activision Blizzard to drive forward on its renewed cultural commitments,” he said, adding “the success of this acquisition will depend on it.”

‘METAVERSE ARMS RACE’

The global gaming market was valued at $173.70 billion in 2021, and is expected to grow to $314.40 billion by 2027, according to research firm Mordor Intelligence.

Microsoft can already claim a significant beachhead in the sector as one of the big three console makers. It has been making investments including buying “Minecraft” maker Mojang Studios and Zenimax in multi-billion dollar deals in recent years.

It has also launched a popular cloud gaming service, which has more than 25 million subscribers.

Executives talked up Activision’s 400 million monthly active users as one major attraction to the deal and how vital these communities could play in Microsoft’s various metaverse plays.

Activision’s library of games could give Microsoft’s Xbox gaming platform an edge over Sony’s Playstation, which has for years enjoyed a more steady stream of exclusive games.

“The likes of Netflix have already said they’d like to foray into gaming themselves, but Microsoft has come out swinging with today’s rather generous offer, which would make Microsoft the third largest gaming company in the world,” said Sophie Lund-Yates, equity analyst at Hargreaves Lansdown.

Tech companies from Microsoft to Nvidia have placed big bets on the so-called metaverse, with the buzz around it intensifying late last year after Facebook renamed itself as Meta Platforms to reflect its focus on its virtual reality business.

“This is a significant deal for the consumer side of the business and more importantly, Microsoft acquiring Activision really starts the metaverse arms race,” David Wagner, Equity Analyst and Portfolio Manager at Aptus Capital Advisors said.

“We believe the deal will get done,” he said, but cautioned: “This will get a lot of looks from a regulatory standpoint.”

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Elon Musk

Tesla Inc (TSLA.O) shareholders urged a judge on Tuesday to find Elon Musk coerced the company’s board into a 2016 deal for SolarCity and asked that the chief executive be ordered to pay the electric vehicle company one of the largest judgments ever of $13 billion.

“This case has always been about whether the acquisition of SolarCity was a rescue from financial distress, a bailout, orchestrated by Elon Musk,” said Randy Baron, an attorney for shareholders, at the start of his closing arguments.

The closing arguments recounted key findings from a 10-day trial in July when Musk spent two days on the stand defending the deal.

The lawsuit by union pension funds and asset managers alleges that Musk strong-armed the Tesla board into approving the deal for the cash-strapped SolarCity, in which Musk was the top shareholder.

Musk has countered that the deal was part of a decade-old master plan to create a vertically integrated company that would transform energy generation and consumption with SolarCity’s roof panels and Tesla’s cars and batteries.

Evan Chesler, one of the lawyers representing Musk, told the hearing that the deal was not a bailout and SolarCity was far from insolvent and its finances resembled many high-growth tech companies.

“They were building billions of dollars of long-term value,” Chesler said of SolarCity.

The all-stock deal was valued at $2.6 billion in 2016, but since that time Telsa’s stock has soared.

Shareholder attorney Lee Rudy urged Vice Chancellor Joseph Slights of Delaware’s Court of Chancery to order Musk return the Tesla stock he received, which would be worth around $13 billion at its current price.

Musk said in court papers such an award would be at least five times the largest award ever in a comparable shareholder lawsuit and called it a “windfall” for plaintiffs.

Rudy said Slights should consider Musk’s contempt for the deposition and trial process, in which he repeatedly clashed with and insulted shareholder attorneys.

“It would be a windfall for Elon Musk if he got to keep shares he never should have gotten in the first place,” Rudy said.

Chesler called the request to order Musk to return the stock from the deal “preposterous” and said it ignored five years of unprecedented success at Tesla.

Tesla’s stock was flat at around $1,049.

Telsa acquired SolarCity as the electric vehicle maker was approaching the launch of its Model 3, a mass-market sedan that was critical to its strategy. Shareholders allege the deal was a needless distraction and burdened Tesla with SolarCity’s financial woes and debt.

Shareholders claim that despite owning only 22 per cent of Tesla, Musk was a controlling shareholder due to his ties to board members and domineering style. If plaintiffs can prove this, it increases the likelihood that the court will conclude the deal was unfair to shareholders.

Musk has consistently told the court that the Tesla board primarily handled the SolarCity deal and that he recused himself from price negotiations.

Musk repeatedly defended the SolarCity deal by saying the company had to be quickly acquired or find financing to solve its dangerous cash shortage.

Slights said last week he intends to retire in the coming months and a related shareholder lawsuit challenging Musk’s record pay package was transferred from Slights to another judge.

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Activities in the nation’s local bourse started the third week of the year on a weak note after the inflation rate rose for the first time in eight months, with investors losing N29 billion.

The Consumer Price Index (CPI) for December 2021 by the National Bureau of Statistics (NBS) released yesterday showed that the inflation rate rose to 15.6 percent after eight months of decline, representing 0.2 percentage point increase when compared with 15.4 percent recorded in November 2021.

Resultantly, the local bourse turned bearish, thereby ending the two weeks of bullish sentiment.

Specifically, the market capitalisation slowed to N23.922 trillion from N23.951 trillion, representing a 0.12 percent decline.

Similarly, the Nigerian Exchange (NGX) Limited All Share Index (ASI) also declined by the same margin to settle at 44,399.66 points from 44,454.67 points on Friday. The negative sentiment was driven by profit taking witnessed in the newly listed BUA Foods, which fell by 6.4 percent.

Analysis of the price movement table showed that there were 21 losers against 14 gainers. Veritas Kapital led the decliners with 8.70 percent to close at N0.21, followed by Mutual Benefit Assurance, which fell by 7.41 percent to close at N0.25, while Cornerstone Insurance, BUA Foods and Courtville Business Solution (CBS) depreciated by 7.27 percent, 6.36 percent and 5.41 percent to close at N0.51, N61.80 and N0.35 respectively.

On the other hand, sectoral activities showed a mixed performance with two decliners and three sectors appreciating. The industrial goods (+0.8%), oil & gas (+0.2%), and the consumer goods sectors (+0.2%) recorded gains, while the insurance (-0.2%) and the banking sectors (-0.1%) declined.
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After recording eight months consecutive decline in 2021, Nigeria’s inflation rate closed the year in the negative, rising 0.2 percentage point to 15.6 percent last month, from 15.4 percent in November, 2021.

The National Bureau of Statistics, NBS, disclosed this yesterday in its consumer price index, (CPI) report for December 2021 noting that the food price index also rose by 0.16 per cent points to 17.37 per cent from 17.21 per cent in November 2021.

The report stated: “The CPI which measures inflation increased by 15.63 per cent (year-on-year) in December 2021. This is 0.13 per cent points lower than the rate recorded in December 2020 (15.75) per cent. This is showing slowing down in the rate when compared to the corresponding period of 2020. Increases were recorded in all Classification of Individual Consumption according to Purpose, COICOP, divisions that yielded the Headline index.

“On month-on-month basis, the Headline index increased by 1.82 per cent in December 2021, this is 0.74 per cent rate higher than the rate recorded in November 2021 (1.08) per cent.

“The percentage change in the average composite CPI for the twelve-month period ending December 2021 increased by 16.95 per cent from 16.98 per cent over the average of the CPI for the previous twelve-month period recorded in November 2021 down by 0.03 per cent points.

“Urban inflation rate increased by 16.17 percent (year-on-year) in December 2021 from 16.33 percent recorded in December 2020, while the rural inflation rate increased by 15.11 per cent in December 2021 from 15.20 per cent in December 2020.

“On a month-on-month basis, the urban index rose by 1.87 per cent in December 2021, up by 0.75 the rate recorded in November 2021 (1.12) per cent, while the rural index also rose by 1.77 per cent in December 2021, up by 0.73 the rate that was recorded in November 2021 (1.04) per cent.”

On food inflation, NBS said: “The composite food sub-index rose by 17.37 per cent in December 2021 down by 2.19 per cent points when compared to 19.56 per cent in December 2020.

“This rise in the food sub-index was caused by increases in prices of bread and cereals, food products, meat, fish, potatoes, yam and other tubers, soft drinks and fruit.

“On a month-on-month basis, the food sub-index increased by 2.19 per cent in December 2021, up by 1.12 per cent points from 1.07 per cent recorded in November 2021.

“The average annual rate of change of the Food sub-index for the twelve-month period ending December 2021 over the previous twelve-month average was 20.40 per cent, 0.22 per cent points lower from the average annual rate of change recorded in November 2021 (20.62) per cent.”
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Kazakhstan may no longer be the bitcoin sanctuary it once was, according to some big miners who are looking to leave the global crypto hub following internet shutdowns last week that compounded fears about tightening regulation.

The government web shutdowns during an explosion of unrest in the country, the world’s second-largest centre for mining, caused bitcoin’s global computing power to drop around 13 per cent as data centres used to produce the cryptocurrency were knocked offline.

Alan Dorjiyev of the National Association of Blockchain and Data Center Industry in Kazakhstan, which represents 80 per cent of legal mining companies in the country, said most crypto producers were now back online.

Yet the resumption of operations may belie problems to come for the fast-growing cryptocurrency industry, according to four major miners interviewed by Reuters, with some saying they or their clients may look for other countries to operate in.

The internet outage compounded growing concerns about the stability and prospects of the business as tighter government oversight looms, the miners said.

Vincent Liu, a miner who moved operations to Kazakhstan from China to take advantage of the country’s cheap power, said the changing environment had led him to look at shifting operations to North America or Russia.

“Two or three years earlier, we called Kazakhstan a paradise of the mining industry because of the stable political environment and stable electricity,” said Liu.

“We are evaluating the situation … I suppose we will keep a part of hashrate in Kazakhstan and will move some to other countries,” he said.

Bitcoin and other cryptocurrencies are “mined” by powerful computers that compete against others hooked up to a global network to solve complex mathematical puzzles. The process guzzles electricity and is often powered by fossil fuels.

Kazakhstan became the world’s No.2 centre for bitcoin mining after the United States last year, attracting an influx of miners and data centre bookings from former global leader China after a crackdown on the industry by Beijing.

In August, Kazakhstan accounted for 18 per cent of the global “hashrate” – crypto jargon for the amount of computing power being used by computers connected to the bitcoin network. That was up from 8 per cent in April, before Chinese miners shifted machines and bought capacity at Kazakh data centres.

POWER PLAYS

Kazakhstan’s crypto mining farms are mostly powered by aging coal plants, which are a headache for authorities as they seek to decarbonise the economy. Power-hungry miners have forced the former Soviet state to import electricity and ration domestic supplies.

The government is now looking at how to tax and regulate the largely underground and foreign-owned industry. It said last year it planned to crack down on unregistered “grey” miners who it estimates might be consuming twice as much power as the “white” or officially registered ones.

Din-mukhammed Matkenov, co-founder of crypto miner BTC KZ, said an influx of Chinese miners had worsened problems for domestic miners by gobbling up power. Clients may look to move to the United States and Russia, he said.

“We think that the development and stability of mining industry in Kazakhstan is in danger,” said Matkenov, whose firm has three data centres in Ekibastuz, a city in northern Kazakhstan, running over 30,000 mining rigs. Patchy power supply has complicated the company’s business, he added.

“It is very unstable and really hard to predict the profits to pay the electricity bill and salaries. At the moment we are close to being bankrupt and clients are trying to find other countries where they can relocate to with a more stable governmental ruling.”

Kazakhstan’s energy ministry did not immediately respond to a request for comment.

Still, Kazakhstan’s relatively low taxes, labour costs and equipment still offer advantages, the four miners said. Power costs a minimum of $0.03-$0.04 per kilowatt, Matkenov said, similar to the United States and lower than $0.05 in Russia.

“There is an ease of doing business in Kazakhstan that allows well-capitalised projects to deploy much faster than would be possible in the West,” said Mike Cohen of Canada-based miner Pow.re.

“Those willing to establish operations in the region have a greater tolerance for geopolitical risk and are not put off by fossil fuel-based energy sources.”

REUTERS