(Alliance News) - The following is a summary of top news stories Wednesday.
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COMPANIES
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Electricity and gas supplier Uniper confirmed its nationalisation by the German federal government, a victim of the energy crisis that has followed Russia's invasion of Ukraine. The Berlin government will first pick up a 93% stake in the Dusseldorf-based energy firm through a capital raise of EUR8 billion at an issue price of EUR1.70 per Uniper share, which will exclusively be signed by the government. Germany will afterwards acquire all shares held in Uniper by Espoo, Finland-based shareholder Fortum, bringing the government's total shareholding to 99%. In addition, state-owned investment bank KfW Bankengruppe will provide Uniper with financing, consisting of an EUR4 billion shareholder loan and EUR4 billion guarantee line, replacing the current credit line from Fortum. The deal is an amendment to the stabilisation package signed in late July, which would have seen the German government invest EUR267 million for the 30% stake, reducing Fortum's shareholding to 56% from 80%.
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Aveva agreed to a takeover offer from majority owner Schneider Electric, under which the French energy management company will acquire the remaining stake in the Cambridge, England-based industrial software firm it does not own. Schneider currently owns a 59% stake, and will acquire the remaining 41% stake in Aveva at a price of 3,100 pence per share in cash, valuing Aveva's total equity at GBP9.48 billion, and implying an enterprise value of GBP10.15 billion. Schneider had been considering a full takeover of Aveva since late August. It has held a majority stake in Aveva since 2018, when the Aveva had merged with Schneider's own software business. Schneider last year seconded one of its executives, Peter Herweck, to be chief executive officer of Aveva.
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Tencent is looking to sell off more of its investment portfolio to fund further share buyback and refocus its growth strategy, the Wall Street Journal reported. Citing people familiar with the matter, the newspaper said the Chinese media and technology group has completed a review of its portfolio, and has found its priorities for possible stake sales depending on the potential investment returns. Possible disposals include online real estate brokerage KE Holdings, ride-hailing firm Didi Global and food delivery company Meituan. However, it is unclear when such disposals will take place. The purpose for the disposals is to free up cash in order for Tencent to invest in other sectors including video games and healthcare, and to support buyback to ease pressure on Tencent's share price, as Prosus starts to reduce its shareholding.
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Twitter's lawyers will question Elon Musk next week as they gather evidence in a legal battle to hold him to his USD44 billion buyout deal, a court filing said. The Tesla chief will be deposed under oath for two days and maybe even a third if needed, in sessions that are to be recorded by "stenographic, sound and visual means," according to the filing. Musk's deposition is set to take place privately in law offices, and comes as part of an evidence gathering phase ahead of a five-day trial scheduled to begin October 17 in the Court of Chancery in the state of Delaware.
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Pharmaceutical firm AstraZeneca said its Tezpire severe asthma treatment has been approved in the EU as an add-on treatment in patients aged 12 and older who are inadequately controlled with high dose inhaled corticosteroids plus another medicinal product. The approval in the EU was based on results from the Pathfinder clinical trial programme, in which Tezpire showed superiority across "every primary and key secondary endpoint" in patients with severe asthma, compared to a placebo, when added to standard therapy.
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JD Sports Fashion agreed terms for former executive chair and chief executive Peter Cowgill to depart from the business. The sportswear retailer said Cowgill will be paid his full salary, benefits and bonus up to May 25, when he had stepped down. From May 25, JD Sports will honour Cowgill's contractual notice period of twelve months. The board also reached two arrangements with Cowgill which it said were "in the best interests of the business". The first is a set of restrictive covenants for a two-year period, replacing more limited provisions that were in Cowgill's 18-year-old contract. He will receive GBP3.5 million over two years, under the agreement that he will not work for or advise any of JD Sports's competitors. The second is a consultancy agreement for an expected period of three years for which Cowgill will be paid GBP2 million, phased over the life of the agreement, the Lancashire, England-based company said.
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MARKETS
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Stock markets were narrowly mixed on Wednesday, while the dollar was firm, ahead of a key interest rate decision by the US Federal Reserve. Among companies in the news, Uniper dropped by 30% in Frankfurt, while Aveva was up 2.3% in London.
The Federal Open Market Committee will conclude its two-day policy meeting and announce its decision at 1800 GMT. This will be followed by a press conference with Fed Chair Jerome Powell at 1830 GMT. While the chances of the Fed going for the full percentage point hike have ebbed in recent days, there are still lingering fears that the central bank could spring a hawkish surprise. The market largely expects another 75 basis point rate hike.
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CAC 40: up 0.1% at 5,986.74
DAX 40: marginally lower, down 5.46 points at 12,665.37
FTSE 100: up 0.7% at 7,240.19
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Hang Seng: closed down 1.8% at 18,444.62
Nikkei 225: closed down 1.4% at 27,313.13
S&P/ASX 200: closed down 1.6% at 6,700.20
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DJIA: called up 0.2%
S&P 500: called up 0.2%
Nasdaq Composite: called up 0.1%
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EUR: down at USD0.9924 (USD0.9989)
GBP: down at USD1.1342 (USD1.1404)
USD: firm at JPY143.87 (JPY143.75)
Gold: up at USD1,673.85 per ounce (USD1,664.71)
Oil (Brent): up at USD92.88 a barrel (USD90.82)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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Russian President Vladimir Putin ordered a partial military mobilisation and vowed on Wednesday to use "all available means" to protect Russian territory, after Moscow-held regions of Ukraine suddenly announced annexation referendums. The votes, already denounced by Kyiv and the West as a "sham", will dramatically up the stakes in the seven-month old conflict in Ukraine by giving Moscow the ability to accuse Ukrainian forces of attacking its own territory. Four Russian-occupied regions of Ukraine – Donetsk and Lugansk in the east and Kherson and Zaporizhzhia in the south – said on Tuesday that they would hold the votes over five days beginning Friday. In a pre-recorded address to the nation early on Wednesday, Putin accused the West of trying to "destroy" his country through its backing of Kyiv, and said Russia needed to support those in Ukraine who wanted to "determine their own future". The Russian leader announced a partial military mobilisation, with Defence Minister Sergei Shoigu telling state television that some 300,000 reservists would be called up.
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Ukrainian President Volodymyr Zelensky reacted calmly to the announcement of plans by four occupied regions in eastern Ukraine to hold referendums on joining Russia. "Our position does not change with noise or any announcements," Zelensky said in his Tuesday evening video address. "We are defending Ukraine, we are liberating our country, and above all we are not showing any weakness," he added.
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The European Central Bank is determined to stop soaring inflation becoming the norm, its president said, as the coronavirus pandemic and the Russian invasion of Ukraine put lasting pressure on prices. The twin shocks have led to consumer price rises that are "much higher and more persistent" than expected, Christine Lagarde said in a speech in Frankfurt, adding that the central bank had to ensure sky-high inflation does not become "embedded". Looking ahead, the ECB expected to "raise interest rates further over the next several meetings", she said.
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UK Prime Minister Liz Truss said she is willing to be unpopular to bring in measures she believes will grow the economy, as she admitted her tax cuts will disproportionately benefit the rich. Truss confirmed she would be reversing the national insurance hike and axing the planned increase to corporation tax, ahead of Chancellor Kwasi Kwarteng's mini-budget on Friday. The Times reported that Kwarteng is also planning to announce a cut in stamp duty in a further attempt to boost growth – although Downing Street refused to comment.
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Kwarteng has been dealt a blow ahead of his mini-budget as official figures revealed higher-than-expected government borrowing last month as its debt interest bill soared to an August record. The Office for National Statistics said soaring inflation saw the interest on government debt jump by 22% year-on-year to GBP8.2 billion last month – the highest August figure since monthly records began in April 1997. Government borrowing, excluding state-owned banks, hit GBP11.8 billion in August – GBP2.6 billion below the same month last year, but far higher than the GBP6.5 billion expected by most economists and nearly double the GBP6 billion predicted by fiscal watchdog the Office for Budget Responsibility. The figure also represented a GBP6.5 billion surge from pre-pandemic levels in 2019, when it was GBP5.3 billion.
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The Asian Development Bank cut its 2022 growth forecast for developing Asia, with crippling Covid-19 lockdowns in China, conflict in Ukraine and efforts to combat inflation dragging on the region. While easing pandemic restrictions had spurred consumer spending and investment in the region, the Philippines-based bank warned of "global headwinds" to the recovery as food and fuel prices soared and central banks hiked interest rates. As a result, the bank slashed its 2022 growth forecast for developing Asia – which refers to the 46 members of the ADB, stretching from the Cook Islands in the Pacific to Kazakhstan in Central Asia – to 4.3%. That compares with its April forecast of 5.2% growth. The region grew by 7.0% in 2021. China's growth forecast for 2022 was reduced to 3.3% from 5.0%, as Beijing pursues a zero-Covid strategy that has devastated the world's second-largest economy.
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By Tom Waite; thomaslwaite@alliancenews.com
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