Unilever logo

Unilever Sells Spreads Brands to KKR in 6.83 Billion-Euro Deal

12:58 PM, Dec 15, 2017 — Unilever (UN) is selling its group of spreads including Becel margarine and I Can’t Believe It’s Not Butter to KKR (KKR) for 6.83 billion euros ($8 billion) as part of the plan by the global consumer goods giant to reshape its portfolio of brands.

KKR, a New York-based acquisitions and buyout firm, made the offer on a cash-free, debt-free basis, the companies said in a statement on Friday. Unilever said in April it was planning to offload the spreads business after undertaking a review of the firm.

“The announcement today marks a further step in reshaping and sharpening our portfolio for long term growth,” said Unilever Chief Executive Officer Paul Polman. “The consideration recognizes the market leading brands and the improved momentum we have achieved.”

KKR plans to continue following Unilever’s sourcing practices, including “working towards the goal of sourcing 100% sustainable palm oil by 2019,” said Johannes Huth, the company’s head of Europe, Middle East and Africa.

The deal is expected to be completed in mid 2018 and Unilever plans to return net cash to shareholders, “unless more value-creating acquisition alternatives arise,” the company said.

Price: 57.13 Price Change: +0.54 Percent Change: +0.95

Target - $TGT

Target Buys Startup Shipt for $550 Million to Bolster Same-Day Delivery Services

12:20 PM, Dec 13, 2017 — Target (TGT) is buying delivery startup Shipt in a $550 million deal that will see the retailer expand its same-day shipping capacity as consumers increasingly turn to online shopping and home delivery.

The cash purchase will see Minneapolis-based Target join its network of stores with Shipt’s technology platform and community of shoppers, according to a statement on Wednesday. Founded in Birmingham, Alabama in 2014, Shipt uses shoppers to delivery groceries and other goods to customers in 72 cities.

“The acquisition significantly accelerates Target’s digital fulfillment efforts, bringing same-day delivery services to guests at approximately half of Target stores by early 2018,” the company said. “The service will be offered from the majority of Target stores, and in all major markets, before the 2018 holiday season.”

Retailers have been putting more money into online shopping, and in October Target’s rival, Wal-Mart Stores (WMT) acquired Parcel, a technology-based, same-day delivery startup based in New York in a move that was seen as a challenge to e-commerce giant Amazon.com (AMZN).

“With Shipt’s network of local shoppers and their current market penetration, we will move from days to hours, dramatically accelerating our ability to bring affordable same-day delivery to guests across the country,” Target Chief Operating Officer John Mulligan said.

Shipt will be a wholly owned subsidiary of Target, running its business independently, according to the statement. The deal is expected to close before the end of 2017.

Companies: Target Corporation
Price: 61.97 Price Change: +0.95 Percent Change: +1.56

Get Live Briefs Pro

Tax Reform Plan Could Raise Tax Revenues by $1.8 Trillion Over Decade – US Treasury

12:26 PM, Dec 11, 2017 — The Senate Committee’s Finance Tax Reform Plan could increase tax revenues by approximately $1.8 trillion over a period of ten years, according to a projection released by the US Treasury on Monday which factors in a higher-than-previously projected economic growth rate.

The Treasury’s Office of Tax Policy (OTP) said that it had modeled the revenue impact of higher growth effects using the Administration projections of approximately a 2.9% real gross domestic product (GDP) growth rate over 10 years contained in the Administration’s Fiscal Year 2018 budget.

OTP said that it had compared this 2.9% GDP growth scenario to a baseline of previous projections of 2.2% GDP growth and said that it expects approximately half of this 0.7% increase in growth to come from changes to corporate taxation while it expects the other half to come from changes to pass-through taxation and individual tax reform, as well as from a combination of regulatory reform, infrastructure development, and welfare reform.

“This 0.7% increase in the annual real growth rate results in an increase in tax revenues during the 10-year period of approximately $1.8 trillion,” the Treasury statement said.

The projection follows the Senate passing the ‘Tax Cuts and Jobs Act’ earlier this month, a bill which reduces the US corporate tax rate from a maximum of 35% to a flat 20% rate and allows increased expensing of the costs of certain property for businesses.

For individuals, the bill replaces the seven existing tax brackets with four brackets, repeals the deduction for medical expenses, and consolidates and repeals several education-related deductions and credits.

Premium Financial News

interview line

US Payrolls Surpass Expectations in November, Rate Hike Next Week Seen as Likely

12:05 PM, Dec 8, 2017 — US job creation surpassed economists’ expectations last month buoyed by rising employment in the business services, manufacturing and health care sectors, marking the continuation of a trend in rising employment which bodes well for the possibility of an interest rate hike later this month.

Nonfarm payrolls rose by 228,000 in November, according to data published by the Bureau of Labor Statistics (BLS) on Friday morning, ahead of economists’ expectations for growth of 200,000 jobs. The monthly gain was supported by 46,000 jobs in professional and business services, 31,000 new posts in manufacturing and 30,000 new roles in health care.

Employment growth has averaged 174,000 per month thus far this year, compared with an average monthly gain of 187,000 in 2016. The gain in November also marks the fifth month in the past six in which payrolls have risen. In October, nonfarm payrolls rose by 261,000 and in September they fell by 33,000.

The unemployment rate held at 4.1% in November, and the number of unemployed persons was essentially unchanged at 6.6 million, according to the BLS. Over the year, the unemployment rate and the number of unemployed persons were down by 0.5 percentage point and 799,000, respectively.

“The job gains are across the board, with clear increases in services, manufacturing and construction. The numbers might have been boosted by the return to work of people affected by the hurricanes, but this effect will have been small,” Ian Shepherdson, chief economist at Pantheon, said. “Post-storm repair work likely supported the 24,000 increase in construction jobs. That said, surveys point to another 200,000-plus job gain in December, so the underlying trend is strong”.

“This US expansion is a virtuous circle in which jobs create spending, and spending creates jobs, and November data stay on that message, but also didn’t alter the tale of moderate wage gains,” Avery Shenfeld, chief economist at CIBC Capital Markets, said. “Overall, nothing to sneeze at here, but no pressure on wage inflation to compel the Fed to accelerate its rate hike program after the hike we expect next week.”

The probability of a 25 basis point hike next week currently stands at 90.2% on the CMEGroup’s Fed Watch tool.

Premium Financial News

General Electric’s GE Power Unit Slashing 12,000 Jobs Amid Cost Cutting Drive

8:59 AM, Dec 7, 2017 — General Electric’s (GE) GE Power unit is cutting 12,000 jobs from its global workforce as part of the industrial conglomerate’s bid to reduce costs after it slashed its dividend last month.

The workforce reductions will enable Schenectady, New York-based GE Power to hit its target of $1 billion in structural cost cuts in 2018, according to a statement on Thursday. The cuts will affect both professional and production employees at the company that says it generates more than 30% of the world’s electricity.

“This decision was painful but necessary for GE Power to respond to the disruption in the power market, which is driving significantly lower volumes in products and services,” Russell Stokes, president and CEO of GE Power, said in the statement. “Power will remain a work in progress in 2018. We expect market challenges to continue, but this plan will position us for 2019 and beyond.”

General Electric announced last month a plan to slash its dividend by half and cut the size of its board of directors as it set earnings expectations for 2018 below analysts’ expectations and said the year will be a “reset and stabilize” period.

Fitch Ratings downgraded General Electric’s long-term credit rating due to a “deterioration in the company’s operating and financial performance” and “reduced long-term growth prospects” in the company’s gas turbine division.

GE Power said the savings from the job cuts are part of GE’s effort to reduce overall structural costs by $3.5 billion in 2017 and 2018. The company said the plans “are driven by challenges in the power market worldwide” as traditional markets including gas and coal have softened.

According to its website, GE Power has more than 55,000 employees and is GE’s largest industrial business, earning about $27 billion in revenue last year.

Companies: General Electric Company
Price: 17.69 Price Change: +0.03 Percent Change: +0.17

Get Live Briefs Pro

Oil pump, industrial equipment

Goldman Sachs Lifts 2018 Crude Price Outlook on Saudi, Russian Resolve to Cuts

9:40 AM, Dec 5, 2017 — Goldman Sachs raised its outlook for oil prices in 2018 on expectations of tighter crude inventories next year after Russia and Saudi Arabia signalled stronger-than-expected commitment to cuts at last week’s meeting of key oil producing nations.

The investment bank sees Brent and West Texas Intermediate 2018 spot forecasts at $62 a barrel and $57.50 a barrel, it said in a note on Tuesday. Forecasts for 2019 are $59.50 a barrel and $55 a barrel. Prior projections for both years were $58 and $55.

“OPEC and non-OPEC participants to the production cuts agreed last week to extend their cooperations until year-end 2018, with a goal of normalizing inventories,” said Goldman analysts including Damien Courvalin and Jeffrey Curie.

“The press conference featured comments on remaining ‘agile and responsive’ to the progress of the rebalancing, as we expected, but the resolve exhibited by Saudi and Russia nonetheless exceeded our expectations,” they said in the note.

Countries from the Organization of the Petroleum Exporting Countries, or OPEC, have put caps on their production in a bid to curb the glut of global crude supplies that helped send prices tumbling to multi-year lows. Still, output in the US has risen as shale producers stepped up their efforts.

Goldman said by 2019, they see shale and other producers responding to the higher prices, incentivizing “OPEC and Russia to pare back their now greater spare capacity, leaving risks skewed to the downside.”

Get more news

Bitcoin cryptocurrency

CFTC Warns of Volatility as Markets Plan Bitcoin Futures Trading

11:00 AM, Dec 1, 2017 — The Commodity Futures Trading Commission warned about uncertainties around Bitcoin as the CBOE Futures Exchange and Chicago Mercantile Exchange self-certified new contracts for futures products of the virtual currency on Friday.

“Market participants should take note that the relatively nascent underlying cash markets and exchanges for Bitcoin remain largely unregulated markets over which the CFTC has limited statutory authority,” J. Christopher Giancarlothe, chairman of the futures and swaps market regulator, said in a statement. “There are concerns about the price volatility and trading practices of participants in these markets.”

CME Group (CME) said it self-certified the initial listing of its Bitcoin futures contract to launch on Dec. 18. CBOE (CBOE) said it filed a product certification with the CFTC to offer Bitcoin futures trading. And the CFTC said the Cantor Exchange self-certified a new contract for bitcoin binary options.

“We have had extensive discussions with the exchanges regarding the proposed contracts, and CME, CFE and Cantor have agreed to significant enhancements to protect customers and maintain orderly markets,” Giancarlothe said.

The CFTC expects the futures exchanges to monitor trading activity through information sharing agreements, but said investors should be aware of the “potentially high level of volatility and risk in trading these contracts.”

The CME Group said its futures contract will have an initial margin of 35% and including position and intraday price limits, among other risk and credit controls.

“Though we have worked through a lengthy, comprehensive process with the CFTC to get to this point, we recognize bitcoin is a new, uncharted market that will continue to evolve, requiring continued collaboration with the Commission and our clients going forward,” said CME Chief Executive Officer Terry Duffy.

Companies: CBOE Holdings, Inc.
Price: 123.69 Price Change: +0.26 Percent Change: +0.21

Premium Financial News

US Federal Reserve

Outgoing Fed Chair Yellen Sees More Rate Hikes to Support Job Market, Stabilize Inflation

12:51 PM, Nov 29, 2017 — More interest-rate increases will be needed to support gains made in the labor market and to stabilize inflation around the 2% target that has been elusive this year, Federal Reserve Chair Janet Yellen said.

In testimony before the congressional Joint Economic Committee in Washington, DC, Wednesday, Yellen said the target range on the federal funds rate will be the primary means of changing monetary policy as the Fed unwinds its balance sheet of asset purchases that were put in place to shore up the economy during the recession.

“We continue to expect that gradual increases in the federal funds rate will be appropriate to sustain a healthy labor market and stabilize inflation around the FOMC’s 2% objective,” Yellen said, according to remarks on the Fed’s website.

The world’s biggest economy has been recovering from recession sparked by the 2007-8 financial crisis, with data earlier Wednesday showing expansion in the third quarter was 3.3%, better than the Commerce department’s previous estimate of 3%. Stock markets have surged to multiple record highs in 2017 and consumer confidence indicators have risen.

Yellen, who is retiring from the Fed in February, said the growth is “increasingly broad based” and is expected to continue to firm with adjustments in monetary policy. She said that even with asset valuations that are high by historical standards, “overall vulnerabilities in the financial sector appear moderate, as the banking system is well capitalized and broad measures of leverage and credit growth remain contained.”

Still, she said Congress “might consider policies that encourage business investment and capital formation, improve the nation’s infrastructure, raise the quality of our educational system, and support innovation and the adoption of new technologies” as the US grapples with slower growth of the labor force and sluggish productivity.

Get Live Briefs Pro

Meredith Scoops Time in $2.8 Bn All-Cash Deal Helped by Koch Brothers’ Investment

7:15 AM, Nov 27, 2017 — Shares in magazine publisher Time (TIME) were sharply higher on Monday morning after media and marketing company Meredith (MDP) said it had agreed to acquire the publisher of titles such as Horse & Hound, Country Life and Sports Illustrated for $2.8 billion in an all-cash transaction.

The deal, which sees Meredith paying $18.50 in cash per share of Time, aims to create a more diversified entertainment company with a lower cost base, according to a statement released by Meredith on Sunday. It was supported by a $650 million equity commitment from Koch Equity Development (KED), the investment and acquisition subsidiary of Koch Industries, owned by billionaire brothers Charles and David Koch. An additional $3.55 billion in debt financing was secured from four large financial institutions.

Headquartered in Des Moines, Iowa, Meredith publishes magazines such as MidWest Living, FamilyFun and Better Homes & Gardens and owns 17 television stations. Cost synergies resulting from the takeover are estimated to be $400 million to $500 million in the first full two years. The combined company will likely serve about 200 million American consumers across digital, television, mobile, and social platforms, with joint 2016 revenues pegged at $4.8 billion, including $2.7 billion of total advertising sales.

Accelerating its digital position by adding scale, the deal is expected to transform Meredith into a Top 10 digital media company with 170 million unique monthly visitors in the US, more than 10 billion annual video views, and nearly $700 million in digital advertising revenues.

“This is a transformative transaction for Meredith, and follows fiscal 2017 in which we posted the highest revenues, profit, and earnings per share in our 115-year history,” Meredith’s Chief Operating Officer Tom Harty said in the statement.

Meredith, which will continue to pay its current annual dividend of $2.08 per share, signaled the deal will probably be accretive to free cash flow in the first full year of operations. It said the increased scale and free cash flow alongside cost synergies will help in “aggressively” paying down debt and achieve a leverage ratio of about 2 times by 2020.

Shares in Time were up 9.8% in recent pre-market trade on Monday. The transaction is expected to close in the first quarter of 2018.

Companies: Meredith Corporation

Premium Financial News

Oil Pipelines

TransCanada Gets Nebraska Approval for Keystone XL on Alternative Route

12:57 PM, Nov 20, 2017 — TransCanada’s (TRP) Keystone XL pipeline received approval from regulators in Nebraska, but the okay was given to an alternate route rather than the course preferred by the Canadian energy company.

The Nebraska Public Service Commission said it approved the alternative mainline route, one of three paths proposed by TransCanada to take oil from Hardisty, Alberta to Steele City near the Nebraska-Kansas border. The mainline route follows along the existing Keystone pipeline for about 95 miles, the commission said in its decision on Monday.

“It is in the public interest for the pipelines to be in closer proximity to each other, so as to maximize monitoring resources and increase the efficiency of response times,” the PSC said. “This would also assist emergency responders and others that may be called upon to assist with any lssues that may arise with either pipeline.”

Keystone XL, which had been rejected by President Barack Obama in 2015 before being approved by his successor, Donald Trump, earlier this year, was the focus of protests amid concerns about the environmental impact of another pipeline.

“There’s no safe route for Keystone XL, and NRDC will continue fighting with every tool, in every venue and with every partner, to make sure it’s never built,” Anthony Swift, Canada project director at the Natural Resources Defense Council, was quoted on Twitter as saying.

Nebraska’s decision also comes after TransCanada’s existing Keystone pipeline was shut down because of a leak that spilled 210,000 gallons of oil in South Dakota last week. The company said on Sunday that 150 people are on site working to clean up the spill.

TransCanada “will conduct a careful review of the Public Service Commission’s ruling while assessing how the decision would impact the cost and schedule of the project,” Chief Executive Officer Russ Girling said in in a statement on Monday.

Companies: TransCanada Corporation
Price: 49.56 Price Change: +0.58 Percent Change: +1.19

Premium Financial News