The £68 billion battle for brewer SABMiller is going 'hostile lite'

• Oscar Williams-Grut
 
•  

• Oct. 8, 2015, 6:52 AM
• 475

Scott Olson/Getty ImagesSABMiller makes Miller Lite, while AB InBev owns Bud Light beer.

The battle to create a $250 billion global brewing giant that controls a third of the world's beer is getting fierce.

AB InBev, the US-Belgian brewing giant behind beers like Budweiser and Corona, made a £68 billion bid for London-listed rival SABMiller on Wednesday, only to have the offer thrown back in its face.

The board of SABMiller, which makes beers like Peroni and Grolsch, said the bid "substantially undervalues" the company.

AB InBev has shot back on Thursday saying the rejection "lacks credibility." The company argues that the bid is more than fair, given it's a 44% above SABMiller's share price in mid-September when takeover talks were first made public.

AB InBev also points out that SAB's biggest shareholder Altira, which owns 27% of the company, supports the bid.

Now Carlos Brito, AB InBev's CEO, is calling on SAB's shareholders to rise up and put pressure on SAB to engage.

Here's Brito:

Notwithstanding our good faith efforts, the Board of SABMiller has refused to meaningfully engage with us. Our proposal creates significant value for everybody.  How long will it be before shareholders see a value of over GBP 42 in the absence of an offer from AB InBev?  If shareholders agree that we should be in proper discussions, they should voice their views and should not allow the Board of SABMiller to frustrate this process and let this opportunity slip away.

In a note on Thursday morning German investment bank Berenberg has characterised this approach as going "hostile lite," referencing SABMiller's Miller Lite beer.

Analysts Javier Gonzalez Lastra and Adam Mizrahi say:

In his US conference call, Mr Brito appealed to SABMiller’s minority shareholders to voice their view to the board, which could be interpreted as a “hostile lite” approach (despite ABInBev having stressed its desire to gain the recommendation from the SABMiller board). If ABInBev does indeed have the support of both Altria and Bevco, which combined account for 41% of SABMiller’s equity, it would appear natural that there is some probability that ABInBev eventually goes hostile.

The consensus in the City is that the deal will eventually get done. AB InBev desperately needs SABMiller for its growth potential, while SAB is facing increasing pressure from its own shareholders.

In a separate note on Thursday, RBC Capital Markets says it expects a final deal to be struck at £44 a share, compared to the current offer of £42.15. Not far to go.

Zinc prices explode after Glencore takes 500,000 tonnes off the market

• Oscar Williams-Grut
 
•  

• 7h
• 2,270
 
• 2

DeborahSilver.com

The mining giant Glencore is cutting its zinc production by a third to boost the price of the metal — and the move is doing exactly that.

Zinc is used mainly forgalvanizing (rustproofing) other metals. As with nickel, it is also used in alloys to create more durable metal products, and it is a primary component of brass and bronze.

Glencore announced the cuts in a statement to the market on Friday. The reduction in its operations in Australia, Kazakhstan, and South America will reduce global zinc supply by 500,000 tonnes per year.

As a result, the price of zinc is jumping — zinc futures are up over 9% at 5:18 a.m. ET.Investing.com

Glencore says the "reason for the reduction is to preserve the value of Glencore's reserves in the ground at a time of low zinc and lead prices, which do not correctly value the scarce nature of our resources."

Glencore controls a huge chunk of global zinc production, so reducing its output by a third will have a big impact. Citi estimates in a note on Friday that the global zinc market is 14.5 million tonnes a year, so an annual reduction of 500,000 tonnes is not trivial.

Glencore shares are jumping on the news, up over 6% at 5:15 a.m. ET.Investing.com

But the production cuts, which Glencore says are temporary, will mean job cuts. Glencore doesn't specify how many but says it will "engage with all employees and put in place support services to assist people who may be affected as a result of these changes."

Glencore shares have been on a wild ride in recent weeks as investors fretted about how the commodity-trading and mining giant would cope with its massive $100 billion (£64 billion) debt pile in an environment of low copper prices.

Shares collapsed 29% in one day after Investec warned that investors could lose everything, but shares bounced back after Glencore reassured the market that it was doing fine.

Boosting zinc prices while cutting costs is another move to reassure investors that it is doing its best to put itself on a sure footing.

Citi says in its note Friday: "We believe Glencore is showing industry discipline by cutting unprofitable tonnes and saying it is worth more value to leave the tonnes in the ground."

Alcoa whiffs, and the stock is tumbling

• Akin Oyedele
 
•  

• 18h
• 3,097

REUTERS/Kevin Lamarque

Aluminum giant Alcoa released its third-quarter-earnings results after the market close on Thursday, and they missed expectations.

"The third quarter brought economic headwinds and significant volatility in some of our markets," said CEO Klaus Kleinfeld in the earningsstatement. "We continue to be laser focused on the things we can control."

The company reported adjusted earnings per share of $0.07 ($0.13 estimated) and revenues of $5.6 billion ($5.64 billion expected), down 11% year-on-year.

Alcoa shares fell as much as 5% in after-hours trading. They have dropped 31% over the last 12 months.

Alcoa is seen as a bellwether for global manufacturing. And, as a big player in commodities, its comments on the markets, and on China's economy, are timely.

Alcoa projects that global aluminum demand will increase 6.5% this year and that there will be a global deficit in 2016.

The company lowered its estimates for 2015 automotive production in China to 1% to 2% from 5% to 8%. 

Last week, Alcoa announced that it will break up into two publicly traded companies: The Upstream Company, involved in mining, and the Value-Add Company, engaged in getting products into industrial clients' hands.

As usual, Alcoa's release unofficially kicks off the earnings reporting season; the big Wall Street banks and Alphabet (Google's new parent company) will announce results next week.

SEE ALSO: MORGAN STANLEY: Here's what Alcoa is worth when you split the company

Here's one sign China's demise might be greatly exaggerated

• Dave Forest, OilPrice.com
 

• 14h
• 1,985
 
• 4

Getty Images/Justin SullivanOil on the move.

Think there aren't any bright spots for commodities prices right now? News this week suggests you should think again.

One unexpected market in fact hit a major price milestone on Monday. Rising to its highest level in half a decade.

Oil shipping.

Platts reported that chartering prices for VLCC (very large crude carrier) ships rose to $100,000 per day on Monday. The first time rates have hit this level since 2010.

Rates are reportedly running especially high for VLCCs sailing from the Persian Gulf to East Asia. As well as for vessels chartered from West Africa, headed to Asia.

Sources in the industry attributed the rise to strong shipping demand out of China. With industry sources saying that requirements for crude oil in China "aren't fully met." Prompting Chinese buyers to charter more VLCCs to bring in extra shipments.

The most interesting thing about this news is it flies in the face of recent reports about an economic slowdown in China. With the pricing numbers in fact showing that Chinese oil users still need a lot of supply -- so much so, they're willing to pay top dollar to bring it in.

This development also suggests that currently-low global oil prices are lifting demand. With market sources saying strong buying interest for VLCCs is also coming from places like Japan.

This is great news for oil shippers, and a welcome development for the oil market in general. It also provides a first solid data point showing that reports of China's economic demise -- and the attendant worries about commodities markets -- may be greatly exaggerated.

Read the original article on OilPrice.com. Copyright 2015.

Japan, China agree on need to promote structural reforms: Aso

Japan's Finance Minister Taro Aso as he attends the opening ceremony of the Thilawa Special Economic Zone (SEZ) at Thanlyin township outside Yangon Sept 23, 2015. 

PHOTO: REUTERS

OCT 9, 201512:55 PM

[LIMA] Japan and China agreed on the need for both economies to steadily promote structural reforms to achieve sustainable growth, Japanese Finance Minister Taro Aso said.

Aso also told reporters that he discussed the need to continue financial cooperation in bilateral talks with his Chinese counterpart on Thursday.

On the Group of 20 finance leaders' working dinner, Aso said there was no particular discussions on China's economy or on the potential global fallout from an expected interest rate hike by the US Federal Reserve.

REUTERS

Singapore's new transport minister aims to deliver the best in class on rail reliability

By

Angela Tanangelat@sph.com.sg

Singapore's newly-appointed transport minister, Khaw Boon Wan, said in his blog on Friday that the government aims to deliver "the best in class on rail reliability''. 

ST PHOTO: DESMOND WEE

OCT 9, 201512:54 PM

Singapore's newly-appointed transport minister, Khaw Boon Wan, said in his blog on Friday that the government aims to deliver "the best in class on rail reliability''.

In a blog post entitled "Catching up with HK", Mr Khaw shared his thoughts on the need to catch up with the Hong Kong Mass Transit Railway (MTR), widely seen by experts as the best in class in providing rail reliability to commuters.

"Our operators, SMRT and SBST, must seek to match MTR's reliability and close the gap as soon as possible,'' said Mr Khaw, Singapore's Coordinating Minister for Infrastructure and Minister for Transport.

"We are now behind Hong Kong MTR, but we shall catch up. Do give us some time to address all these problems,'' he added.

Mr Khaw said that while efforts in recent years have improved train reliability in the city-state, the situation is still not good enough. For example, although the average distance travelled before a delay of more than 5 minutes for Singapore's North-South and East-West Lines (NSEWL) has improved to 137,000 train-km, it is still far short of MTR's performance of about 300,000 train-km.

He noted that Singapore has 10 major disruptions - defined as delays exceeding 30 minutes - across all its train lines last year, compared to MTR, which had 12, "but their network is significantly longer than ours".

"My immediate priority is on these major disruptions: what caused the past disruptions, can we prevent a repeat, what other possible causes have we identified, and have we addressed those causes as well?'' Mr Khaw said.

The consensus view is that Singapore has under-invested in rail maintenance, and its engineering capabilities in this area are still lacking.

"We will need to ramp up investment in this area. We will need to recruit and retain more skilled workers. All these are significant challenges, not easy to resolve quickly, but we are determined to overcome them. We will need time to turn around and then stabilise the situation.''

Until that happens, Singaporeans must be mentally prepared for the next disruption.

"Likewise, I am sure that every disruption hurts our maintenance crew. They told me so when I visited them. Let's stand with them and boost their morale. It is not SMRT's or SBST's name that is at stake; it is Singapore's reputation. How every one of us responds to a breakdown makes a difference," Mr Khaw said.

    
 

Zegna to cut capex in 2016 after investing in stores worldwide

Ermenegildo Zegna, chief executive officer of the luxury-suit maker that bears his name, plans to reduce capital expenditure in 2016 after investing in stores globally even as customer traffic declined. 

PHOTO: ERMENEGILDO ZEGNA

OCT 9, 201511:04 AM

[HONG KONG] Ermenegildo Zegna, chief executive officer of the luxury-suit maker that bears his name, plans to reduce capital expenditure in 2016 after investing in stores globally even as customer traffic declined.

"We spent a lot of capex in the previous year,"  Mr Zegna said in an interview in Hong Kong on Thursday. "If we reduce capex for one year it would be fine because we have done" some major investments, he said. The company is doubling the size of some stores in London and has opened outlets in Japan and Macau.

While Zegna hasn't decided on the size of the reduction, the 60-year-old said he will be more "careful" in 2016. The company is consolidating stores and locations in China, its biggest market, he said.

Ermenegildo Zegna Group is among luxury-goods makers such as Prada SpA and Burberry Group feeling the pinch of China's economic slowdown and President Xi Jinping's clampdown on graft and extravagance. High-end brands including Gucci are also pushing Hong Kong landlords to cut rents on existing properties as sales plummet.

The "biggest challenge" is how the company will address a drop in customer traffic, Mr Zegna said. "You see less people in mall, you see less people in stores. You have to create the right plan on how to excite and get the traffic you used to see." The devaluation of China's yuan and the country's stock rout had "surely created some confusion" leading to "quite a drop" in customer traffic in August, the grandson of the company's founder said. Still, Mr Zegna said he doesn't expect a decline in 2015 sales.

The Swiss central bank's January decision to abandon a cap on the franc has roiled markets worldwide and sent the currency surging to a record against the euro. Zegna, which produces most of its made-to-measure suits in Switzerland, had planned to renegotiate wages of its largely Italian workforce in Switzerland and possibly pass on some of the cost increases to consumers, the CEO said in January.

Mr Zegna said on Thursday he has no plan to increase prices in China. "If anything, we would take some prices down and adjust some prices up in Europe," he said in a Bloomberg Television interview.

Sales amounted to 1.21 billion euros (S$1.91 billion) in 2014, 90 pe rcent of which came from exports. They totaled 1.27 billion euros in 2013, Zegna said in January.

His company, which has more than 500 stores worldwide, entered the Chinese market in 1991 with an outlet in Beijing. Greater China accounts for a third of global sales. The US is its No 2 market, followed by Italy and Japan, he said.

While remaining cautious, Mr Zegna said he's more positive on 2016 after seeing better-than-expected sales during a holiday the past week in China and a "slight rebound" in some stores around the world.

BLOOMBERG

    
 

SBS and SMRT rewarded for improving service reliability

By

Kelly Taykellytay@sph.com.sg@KellyTayBT  

SINGAPORE bus operators SBS Transit and SMRT Corporation have earned S$816,000 and S$384,000 respectively under the Land Transport Authority's (LTA) Bus Service Reliability Framework (BSRF), the two companies and the LTA said in a joint press release on Friday. 

ST PHOTO: DESMOND FOO

OCT 9, 201511:07 AM

SINGAPORE bus operators SBS Transit and SMRT Corporation have earned S$816,000 and S$384,000 respectively under the Land Transport Authority's (LTA) Bus Service Reliability Framework (BSRF), the two companies and the LTA said in a joint press release on Friday.

SBS Transit's larger amount reflects improvements to 12 services, versus SMRT's five.

Introduced in February 2014, the BSRF rewards operators if they improve service reliability and penalises them if there is deterioration in reliability. The incentives help offset the costs incurred by the operators to support the BSRF, such as the hiring of more service controllers.

The three bodies also said that close to 70 per cent of Bus Service Enhancement Programme (BSEP) improvements have been rolled out, with commuters experiencing better connectivity, less crowded buses and more regular bus arrivals.

The BSEP was started in September 2012 and aims to introduce 1,000 government-funded buses by 2017. It will expand the public bus fleet by about 35 per cent, and also includes the introduction of 80 new routes.

Said the joint statement: "The second assessment period of the BSRF trial (December 2014 to May 2015) has shown that commuters on average have benefitted from more regular wait times and less crowding, as there is less prolonged waits, and passenger loads are spread more evenly across bus trips. Seventeen out of 22 services reduced their Excess Wait Times.

"The BSRF trial has been expanded by 12 services in June 2015, with 11 more services joining the trial in December 2015. This brings the total number of services under the trial to 45."

Another two City Direct Services will be implemented in Q4 this year, benefiting residents of Tampines, Simei, Marsiling and Woodlands. Seven new routes will also be introduced to enhance connectivity in areas such as Bedok, Bukit Panjang, Choa Chu Kang, Jurong East, Jurong West, Marine Parade, Punggol, Sembawang, Tampines and Yishun.

"Details of these new routes are currently being worked out and will be shared closer to their implementation dates," said the LTA, SBS, and SMRT.

      

Apple removes some apps from online store over security concerns

An Apple logo hangs above the entrance to the Apple store on 5th Avenue in the Manhattan borough of New York City, in this Jul 21, 2015, file photo. 

PHOTO: REUTERS

OCT 9, 201511:16 AM

[SAN FRANCISCO] Apple Inc said on Thursday that it had removed "a few" applications from its App Store, expressing its concern that the security of some users' personal data could be compromised in certain circumstances.

The company said the apps threatened users' security by installing certificates that can expose data to monitoring by third parties. The company did not specify the precise number of apps at issue. "Apple is deeply committed to protecting customer privacy and security," an Apple spokeswoman said in a statement. "We are working closely with these developers to quickly get their apps back on the App Store, while ensuring customer privacy and security is not at risk." Apps with so-called root certificates route user data to servers where it can be analysed. That opens the door for network providers to view encrypted traffic, leaving users vulnerable to data breaches.

Among the apps removed was Been Choice, which has attracted attention for its ability to block advertising in apps.

An Apple spokeswoman said the company would release a support page to help users remove the apps in question from their devices.

PC shipments fall 7.7 per cent in third quarter: Gartner

Research firm Gartner Inc said worldwide shipments of personal computers fell 7.7 per cent to 73.7 million units in the third quarter as a stronger dollar made them costlier. 

PHOTO: BLOOMBERG

OCT 9, 20157:34 AM

[NEW YORK] Research firm Gartner Inc said worldwide shipments of personal computers fell 7.7 per cent to 73.7 million units in the third quarter as a stronger dollar made them costlier.

Meanwhile, International Data Corp (IDC) said shipments fell 10.8 per cent to 71 million units.

Up to Thursday's close, the dollar had risen about 5.6 per cent this year against a basket of major currencies.

Gartner also said the Windows 10 launch in the quarter had minimal impact on shipments as users chose to upgrade to Windows 10 on existing PCs.

Gartner said analysts "see some signs for future stabilisation and growth" in the PC market. The firm said in July that it did not expect the global PC market to recover until 2016. "The PC market continues to contract as expected, but we remain optimistic about future shipments," said Jay Chou, research manager at IDC Worldwide PC Tracker.

REUTERS

Crude oil futures rise after bullish forecast, Fed minutes   

Crude oil futures rose in early Asian trade on thin volumes after an influential forecaster predicted that a market rally was not far off and US Federal Reserve minutes suggested there was no hurry to raise rates.

PHOTO: AFP

OCT 9, 201511:43 AM

[TOKYO] Crude oil futures rose in early Asian trade on thin volumes after an influential forecaster predicted that a market rally was not far off and US Federal Reserve minutes suggested there was no hurry to raise rates.

The gains added to a surge in prices on Thursday, with Brent crude, the global benchmark, on track for a near 11 per cent gain this week, the biggest weekly rise since early 2009.

Brent was up 25 cents at US$53.30 a barrel at 0306 GMT. The contract rose US$1.72 to close at US$53.05 a barrel on Thursday.

US crude was 23 cents higher at US$49.66 a barrel, after climbing 3.4 per cent to close at US$49.43 a barrel.

US crude is heading for a gain of about 9 per cent this week, the biggest weekly increase since August. The contract rose to above US$50 on Thursday, the highest since July 22. "It is quite difficult to find support above US$50 on the current fundamentals," said Tetsu Emori, president of commodities investor, Emori Capital Management.

Opec is showing no sign of cutting output with lower prices and there is the prospect of additional Iranian supplies coming to the market following the July nuclear agreement with world powers, Emori said. "The market is relatively overbought in the short term and heading to the weekend no one is really willing to take any fresh positions," he said.

PIRA Energy Group, a closely watched forecaster that predicted the slump in oil prices a year ago, said on Thursday it expected crude prices to rise to US$70 per barrel by the end of 2016 and US$75 a barrel in 2017.

Also supporting prices was the release of the Fed minutes, which showed that policymakers are concerned that the global economic slowdown may affect the outlook for the US.

This led investors to further pare bets that the Fed is likely to raise rates later rather than sooner.

Gains in Chinese equities on Thursday, opening after a week long National Day holiday, added to the bullish tone, while Russia's military involvement in Syria has brought a geopolitical risk premium into the market.

REUTERS