TheChek News Flow

DAX:

MDAX:

SDAX:

The acquisition of cereal maker WK Kellogg could be finalized as soon as this week

The Italian candy maker behind Ferrero Rocher and Nutella is nearing a roughly $3 billion deal to buy the breakfast-cereal conglomerate WK Kellogg KLG 3.49%increase; green up pointing triangle, according to people familiar with the matter.

The details

Ferrero, a family-owned company, could finalize the deal for the iconic cereal company as soon as this week, barring a last-minute hiccup in the talks, the people said.

A deal would combine two storied consumer food makers from both sides of the Atlantic.

WK Kellogg is the company behind Froot Loops, Frosted Flakes, Rice Krispies and a variety of other cereal monikers. It has a market value today of some $1.5 billion, and more than $500 million in debt.

The invention of Corn Flakes cereal in 1894 by the company’s founder, Will Keith Kellogg, led to the business’s formation in the early 20th century. The story goes that the wheat-based cereal was created as an accident, but it would go on to revolutionize the breakfast-food industry.

Founded close to 80 years ago in Italy, Ferrero has expanded internationally to become the world’s third-largest chocolate confectionery company, with some 35 brands that are sold in more than 170 countries. Its pantry includes Butterfinger, Baby Ruth, Kinder and its namesake chocolate treats.

The group generated revenue of 18.4 billion euros, equivalent to about $21.5 billion, for its latest financial year, up almost 9% from the prior period, boosted by its operations in the U.S. and Italy.

The context

Ferrero has been targeting the U.S. for acquisitions to grow geographically and expand by category. It bought Wells Enterprises, the maker of Blue Bunny and other ice-cream brands, and before that struck a $2.8 billion deal to acquire Nestlé’s U.S. chocolate business.

WK Kellogg is a product of Kellogg spinning off its North American cereal business into a separate publicly traded company about two years ago. The remaining global snacking business, called Kellanova, agreed to sell itself to Mars in a more than $30 billion blockbuster transaction last year.

The deal would come when Americans’ penchant for snacking is changing. Higher prices on grocery shelves combined with a push toward healthier options means consumers are picking up different habits when they shop and eat. Companies, in turn, are being forced to adapt.

WK Kellogg has also been under fire for its use of artificial food dyes in some of its breakfast cereals, especially so after Robert F. Kennedy Jr., a critic of the additives, became the country’s top health official.

Other recent deals in the snacking space include PepsiCo’s acquisition of tortilla-chip maker Siete Foods, J.M. Smucker’s acquisition of Twinkies snack-cake maker Hostess Brands and Hershey’s deal for better-for-you popcorn brand LesserEvil.

Even billionaires are selling seats on personal planes and jet charters at relative discounts. ‘Sometimes you don’t want to spend $25,000 to $30,000 going up to New York.’

Nick Molina was in the American Express Centurion Lounge at New York’s LaGuardia Airport, chatting with a stranger about flight delays, when his fellow traveler asked if he’d considered flying private.

“She was telling me about this WhatsApp group,” said Molina, a 57-year-old investor and former startup entrepreneur in Key Biscayne, Fla. “She offered to get me added.”

Which is how he ended up in “S. Florida<->NY/Northeast,” one of several active group chats where travelers, from the merely wealthy to actual billionaires, buy and sell seats on private flights. These invite-only chats focus on gilded routes—New York to Palm Beach, Aspen to Southern California, Texas to Cabo—and include thousands of members, at a time when delays and safety concerns have plagued commercial aviation.

“They’ll go in a chat and say, ‘Hey, I’m going to Aspen on August 1. Who wants to split a plane with me?’” said Peter Minikes, who runs private-jet charter company Priority One Jets.

Real-estate investor Enrico Scarda, 56, sold his own jet around a year ago but has not sworn off his habit of flying private. He’s a member of the same 676-person group as Molina, which operates like a Craigslist for one-percent fliers moving up and down the East Coast. Through the group, he has flown on midsize jets including a Dassault Falcon 50 and a Hawker 800.

“I guess, at first, I was a little hesitant about having a stranger meet you on the plane,” Scarda said. “But after the three or four times that I either bought a seat or sold a seat, I realized it’s all pretty much the same types of people.”

Members of these chats hawk seats on their own jets to defray costs or charter planes and look for splitters. Some are simply passengers with an aversion to TSA lines. Private-jet brokers also pop in, offering their clients’ inventory. That often means seats on “dead-leg” flights—empty jets flying to pick up passengers.

Kaden Green, a 20-year-old private-jet broker, is active on many of these WhatsApp groups. He’s found them to be valuable tools for generating client leads. “It’s free marketing,” he said. “It’s not like you need to pay for an ad or anything.”

For some fliers, sharing cream-colored cabins with strangers defeats the purpose of flying private, stripping people of the ability to take to the skies whenever they wish. “At the end of the day, you’re still scheduling your day and your travel around a pre-booked flight plan,” Molina said.

Green, who estimates as much as 30% of his business stems from WhatsApp groups, recently started his own chat dedicated to private flights between Europe and the United States. Arik Kislin, an investor, started a separate 23-person “Turks Private Jet Group” for travelers to Turks and Caicos, the British archipelago where he owns a home. What fuels these groups is a blend of penny-pinching ways and a thirst for luxury.

“I do understand that sometimes you don’t want to spend $25,000 to $30,000 going up to New York, but you’re OK spending three or four [thousand],” Kislin said.

Scarda said most seats between New York and South Florida go for at least $2,000 in the WhatsApp group. Commercial airliners like JetBlue and Delta ferry passengers between the two areas for as little as a 10th of that.

Before the pandemic, many fliers between these ritzy locales offered seats free to those in their network, according to Minikes, the charter broker. But as the private-aviation market has expanded and a WhatsApp shadow economy has emerged, charging for seats has become more customary.

“It’s a tight space,” he said. “Why do you want to be uncomfortable if you’re not going to be compensated for it?”

Whether these trips comply with Federal Aviation Administration regulations is murky. Plane operators typically must be certified as Part 135 if they receive any money over their pro rata share of cost, according to aviation attorney Steve Taber. Part 135 is a section of the Federal Aviation Regulations, setting rules and safety standards for on-demand, nonscheduled operators. If aircraft operators are found in violation of these rules, they can face actions like monetary civil penalties, according to aviation attorney Mary-Caitlin Ray. Taber added that FAA officials have pursued Instagram accounts and Facebook groups where users sell private jet seats for profit.

For that reason, it might not be worth avoiding full-body scans and baggage fees. And there are other inconveniences that even the rich can’t escape. Kislin said shared private flights often end up delayed because a majority of co-travelers prefer to takeoff later. “Well, that doesn’t work for me,” he said. “That changes my schedule.”

But even if Kislin books travel elsewhere, remaining a part of these private aviation groups is valuable. For some jet-setters, it’s as status-y as being a member of Zero Bond.

How Volkswagen’s Electric Bus Went From American Flagship to Flop

The German company’s hyped reboot of its iconic vintage van has been stunted by a luxury price tag, Trump’s trade war and an embarrassing recall

As psychedelic rock blared, Thomas Schäfer hopped onto a Huntington Beach, Calif., stage flanked by surfboards two years ago to announce the rebirth of an automotive icon, the Volkswagen VOW3 1.56%increase; green up pointing triangle bus.

The German auto giant was bringing back the bus as an electric vehicle, albeit one with a boxy design and two-tone paint job reminiscent of the original. The reboot was more than two decades in the making, and the company said the vehicle would soon be available in the U.S.

“Finally, finally,” said Schäfer, a top VW executive, as the bus they called the ID.Buzz rolled across the stage to wolf whistles from the crowd.

The reception since has been considerably less enthusiastic.

Volkswagen had hoped to ride a wave of nostalgia for a much-loved symbol of 1960s hippie counterculture as a way to carve out a larger chunk of the lucrative U.S. auto market—a feat that has defied the world’s second-largest carmaker for half a century.

Instead, the vehicle is shaping up to be yet another American misadventure for the company, reaching dealers years late, over budget and just in time for a trade war.

Built in Germany, the model was delivered to its first U.S. customer days after the election of Donald Trump, who would go on to introduce a 25% tariff on imported cars and roll back government support for EVs.

With a battery range of less than 250 miles per charge, the ID.Buzz doesn’t compare favorably with other new EVs. The German-led design also failed to account for some uniquely American tastes: It often needs to be fitted with extra cupholders at U.S. ports.

Capping the model’s troubles, all the vehicles shipped to the U.S. were recalled in April because the third-row seats were too broad, allowing three passengers to squeeze into a space with only two seat belts. Sales were suspended for two months while Volkswagen fit plastic parts to narrow the row, which meant the company only delivered 564 in the three months before the end of June.

Even before the recall, the luxury sticker price of the ID. Buzz, which starts at about $60,000, kept a brake on sales as consumers pivoted to more affordable wheels. In the U.S., where the vehicle became available toward the end of last year, just over 3,000 had been shipped to dealers by the end of March.

While a slowdown in EV sales and President Trump’s tariffs have caught other automakers off guard, the ID.Buzz debacle highlights institutional problems, such as internal divisions and sluggish, Europe-centric product development, that have dogged Volkswagen for years.

“Could have been there earlier? Probably, yes,” Kjell Gruner, president of Volkswagen Group of America, told reporters earlier this year.

A spokesman for the ID.Buzz in Germany said it was a “halo” product designed to bring drivers to showrooms rather than sell in great numbers. He said it only arrived in the U.S. last year, following a 2022 launch in Europe, because Volkswagen’s American business decided that a three-row extended version that only came later was the best fit for the U.S. market.

Many hardcore VW fans have been disappointed by the rollout.

In Dallas, Texas, European car enthusiast and parts supplier Autrey McVicker was “dead set on getting the Buzz” until his dealer told him the pomelo yellow and white version he had his eye on would cost $72,000, far more than he had expected.

“I just couldn’t justify such a high expense for an EV that would most likely lose 50% of its value the first year,” he said.

McVicker is still waiting for his ID.Buzz. He hopes to get one “once they start popping up on the used market for what they are actually worth.”

Golden age

The original bus sold in the millions, embodying Volkswagen’s name, which means “the people’s car” in German.

In the 1960s, the bus and the Beetle helped Volkswagen enjoy rapid growth. U.S. sales peaked at almost 570,000 in 1970, more than a third of the brand’s global total. At the time, the van was priced at the equivalent of around $20,000, less expensive than most cars.

Many of them festooned with peace signs and flowers, and capable of moving large groups around the country cheaply, the bus was a favorite of surfers, young families and hippies. (When Grateful Dead guitarist Jerry Garcia died in 1995, Volkswagen ran an ad with a tear falling from one headlight.) It spawned “van life” several generations before the term was embraced by social-media influencers.

But as the dollar fell against the deutschmark and Japanese auto companies expanded to the U.S., Volkswagen lost its edge. By 1993, Volkswagen sales in the U.S. had declined to a low of less than 50,000.

A few years later, the New Beetle helped to revive the brand by channeling its 1960s heritage, and Volkswagen began plotting a similar effort for the bus. A first attempt was shown at the 2001 Detroit auto show.

The concept was a hit and was cleared for series production, but following a management change, the new bus was canceled for fear it would be too niche and costly. Instead the company launched a rebadged Chrysler minivan, the VW Routan, that flopped.

It took the greatest scandal in Volkswagen’s history for the company to get serious about reviving the bus.

In January 2016, less than four months after the company admitted to cheating on emissions tests, Volkswagen executive Herbert Diess delivered the keynote address at the Consumer Electronics Show in Las Vegas.

Diess started with an apology to the millions of customers with affected vehicles, then pledged to create “a different and better company. A new Volkswagen.”

“Do you remember this iconic machine?” asked Diess, as a photo of a VW bus with a surfboard on the roof appeared on screen behind him. “Ladies and gentlemen, the Volkswagen Budd-e.”

Diess was one of a growing group of auto executives who believed the industry was on the cusp of an electric revolution, and was a fan of Elon Musk. The Tesla CEO was preparing to launch the company’s first mass market vehicle, the Model 3 sedan, which he said would cost $35,000. Nearly 200,000 people reserved a Tesla on the first day orders opened, and Diess used the new competition as a motivating tool to push Volkswagen to move faster.

Volkswagen had toyed with the idea of bringing out an electric version of the more aerodynamic Beetle, according to former executives. But the company settled on electrifying the bus, partly because Americans were turning away from small cars in ever larger numbers.

Diess saw the Volkswagen people carrier as a way to recapture what made the company popular in 1960s America: fun, affordable vehicles. Making them electric would help dispel the stench of its emissions scandal.

The Budd-e concept offered a “journey to the year 2019,” Diess said. By mid-2017, when in Pebble Beach he announced regular production of the ID.Buzz, he was promising the first deliveries in 2022. It didn’t reach America until 2024, after he had left the company.

Internal rivalries

In his then role as head of the Volkswagen brand, Diess was in charge of the group’s pivot to becoming an electric-car maker.

Volkswagen owns luxury automakers Audi and Porsche in a structure that encourages competition between rival teams to develop new technologies, such as those feeding into the novel approach to electric vehicles that spawned the ID.Buzz.

The belief was that friendly competition would yield a better product, but it had the effect of slowing down decision-making on the ID.Buzz, according to a former executive at Volkswagen’s North American arm. The competition also drove up costs as the departments duplicated efforts, the person said.

Volkswagen, which developed the ID.Buzz alongside other EVs such as the ID.4, later vied with the company’s separate commercial-vehicle arm for the right to produce it.

Diess had considered making the vehicle in the U.S., where Volkswagen opened a factory in Chattanooga in 2011. As a compromise to get the ID.Buzz over the line, Diess gave the vehicle to the commercial-vehicle business, which had produced the original bus and made its successor vehicles for sale across Europe. Chattanooga got to produce the more mainstream ID.4 SUV instead, while the commercial business gave up a project to electrify an existing van.

But the commercial-vehicle engineers had less expertise on electric-vehicle technology and building automobiles for sale in the U.S.

“Commercial-vehicle engineers had to learn a lot of things, and the other engineers said, ‘We’re too busy, you figure it out yourself,’” the former Volkswagen North America executive said. “That’s why it took so damn long.”

The commercial-vehicle business is also based at a plant in Hanover that is among the company’s most expensive. The labor cost of producing a vehicle in Germany was roughly $3,307 last year, compared with $1,341 in the U.S., according to a recent report by consultants at Oliver Wyman. Hundreds of millions of euros were also spent on upgrading the plant to accommodate production of an EV on an all-new platform.

The decision to make the vehicle in Hanover was at least partially due to Volkswagen’s complicated political situation. Hanover is the capital of Lower Saxony, the German region that owns 20% of the company’s voting shares and has two seats on its board.

“Herbert’s plans to take the bus out of Hanover and put it in another country didn’t go down well with Lower Saxony,” recalls one executive who was involved in the project.

The Volkswagen spokesman said the factories run by the commercial-vehicle business were the only ones with the equipment to build a vehicle with side panels such as the ID.Buzz.

Supply shortages pushed up battery costs during the pandemic, which was especially impactful for the ID.Buzz, given the large battery required to move a bus. High costs meant the plusher interior features initially envisaged, such as a soft dashboard and door panels, were gradually replaced with cheaper plastics as the project progressed.

The rich people’s car

The styling of the original bus that made it so endearing turned out to translate poorly in the EV age.

When Diess showed an ID.Buzz prototype in 2017, he promised EVs that would be “affordable for millions, not just to millionaires.” The company prepared its Hanover factory to produce up to 130,000 units a year, and executives hinted that they could in time manufacture it in the U.S. as well.

Only around 30,000 units were sold last year, hurt in Europe by key markets including Germany and Sweden rolling back EV subsidies.

The original VW bus had its engine at the rear, giving it an unusually flat front and poor aerodynamics. For an EV, minimizing weight and air drag is key to maximizing range per unit of expensive battery power.

Volkswagen’s designers made the front of the ID.Buzz much more sloping than that of the original bus, but they still had to use an outsize battery to report an anemic range of 234 miles at full charge.

When the ID.Buzz finally hit U.S. dealerships in October, the $60,000 price tag was criticized as being higher than many competitors’ vehicles, which could also travel farther on a single battery charge.

“Anyone who has been around VW thinks the price point is high,” said Fred Emich IV, a Volkswagen and Kia dealer.

Dazed and confused

Designing and building cars in Germany for the U.S. comes with problems beyond just high costs. After less than a year on the U.S. market, the ID.Buzz has already been subject to two recall notices, both for glaring design oversights.

In April, the National Highway Traffic Safety Administration warned that the vehicle showed the international brake-warning sign in amber rather than the word “brake” in red capital letters, which is the requirement in the U.S.

A few weeks later, the body said the third-row seat was too wide because it could accommodate three people even though it only had two seat belts. The company is fitting plastic parts to cover the sides of the seats in the roughly 5,600 vehicles affected.

Volkswagen also appeared to miss the biggest appeal of the ID.Buzz to American car buyers: its paint job.

The top-of-the-line ID.Buzz comes in a two-tone paint job with names like Cabana Blue and Pomelo Yellow, reminiscent of the vintage models often found in psychedelic hues. The base model is only offered in pedestrian white, gray or black.

To help juice sales of those models, Volkswagen started directing dealers to wrap the cheaper versions with colored vinyl.

The snafus are emblematic of Volkswagen’s struggles to bring products designed for European tastes or regulatory standards to the U.S.

Used to catering to sedan-loving Europeans, the company was slow to introduce SUVs as Americans started to embrace them in the 2000s. The emissions scandal itself was rooted in an effort to adapt a European technology for tighter U.S. nitrogen-oxide emissions standards, at minimal cost.

“The problem with all of the Volkswagen brands has always been that they’ve just been a bit too Europe-centric,” said Citigroup analyst Harald Hendrikse.

The company has made clear it wants to change that. At Volkswagen’s annual general meeting in May, Chief Executive Officer Oliver Blume said it was “formulating a vision for North America,” where it wants to grow “with products that are consistently geared to the expectations of American customers.”

But Blume didn’t evoke the ID.Buzz. Instead he talked about Scout, the heritage SUV brand for which the company is building a $2 billion new factory in South Carolina.

Nissan bets on its hybrid technology to spark US revival

Third generation of carmaker’s e-Power system has improved fuel efficiency enough to justify American launch next year

Nissan is betting that a third-generation version of its unique hybrid technology will drive a breakthrough in the US, a critical market for new boss Ivan Espinosa as he tries to turn around the struggling Japanese carmaker.

The company produces its “e-Power” hybrid system for the Qashqai model in its UK plant in Sunderland and for various models made in Japan but has shied away from launching it in the US because of poor fuel economy on highways.

However, fuel efficiency has improved 15 per cent in the latest generation, making management confident the technology can be introduced in Nissan’s Rogue SUV in the US from next year, as part of a push to win back customers and reverse tumbling sales.

“E-Power is one of the most important technologies” to support Nissan’s revival, said Eiichi Akashi, Nissan’s chief technology officer and a key ally of Espinosa.

Hybrids, which combine conventional engines with batteries to power cars, have been experiencing a significant resurgence. Nissan’s rival Toyota has seen its enduring faith in the category rewarded through higher sales, as motorists hesitate to go fully electric because of concerns about higher prices and the availability of charging points.

In contrast, Nissan was a trailblazer in fully electric cars with its Leaf model but has fallen behind BYD and Tesla in that category while neglecting hybrids, despite initially releasing its e-Power technology almost a decade ago in 2016.

While standard hybrids switch between an engine and a battery-powered electric motor to power a vehicle’s wheels, Nissan’s e-Power engine is not connected to the wheels and powers a generator instead, which tops up the battery.

This means e-Power hybrids can offer the same experience as fully electric cars, with quieter driving and faster response times. The engine kicks in at higher speeds, but less perceptibly because it operates at a more consistent, lower RPM level optimised for generating electricity. The system takes advantage of the efficient engine to use less fuel to power the generator, keeping the battery at a high level of charge and reducing motorists’ “range anxiety”.

In earlier versions of e-Power, only a small portion of the battery capacity was utilised, due to concerns about the impact on battery life from frequent charging and discharging. This meant the engine did the majority of the work at higher speeds, lowering the fuel efficiency benefit.

Analysts said the history of the technology epitomised the good, bad and the ugly at Nissan: fun, novel and offbeat products, but confused, clunky marketing and getting caught flat-footed due to slow decision-making and infighting.

“I think Nissan has a lot of problems — [but] I don’t think technology is one of them. The problem is not being differentiated enough; it’s not reacting quickly enough to changes in markets,” said Christopher Richter, analyst at CLSA. “They failed to put it [e-Power] into the US market and they’re in the penalty box because of that.”

During this period of lost time on hybrids, Nissan’s brand has been damaged by large incentive packages offered on cars sold in the US, which have cemented a perception of its brand as low-cost. As an executive at a major Nissan supplier put it: “If you’re on welfare, then you buy a Nissan.”

While fuel economy is now expected to be similar to that of regular hybrids, Nissan believes sharing components with pure EVs may give it a slight cost advantage, according to current executives and former engineers. The main differentiator is the EV-like feel, which creates less engine vibration and reduced pedal switching as the car automatically slows itself down.

“Ninety per cent of customers won’t care. They just care if it’s cheaper,” said Francisco Carranza, a former Nissan executive who worked on its electrification technologies.

Analysts have expressed concern that the carmaker's window for major sales of hybrids has narrowed significantly, and it may have missed the golden years. The e-Power system will compete against new and planned EV offerings with range-extender options from rivals such as BMW, Hyundai, Jeep and Volkswagen.

With Nissan highly exposed to US tariffs of 25 per cent on auto imports, it plans to shift a higher proportion of the Rogue’s e-Power production to the US, rather than Japan.

“They should have introduced e-Power into the US sooner,” said Carranza, who now works at Futuraiser, a London-based financial advisory for auto and energy groups. But he added that there were “still many years in front of us in which hybrid vehicles will have a bright market”.

In May, chief executive Espinosa unveiled plans to cut 20,000 jobs and shut seven out of 17 factories globally in an effort to reduce costs and tackle an expected ¥200bn ($1.4bn) operating loss in the three months to the end of June. But arguably the far tougher task for the 46-year-old Mexican will be reigniting revenue growth, with car sales tumbling from 5.5mn to 3.5mn globally since 2018.

Since Nissan’s merger talks with Honda fell apart earlier this year, Apple supplier Foxconn has stepped up its pursuit to secure contract manufacturing orders for EVs from Nissan.

The two sides have been in talks about joint use of the Oppama plant in Japan to form a base for Foxconn’s contract manufacturing operations, rather than Nissan closing the plant, according to two people familiar with the matter. Nissan shares slumped a further 16 per cent this week after issuing ¥200bn ($1.4bn) of convertible bonds, raising fears of dilution for existing shareholders.

Proving e-Power’s success would put weight behind Nissan’s claims that it holds a clutch of valuable technologies, in areas from assisted driving to solid-state batteries, that set it apart from the competition and provide a foundation for growth.

While the US market is shielded from Chinese competition, in the long run, Nissan will have to contend with its Asian rivals’ technological edge and cost competitiveness, led by BYD.

With conventional fuel readily available for the e-Power engine that tops up the battery, a former Nissan engineer said the technology may provide a good alternative to EVs for people with little access to charging infrastructure.

Yet China’s low-cost lithium iron phosphate (LFP) batteries had outperformed even the wildest expectations of the auto industry and put Chinese carmakers in a powerful position to expand plug-in hybrid and range extender vehicle sales, the person added.

“In the end, LFP will make sense. E-Power was developed during a time when we didn’t know how far LFP could go,” the engineer said.

Dutch pension funds set to sell €125bn of government bonds

Overhaul of Eurozone’s largest retirement sector is expected to put pressure on continent’s debt markets

Dutch pension funds are set to put pressure on European government bond markets later this year as they start to sell around €125bn of long-dated bonds because of a substantial reform of the retirement sector. 

Between 2025 and 2028 the €1.5tn Dutch pension industry is transitioning from a system in which final payouts to pensioners are guaranteed to a defined contribution framework, in which employers are only tied to the amount they put in. That will mean holding much less long-term sovereign debt to back their long-term promises and freeing up more funds to invest in higher-returning assets such as equities and credit.

While a handful have already switched, Dutch funds managing close to half of the total assets that need to be transferred are set to convert in January next year, with managers expected to prepare portfolios in the run-up. Strategists at Dutch bank Rabobank expect €127bn of long-term sovereign debt will be sold over the course of the transition.

The sale is the latest example of declining demand for long-term debt among pension funds which, coupled with record levels of sovereign borrowing, has helped push up bond yields around the world.

“Everyone is worried about the European long end” of the bond market, said Pooja Kumra, a rates strategist at TD Securities, adding that sales may come “very quickly at the end of the year . . . but pre-emptive trades could be punitive if there are more delays”.

PFZW, the second-largest pension fund in the Netherlands with €259bn of assets for healthcare and welfare workers, told the Financial Times it was on track to switch to the new system on January 1, 2026. ABP, the nation’s largest, plans to transition the following year.

Rising bond yields are piling pressure on policymakers as Europe increases its borrowing to fund its defence and energy ambitions, led by Germany’s €1tn “whatever it takes” spending plan.

Long-dated Eurozone debt has been hit especially hard. Germany’s 30-year yield has climbed from below zero during the Covid pandemic to more than 3 per cent, close to its highest levels since the Eurozone debt crisis. The additional interest rate paid on France’s 30-year debt, compared with its two-year equivalent, has surged from zero two years ago to more than 2 percentage points.

Dutch pension funds, which are by far the largest in the Eurozone, have used interest rates swaps and government bonds across different time horizons, even over 50 years or more, to match the period over which they must make payouts to their youngest members. 

But as funds move to a system where they pay out based on returns, they are set to move towards riskier assets such as equities and credit, which they expect to generate higher returns for their members over the long term. 

“There will be a shift away from 50, 40 and 30-year bonds,” said Michiel Tukker, a European rates strategist at Dutch bank ING. “Now the question is . . . who will be the buyer?”

Some other traditional buyers have pulled back. Japanese investors, historically a cornerstone buyer of Eurozone sovereign debt, sold down their holdings at the end of last year at the fastest pace in a decade.

Rabobank estimates that, prior to the debt sales, Dutch pension funds owned around €457bn of government bonds, with the heaviest sales — an estimated combined €69bn — expected in German, French and Dutch sovereign debt. 

Some 19 per cent of all government debt in the Netherlands is owned by Dutch retirement funds, compared with an 8 per cent ownership of German Bunds, according to Rabobank, with the ownership ratio highest for bonds with a distant maturity date. 

Leading into the pension transition, Dutch funds have been increasing their use of hedging through bonds and swaps to protect their members’ benefits ratio from any interest rate shock or equity market tumble. 

“It gives a difficult dynamic, where on the one hand you are incentivised to increase your interest rate hedges going into the transition date, and then after that date you do the opposite trade as fast as possible because you don’t want to be the last one,” said Tukker.

The timing is still uncertain. A handful of pension funds have already delayed their transition date, including PME, a €60bn scheme for workers in the metal and tech industry. But hedge funds are positioning to profit from the transition, analysts said. 

“Everyone is trying to prey on this,” said Lyn Graham-Taylor, a senior rates strategist at Rabobank, adding that he was focused on trying to work out “how much are long-end rates going to steepen and how much is already in the price?”

Former staff say fired whistleblower’s lawsuit reflects wider problems at LVMH drinks division

Moët Hennessy is facing accusations of sexual harassment, gender discrimination and unfair dismissal in a lawsuit that people who have worked at the business say is symptomatic of wider cultural problems at LVMH’s €6bn drinks division.

Maria Gasparovic, former chief of staff to the wine and spirits business’s global head of distribution Jean-Marc Lacave, was fired in June last year, four months after alerting her managers and human resources department to alleged misconduct by more senior colleagues.

Her accusations in a case at a Paris employment tribunal, where she is seeking €1.3mn in damages and compensation, include that superiors told her she needed “anti-seduction” training to qualify for a promotion.

She also alleges that Moët Hennessy continued shipping products via intermediaries to Russia even after LVMH announced in March 2022 that it would suspend operations in the country.

A person close to the group said the offer of coaching for Gasparovic had been intended to help her develop professionally and that it had been misinterpreted.

Moët Hennessy is suing Gasparovic for defamation after she later posted her allegations on social media, according to people with knowledge of the matter. A trial is expected to take place this autumn.

In her dismissal letter, Moët Hennessy said it was firing her due to her personal conduct, alleging she made threatening remarks to colleagues.

But her sacking was one of a series of departures from Moët Hennessy that a dozen people familiar with the business told the Financial Times was related to a toxic workplace environment where bullying and mismanagement were problems. 

At least 20 staff at the business’s headquarters went on long-term sick leave in 2024, according to the people, leading some executives to comment in a senior leadership meeting that they had never seen such numbers before. Many of the employees had complained of stress and bullying, the people added, and several subsequently left the business.

Gossip and rumours were rife at Moët Hennessy, while a “boys club” mentality was common, according to the people.

One former employee described how their boss would “scream at people like it was a fashion house in the 1990s, except we are in 2025 — that behaviour is no longer acceptable. Lots of people were going on sick leave, people were disappearing overnight. It took on disruptive proportions”.

Besides Gasparovic, the Financial Times has identified at least four other female employees at Moët Hennessy’s Paris headquarters who reported bullying and harassment before leaving the group.

Three took their complaints to the employment tribunal in cases that have since been settled. Male staff have also lodged complaints with the employment tribunal.

Moët Hennessy declined to comment, other than to note that recourse to the employment tribunal was a routine element of the French labour market.

A company of parent LVMH’s size might have dozens of cases pass before the tribunal in a given year, according to a person close to Moët Hennessy.

They added that staff going on sick leave was not an uncommon occurrence, particularly during the dismissal process, saying they did not recognise the characterisation of Moët Hennessy’s culture as described to the FT.

In a note sent to staff in September 2024, Moët Hennessy’s then chief executive Philippe Schaus and head of HR Paula Fallowfield sought to assuage widespread “concern” within the company about the string of employee departures and Gasparovic’s public allegations on social media.

“We assure you that each case has been handled thoughtfully, fairly and in line with a commitment to confidentiality and our values,” they wrote in the email, while reminding staff of “the distress one-sided narratives may cause”.

“We are committed to providing a positive working environment . . . Moreover we are also determined to do everything possible to protect the reputation of Moët Hennessy,” they wrote. 

In the months after Gasparovic went public with some of her allegations, Schaus and several other Moët Hennessy executives left LVMH, along with the luxury group’s global head of HR Chantal Gaemperle. Gasparovic’s boss Lacave departed at the start of this year. 

In February, LVMH chief executive Bernard Arnault’s son Alexandre and the group’s former chief financial officer Jean-Jacques Guiony were brought in to turn around the drinks business — the luxury group’s worst-performing division last year as it burnt through cash amid a depressed global market for alcohol sales. 

Executives told Moët Hennessy staff last month they would look to cut headcount by about 1,200 — roughly 13 per cent of the workforce — to cope with the downturn.

While the alleged toxic culture at the drinks business predates the sector’s downturn, pressure to reduce overheads may have contributed to a difficult environment since 2023, according to several of the people.

Avi Bitton, an employment lawyer in Paris who has represented several Moët Hennessy workers on employment law issues, said he had been contacted by LVMH managers “monthly” as they made at times acrimonious exits from the group, and that several were employed by the wine and spirits business. “There’s clearly an issue at Moët Hennessy,” he said.

In the letter informing Gasparovic of her dismissal, Moët Hennessy said she was being fired for impersonating another employee on a call while on sick leave and for making threatening remarks to colleagues. People close to Moët Hennessy said its executives believed she was trying to blackmail the company.

Before her departure, Gasparovic had submitted a whistleblowing report to Moët Hennessy detailing her allegations of harassment and discrimination, according to court documents seen by the FT. 

No formal investigation was carried out by Moët Hennessy into her claims, according to her subsequent legal complaint.

Former chief operating officer Mark Stead, who is in a relationship with Gasparovic and accompanied her to meetings with HR to complain about her situation, was dismissed shortly after her on the grounds that he had misused travel and expenses resources. 

Moët Hennessy subsequently launched a legal complaint against Stead for breach of confidentiality, alleging that he had shared privileged information with Gasparovic.

Stead is separately suing the business for wrongful dismissal, and alleges he was actually fired in reprisal for supporting a whistleblower’s claims. He declined to comment.

Gasparovic alleges in the employment tribunal filing that she was the subject of “unfounded and sexist rumours” and “acts of denigration” within the company.

She claims that Schaus had ordered Moët Hennessy’s head of HR to conduct an investigation into her private life because they suspected she was having an affair with a second executive.

In one alleged incident in her filing, Gasparovic says she was told by her boss, then global head of distribution Jean-Marc Lacave, that she would need “anti-seduction” coaching if she wanted a promotion after both Schaus and a Moët Hennessy client claimed she wanted to seduce them.

She alleges that in a conversation about why she had not yet been promoted, Lacave told her she had been described by the client as “gagging for it”.

A person close to the company said Gasparovic had not been promoted because she was not qualified for the role she sought.

Gasparovic is one of several women who worked at Moët Hennessy who told the FT they had been the subject of unfounded rumours about affairs with men at the company.

When one complained to the business about gossip that she was receiving opportunities at work because she was sleeping with a male executive, she was told by her HR manager “to get used” to it.

“I was told the more you move up in the organisation, the more this will happen,” she said. “Moët Hennessy is the kingdom of rumours.” 

Former chief executive Schaus had difficult relationships with some staff, according to several people who worked with him.

Two female executives left the group after complaining to LVMH about him and wider problems with bullying at Moët Hennessy, according to three people with knowledge of the situation.

Several other people made complaints about Moët Hennessy to LVMH group’s human resources department, as well as to occupational health and employee labour representatives. 

People familiar with the matter said Schaus had acknowledged Moët Hennessy’s male-dominated, nightlife-oriented culture when he arrived as chief executive in 2017 and had taken concerted steps to change it.

This included hiring a string of women in senior positions, including as heads of major brands, and appointing the company’s first ever female head of France.

But one woman who worked at Moët Hennessy likened it to an “old-fashioned royal court”, saying that “for some, you play the game, or you leave or get pushed out . . . but it can be a highly destabilising experience”. 

Another former male executive described misogynistic behaviour at work events, saying Moët Hennessy was “a place where you’re told very quickly to get comfortable playing in the grey”. 

Gasparovic’s February 2024 whistleblowing complaint to Moët Hennessy HR separately included allegations that it knowingly dispatched products whose ultimate destination was Russia even after LVMH announced in March 2022 that it had halted its operations in the country.

Documents seen by the Financial Times show that almost €26mn worth of cognac and champagne — internally referred to as “special orders” — was shipped to Russia via US-based intermediaries in 2022 and 2023.

The shipments, which did not contravene EU sanctions, were first reported by French publication La Lettre. The company has denied wrongdoing.

Gasparovic’s whistleblowing dossier was shared beyond Moët Hennessy — copies were sent in June last year by her lawyers to LVMH’s headquarters and brought to the attention of Gaemperle and Jérôme Sibille, the group’s general counsel. Both were members of the group’s executive committee and close advisers to Bernard Arnault. 

Gaemperle was fired in November, according to several people with knowledge of the situation. People close to the group told the FT her departure was not related to the situation at Moët Hennessy.

In a cease and desist letter sent to Gasparovic in September after she posted allegations on LinkedIn, Moët Hennessy claimed she had “instrumentalised the status of whistleblower in bad faith” to “demand the payment of an exorbitant” sum, according to documents seen by the FT.  

“You have not been the victim of any discrimination,” the letter says. “You cannot present yourself as a whistleblower when you have exploited for your personal benefit, for several years, the same facts that you publicly claim to have reported.”  

Schaus and Stead declined to comment. Lacave and Gaemperle did not respond to requests for comment.