NYT : Apple’s European Headache

Apple’s European Headache
The iPhone maker is the first U.S. tech giant charged with breaching the European Union’s Digital Markets Act, potentially exposing it to huge fines.

The E.U. bites into Apple
Apple’s feud with global regulators escalated after the European Union on Monday charged the iPhone maker with stifling competition on its App Store, a breach that carries potentially big penalties and could upend a hugely profitable area of the tech giant’s business.
The $3 trillion company is the first to be charged under the Digital Markets Act, a landmark 2022 E.U. law that was designed to reduce the dominance of six mostly American “online gatekeepers.” Of those, Amazon, Google and Meta are also under investigation, and The Financial Times reports that Microsoft could face charges tied to its market dominance.
Here are the E.U.’s accusations against Apple:
  • The App Store violates so-called steering rules. Regulators say that app developers cannot easily inform their customers about new offerings, including cheaper deals, within Apple’s ecosystem.
  • The fees Apple charges are excessive.
  • The bloc is also investigating Apple again for noncompliance, including over a core technology fee that equates to a half-euro charge per user download.
Apple is facing a slew of regulatory hurdles at home and abroad, as the company plays catch-up in the artificial intelligence race. On Friday, Apple said it would delay rolling out new A.I. products and services in Europe because of “regulatory uncertainties.”
And the company already faces a $2 billion E.U. fine for impeding competition in the music streaming sector.

The clash is a big test for the Digital Markets Act. Under the D.M.A., fines can run as high as 20 percent of global revenue, which last year topped $380 billion at Apple. Repeat abuses would give the European Commission, the bloc’s executive arm, the additional power to force a divestment or sale.
“We are determined to use the clear and effective D.M.A. toolbox to finally open real opportunities for innovators and for consumers,” Thierry Breton, the E.U.’s internal market commissioner, said.
Apple and other tech giants are expected to challenge the scope of the markets act in court.
Apple has argued that its app store has been good for other businesses. It said on Monday that it had made a “number of changes” to the app store to comply with the D.M.A. and that it was “confident our plan complies with the law.”
A separate crackdown looms in the U.S. In March, the Justice Department, the District of Columbia and 16 states opened an antitrust suit against Apple, arguing that it designed its products so that customers are locked into the devices to the detriment of consumers and small businesses.
  • In other Apple news: the company and its longtime rival, Meta, are reportedly discussing partnering on A.I., according to The Wall Street Journal.
HERE’S WHAT’S HAPPENING
Federal prosecutors are said to recommend criminal charges against Boeing. A potential case against the embattled planemaker would arise out of accusations that it violated a 2021 settlement related to fatal 737 Max crashes in 2018 and 2019, Reuters reports. Under the terms of that agreement, Boeing agreed to overhaul its compliance practices; the company has since been under investigation for faults in more plane models.
ByteDance is reportedly working on a sanctions-compliant A.I. chip. The Chinese tech giant, which owns TikTok, is working with the American semiconductor giant Broadcom to design an advanced processor for artificial intelligence work, according to Reuters. It’s the latest effort by a Chinese company to get around U.S. sanctions that severely limit exports of advanced A.I. processors to China.

>>> Kura Oncology reported preclinical data supporting the potential therapeutic

Kura Oncology reported preclinical data supporting the potential therapeutic utility of menin inhibitors in the treatment of diabetes (20.97)
  • The new findings were presented this weekend at the American Diabetes Association's 84th Scientific Sessions in Orlando. Copies of the presentation are available in the Posters and Presentations section on Kura's website. "Despite the introduction of multiple options for the treatment of type 2 diabetes, a significant unmet need exists as a large proportion of patients do not achieve glycemic control," said Francis Burrows, Ph.D., Senior Vice President, Translational Research.
  • "We are encouraged by these preclinical data for ziftomenib in diabetes, which demonstrate the potential for menin inhibitors to enhance pancreatic function and warrant further evaluation in diabetes."
  • Type 2 diabetes is marked by an inadequate number of functional pancreatic beta cells, which results in insufficient insulin production, leading to hyperglycemia. Ziftomenib demonstrated meaningful levels of glycemic control in preclinical in vivo models, including reduced fasting blood glucose levels and %HbA1C within 27 days as well as consistent improvement in both insulin sensitivity and insulin production. The data show that the effects of ziftomenib were fully maintained following dose discontinuation, suggesting restoration of beta-cell mass. A decline in pancreatic beta-cell function and/or mass has been defined as a key contributing factor to disease progression in type 2 diabetes. Notably, in human islet microtissues originating from two donor samples, ziftomenib induced beta-cell proliferation while non-beta-cell proliferation was not detectable, demonstrating menin is a viable therapeutic target for beta-cell mass specific expansion.

>>> US Early premarket gappers

Early premarket gappers
  • Gapping up:
    • RXO +11.8%, ARGX +8.5%, ALT +8.4%, DJT +7.3%, PUK +6.5%, CDLR +5.6%, FREY +4.2%, NXE +4.2%, MNKD +3.7%, TERN +3.7%, BHR +2.9%, MUFG +2%, GUTS +2%, BNTX +1.8%, TAK +1.3%, VALN +1%, GSK +0.7%, BMY +0.7%
  • Gapping down:
    • GTHX -17.7%, RMD -12.1%, STOK -7%, MSTR -5.9%, BITB -5%, HIVE -4.9%, GBTC -4.8%, IBIT -4.8%, BRRR -4.6%, BTCO -4.6%, COIN -3.7%, HUT -3.3%, GOEV -3.2%, TNDM -3%, UAA -2.9%, SBS -2%, HCM -1.9%, DEFI -1.9%, AISP -1.6%, ITI -1.2%, CRNX -1.2%, CX -1.1%, BV -0.8%

FT : Private equity sale of can maker is rare windfall from faded buyout boom

Private equity sale of can maker is rare windfall from faded buyout boom
KPS deal to sell Eviosys comes as dealmakers have struggled to exit a growing stockpile of ageing investments

A US private equity group has sold a large industrial business for nearly $4bn, marking one of the first big private equity windfalls from a wave of dealmaking seen in 2021, when interest rates were near zero and valuations high.

KPS Capital Partners has agreed to sell its Eviosys packaging business to manufacturer Sonoco Products nearly three years after it acquired the provider of aluminium containers for aerosols and foodstuffs like cat food, tuna and sardines, the company will announce on Monday. The deal will generate a windfall of nearly $2bn for KPS.

In 2021, KPS carved Eviosys out of Crown Holdings, a larger rival selling cans to food and beverage giants, for $2.7bn in an acquisition that came amid a record wave of $1.1tn in private equity buyouts. However, a swift increase in interest rates from early 2022 quickly cooled off buyout activity, which has fallen by more than half from those levels.

The heavy private equity investment of 2021 has caused a cash crunch among many investors like pensions and endowments because rising interest rates have punished corporate valuations and made it hard for dealmakers to exit a growing stockpile of ageing investments. The sector entered 2024 sitting on a record $3.2tn in unsold deals that are a “towering backlog” that PE firms must now exit, according to consultancy Bain & Co.

Buyout funds raised between 2019 and 2021 have collectively returned less than 20 per cent of investors’ commitments, falling “drastically behind” similar funds raised in earlier years, according to a recent report from Goldman Sachs.

KPS, however, was able to earn a swift and large windfall for Eviosys by increasing its profitability by about 50 per cent, according to a source briefed on the matter, and by identifying a larger corporate buyer that would find value in its specialised packaging operations.

Sonoco, a century-old South Carolina company which first made paper textile cones for the garments industry but now sells container for brands like Pringles chips and Bush’s Best baked beans, will pay $3.9bn for Eviosys.

Howard Coker, chief executive of Sonoco, has in recent years divested business lines focussed on recycling and industrial foam to simplify its operations.

The acquisition will generate a $1.8bn gain for KPS and its investors, or about 3.2-times their initial equity investment because they used debt to finance the deal, according to the source. KPS declined to comment on its returns.

The New York-based private equity group cofounded by Michael Psaros, which specialises in carving out non-core industrial business lines from larger conglomerates like Thyssenkrupp, Bosch, AB InBev and Tate & Lyle, has recently struck a flurry of deals.

Last month, it agreed to buy Innomotics from Siemens for $3.8bn and has agreed to two other large industrial deals this year. Managing over $21bn in total assets and known for acquiring family-owned businesses and distressed companies facing restructuring, KPS closed a $9.7bn fundraising in 2023.

>>> Europe : Brokers Upgrades & Downgrades - 24th of June 2024 V2(+)

>>> Up
* Britvic Raised to Buy at Investec; PT 1,350 pence
* Hochtief Raised to Buy at Jefferies; PT 124 euros
* Redcare Pharmacy NV Raised to Buy at M.M. Warburg; PT 138 euros (+)
* Verve Group SE Raised to Buy at Inderes; PT 2.49 euros (+)

>>> Down
* Bertrandt Cut to Hold at Hauck & Aufhaeuser; PT 34 euros (+)
* Carl Zeiss Meditec PT Cut to 85 euros from 145 euros at RBC
* Flutter Cut to Hold at Peel Hunt; PT 15,000 pence
* Forvia Cut to Hold at Stifel; PT 12 euros
* Raute Cut to Accumulate at Inderes; PT 15 euros
* SIG Cut to Add at Peel Hunt; PT 28 pence (+)
* Valeo Cut to Hold at Stifel; PT 11.30 euros
* YouGov Cut to Hold From Buy by Liberum
* Zalando Cut to Equal-Weight at Morgan Stanley; PT 24 euros

>>> Initiation
* Coca-Cola Rated New Outperform at BNPP Exane; PT $72 (+)
* Colgate-Palmolive Reinstated Outperform at BNPP Exane; PT $109 (+)
* Elekta Rated New Hold at Deutsche Bank; PT 70 kronor (+)
* Envipco Rated New Buy at Nordea; PT 8.31 euros
* GE Vernova Rated New Outperform at Haitong Intl; PT $211.83
* Keurig Dr Pepper Rated New Neutral at BNPP Exane; PT $36 (+)
* Kimberly-Clark Reinstated Neutral at BNPP Exane; PT $146 (+)
* Monster Beverage Rated New Underperform at BNPP Exane; PT $48 (+)
* Nordrest Holding Rated New Buy at Pareto Securities (+)
* P&G Reinstated Outperform at BNPP Exane; PT $187 (+)
* PepsiCo Rated New Neutral at BNPP Exane; PT $174 (+)
* Pod Point Group Rated New Buy at Panmure Gordon; PT 67 pence (+)
* Public Policy Holding Rated New Buy at Canaccord; PT 250 pence (+)

>>> Call
* Deutsche Bank Says ‘Time For Another Breather’ in S&P 500 Rally
* Flutter a Great Company at a Fair Price, Peel Hunt Cuts to Hold
* Goldman Flags Tariffs as Key Risk to US Stocks From Elections
* Hochtief Raised to Buy at Jefferies on Step Change in Growth
* JPMorgan Stock Strategists See Europe Politics to Keep Weighing (+)
* Morgan Stanley’s Wilson Says Market Focusing on Softening Growth
* Zalando Downgraded at Morgan Stanley on Top-Line Concerns