TheChek News Flow

Offer comes as exclusive negotiating window between Skydance and entertainment giant is about to expire

Sony 6758 -0.31%decrease; red down pointing triangle Pictures and private-equity giant Apollo Global Management APO 3.72%increase; green up pointing triangle have submitted an all-cash $26 billion offer for Paramount Global PARA 11.42%increase; green up pointing triangle, marking the second time the private-equity firm has come in with a bid for the entertainment giant.

Apollo and Sony on Wednesday submitted the offer letter, which was signed by Sony Pictures CEO Tony Vinciquerra and Aaron Sobel, a partner at Apollo, according to people familiar with the situation. The offer is a starting point for discussions and is nonbinding.

Janus Henderson set to march into Europe with Tabula acquisition

The $335bn manager already has $14bn in active fixed income ETFs in the US and is eyeing rapid growth in demand globally

Global asset manager Janus Henderson has bought London-based Tabula Investment Management as it seeks to exploit growing demand for actively managed exchange traded funds outside the US.

Janus is already the fourth-largest provider of active fixed income ETFs in the US, according to Morningstar data, with $14.2bn of its $335bn of assets under management held in the structure.

It said the acquisition was driven by a push to “enhance its partnership with its UK and European client base, which is increasingly looking at active ETFs, and to reach key growing markets in Latin America, the Middle East and Apac”. Financial terms were not disclosed.

Europe’s near-ubiquitous Ucits funds structure is highly popular in much of Latin America and Asia, allowing funds domiciled in Europe to provide a springboard for expansion to much of the world outside of the US.

The ETF industry was once synonymous with benchmark-tracking passive funds but active ETFs have expanded rapidly in the US in recent years, partly because the American tax system has favoured ETFs over mutual funds, but also because active managers have lost their fears that the transparency inherent in ETFs would allow others to front-run their investment decisions.

Active ETFs held $530bn of assets in the US at the end of 2023, 8.5 per cent of the broader ETF market, according to Morningstar.

The trend is less advanced in Europe, where ETFs have no tax advantage over mutual funds, but interest in active ETFs has jumped over the past year with active ETF AUM increasing by €10bn to €33.8bn representing 1.9 per cent of the wider ETF market, according to Morningstar.

Take up has been stronger in parts of the Apac region, with active ETFs accounting for 29.4 per cent of the $93bn South Korean ETF market and 11.8 per cent of Australia’s $65bn ETF sector. In 2023 active ETFs took 86.7 per cent of all net ETF flows in Korea, according to Morningstar.

“The European ETF market is undergoing a significant transformation, growing considerably and mirroring trends observed in the US market where active management is increasingly being incorporated into the ETF wrapper,” Janus chief executive Ali Dibadj told analysts on a conference call Thursday. The company noted that nearly 10 per cent of European ETF launches last year were actively managed.

“This shift represents a considerable growth opportunity for asset managers looking to broaden the ways in which clients access their investment capabilities and capitalise on evolving client preferences in the European market,” Dibadj continued.

Tabula was formed in 2018 by Michael John Lytle and Stefan Garcia, who built Source into a $25bn ETF manager before selling it to Invesco.

Tabula itself is far smaller, with about $500mn of assets in fixed income ETFs, many of them badged as Paris-aligned, all of which are passive.

Lytle, who will continue as chief executive, said the plan was to launch a wide range of both active bond and equity ETFs in Europe, some based on Janus’s existing US investment products and some entirely new.

Janus will “certainly do some ETF launches off the back of the Tabula transaction,” chief financial officer Roger Thompson told analysts on Thursday’s call.

“I think we are just at the turning point of the European [active ETF] market,” Lytle said, with the likes of Robeco, BlackRock’s iShares, Eurizon Capital and Cathie Wood’s Ark Invest all having launched or planning to launch active ETFs in Europe this year.

Janus could have entered the European market under its own steam. However, Lytle said that doing so via an acquisition will have allowed it to accelerate the process by a couple of years or so, compared with setting up an operation from scratch.

Moreover Tabula, whose ETFs are listed across 10 European exchanges, already has relationships with 200 institutional investors, as well as a host of market makers and authorised participants, which create and redeem shares.

“Tabula’s existing infrastructure and ecosystem offers us instant access to an institutional platform that we believe will position Janus Henderson as a trusted and credible player in the European ETF market,” Dibadj said.

Statement comes as the Australian miner’s chief executive visits country after political backlash

BHP has said its proposed takeover of Anglo American, which excludes its South African platinum and iron ore assets, was not a reflection of negative views of the country.

In its first material statement since tabling a bid for Anglo last week, Australian-headquartered BHP sought to “clarify” perceptions that its planned spin-off of Anglo American Platinum and Kumba Iron Ore showed a lack of confidence in South Africa.

“The structure of BHP’s proposal . . . reflects the priorities for BHP’s portfolio and opportunity for synergies,” BHP said in a statement on Thursday. It “does not reflect a view of South Africa as an investment destination and is based on portfolio and commodity considerations”.

The statement came as BHP chief executive Mike Henry was in South Africa on a charm offensive, according to people familiar with the situation.

His visit comes days after the country’s mineral resources and energy minister Gwede Mantashe told the Financial Times that he did not support BHP’s bid, and later said that if companies did not want South African assets, “then they don’t want Anglo”.

Meanwhile, David Masondo, deputy finance minister and chair of the state-owned Public Investment Corporation that is Anglo’s second-biggest shareholder, said in an interview on Thursday that the decision to exclude South African assets was a “key issue” for him.

The deal, which was initially valued at £31bn, would be the biggest on record for the mining sector. Anglo rebuffed the offer last week, arguing that it undervalued the company, leaving analysts expecting a rival bid to emerge. BHP proposed an all-stock bid for London-listed Anglo to get access to a portfolio that includes copper mines in Chile and Peru. Copper is a metal vital to the transition to cleaner energy.

BHP’s decision to exclude South African assets is especially sensitive for the ruling African National Congress ahead of its toughest election since the end of apartheid. The 107-year-old Anglo is an iconic institution that has dominated the South African economy for most of the past century.

Masondo disputed that companies faced more onerous operating conditions in South Africa than in other jurisdictions and said President Cyril Ramaphosa was working to resolve the energy and rail problems that have made it difficult for miners to sell to international markets.

In Thursday’s statement, BHP said under the proposed deal, Anglo American Platinum — known as Amplats — and Kumba would continue to be listed on the Johannesburg Stock Exchange, and be run by South African-based teams.

“South Africa will continue under BHP’s proposal to benefit from Anglo Platinum and Kumba operating as independently listed South African companies investing in local operations, communities and jobs,” it said.

BHP said the merged company would deliver “growth opportunities and investment currently not available under the existing ownership structure”.

An agreement between Exxon and FTC bars Scott Sheffield from Exxon Mobil’s board and paves the way for closure of Exxon’s acquisition of Pioneer

Former Pioneer Natural Resources PXD 0.89%increase; green up pointing triangle Chief Executive Scott Sheffield attempted to collude with representatives of the Organization of the Petroleum Exporting Countries to coordinate production and raise oil prices, U.S. antitrust enforcers said.

Officials at the Federal Trade Commission have decided to refer the allegations against Sheffield to the Justice Department for a potential criminal investigation, according to people familiar with the matter. It is unclear if the FTC has contacted the department yet.

The allegations, unveiled by the Federal Trade Commission on Thursday, come as Exxon XOM 0.21%increase; green up pointing triangle Mobil struck an agreement with antitrust enforcers not to add Sheffield to its board of directors. The agreement allows Exxon to close a $60 billion stock deal to acquire rival Pioneer as early as this week.

The FTC said the proposed consent order seeks to prevent Sheffield from engaging in collusive activity that would potentially raise crude-oil prices.

“Mr. Sheffield’s past conduct makes it crystal clear that he should be nowhere near Exxon’s boardroom. American consumers shouldn’t pay unfair prices at the pump simply to pad a corporate executive’s pocketbook,” said Kyle Mach, deputy director of the FTC’s Bureau of Competition.

In an eight-page complaint, the FTC cited public statements by Sheffield and private messages the regulator said he sent to OPEC officials and other oil executives. Most of the private messages were redacted.

The accusations are a blow to Sheffield, who as part of the deal with Exxon was set to join that company’s board. Some antitrust experts criticized the move as overreach by the FTC.

“During Mr. Sheffield’s career, it was neither the intent nor an effect of his communications to circumvent the laws and principles protecting market competition,” Pioneer said Thursday. The company said it and Sheffield aren’t taking any steps that would stop Exxon’s acquisition.

Sheffield referred inquiries to Pioneer.

An OPEC representative didn’t respond to a request for comment.

Federal regulators said Sheffield had exchanged hundreds of messages with OPEC representatives and officials discussing crude-market dynamics, pricing and output. They said that through “public statements, text messages, in-person meetings, WhatsApp conversations and other communications while at Pioneer, Sheffield sought to align oil production across the Permian Basin in West Texas and New Mexico with OPEC+.” OPEC+ is the wider group of oil producers that includes OPEC and several others led by Russia.

The appointment of Sheffield to Exxon’s board, the FTC said, would give him a larger platform from which to advocate for greater industrywide coordination. It said the appointment would also be anticompetitive as Sheffield serves on the board of pipeline company Williams Companies and other businesses that directly overlap with Exxon’s operations.

The FTC’s proposed consent order, in addition to barring Sheffield from the board, requires that for a period of five years, Exxon won’t add any Pioneer employee or director to its board, other than certain named individuals.

The FTC didn’t accuse Exxon of wrongdoing.

“We learned about these allegations from the Federal Trade Commission,” an Exxon spokeswoman said. “They are entirely inconsistent with how we do business.”

Exxon said that Richard Dealy, the current Pioneer CEO, will join the company and that Maria Dreyfus, a Pioneer board member, will join Exxon’s board.

Gazprom plunges to worst loss in decades as sales to Europe collapse

Energy giant suffers fallout from Ukraine war as Europe weans itself off Russian supplies

Russian energy giant Gazprom plunged to its biggest loss in at least a quarter of a century after gas sales more than halved in the fallout from Vladimir Putin’s war in Ukraine.

The loss of Rbs629bn ($6.9bn) in 2023 underlines how the Russian president’s invasion of Ukraine has ravaged the state-owned natural gas monopoly, leading to plummeting sales to Europe, its main source of income.

Gazprom’s revenues fell almost 30 per cent year on year to Rbs8.5tn, with gas sales dropping from Rbs6.5tn in 2022 to Rbs3.1tn.

The company’s Moscow-listed shares fell more than 4.4 per cent on the news. Most Russian analysts had expected it to make a small profit.

Analysts said the losses showed how Gazprom, once a cash-rich “national champion” that used its stronghold over Europe’s energy supply as a geopolitical weapon, had failed to adapt to losing the EU market.

Gazprom’s revenue from gas sales outside Russia fell from Rbs7.3tn in 2022 to Rbs2.9tn last year, a drop analysts said was mostly driven by the loss of its European sales.

European countries, meanwhile, have had greater success than expected in finding alternative sources of gas: Russia’s share of Europe’s gas imports dropped from 40 per cent in 2021, the last full year before the invasion, to 8 per cent in 2023, according to EU data.

The results showed that what was once Gazprom’s core business — selling gas to Europe — had become a lossmaking millstone only partially offset by profits from its oil sales, analysts said.

Profit from oil, gas condensate, and petroproducts rose to Rbs4.1tn, up 4.3 per cent on the previous year, showing how Russian exporters have successfully navigated western attempts to limit the Kremlin’s revenue from energy sales.

But those efforts were not enough to stop Gazprom making a loss.

“The loss of revenues from Europe is an unfixable problem without going back into Europe,” said Craig Kennedy, a Harvard-affiliated scholar and former vice-chair at Bank of America. “It was cross-subsidising the rest of the business and they are finally being forced to show this in their accounts.”

The losses showed how the war had made this prewar model unsustainable, Kennedy added.

The Kremlin has sought to avoid liberalising domestic gas prices, forcing Gazprom to borrow to cover its mounting losses.

“The state’s response to them is just, let’s go borrow more,” he added.

Danish wind developer chief Mads Nipper says project costs heightened by elevated interest rates

High interest rates will keep the costs of renewable energy elevated, Ørsted’s boss has warned, as he hailed the wind developer’s “positive steps” following a dismal 2023. 

“The longer interest rates stay high, the longer prices in [renewable energy] auctions will stay high,” Mads Nipper said, although he added that Ørsted’s projects were less sensitive than others’ because many were already under construction with costs locked in. “We expect and hope they will come down.”

Renewable energy projects are sensitive to interest rates, which have been rising since 2021, because developers need to raise money to cover high upfront costs — particularly in the wind sector.

Energy consultancy Wood Mackenzie found in a recent report that a 2 percentage point rise in US interest rates could drive up the overall cost of a renewable energy project by 20 per cent. 

The US Federal Reserve implied on Wednesday that rate cuts would be delayed until the second half of the year at the earliest. Fed chair Jay Powell said it was “likely to take longer for us to gain confidence that we are on a sustainable path down to 2 per cent inflation”. 

Nipper is trying to restore the fortunes of Ørsted, the world’s largest offshore wind developer, after rising costs due to high interest rates and other challenges prompted it to walk away from two large US projects last year, triggering multibillion-dollar impairments. 

The company in February suspended its dividend and cut targets for the amount of renewables it plans to develop. It also said it would cut up to 800 jobs and withdraw from offshore wind markets in Norway, Spain and Portugal. 

Shares in Ørsted have fallen 70 per cent since peaking in January 2021 at the height of investor frenzy over environmentally friendly stocks, when the company was feted for successfully moving away from oil and gas. 

They climbed more than 3 per cent on Thursday as the company reported higher earnings from offshore wind sites. 

It also reversed an impairment of DKr800mn ($115mn) it had booked last year on its 924-megawatt Sunrise Wind project in New York, after a final investment decision in March to proceed with the project after all.

That is one of several “important milestones”, along with finishing its Greater Changhua offshore wind farms in Taiwan, which Nipper said would help restore investor confidence. “This is a long journey,” he added. 

The company is still experiencing strains in its supply chains, Nipper said, but is trying to overcome them including by striking long-term agreements for access to installation vessels. It now has 7.6GW of offshore wind under construction, its highest ever.

Overall, Ørsted reported quarterly revenues of DKr19.2bn and a pre-tax profit of DKr4.4bn. 

It comes as fellow Danish group Vestas, the largest turbine supplier outside of China, reported a quarterly pre-tax loss of €105mn, against a €31mn profit in the same period a year earlier, with fewer turbines delivered. 

Henrik Andersen, chief executive, said earnings were typically weighted towards the second half of the year and the results were “in line with expectations”. The company is maintaining its guidance for the year of a 4-6 per cent profit margin.

“I think the industry is in a better place,” he added. “It is maturing. Most interactions I see show that we are becoming much more disciplined.” 

Vestas shares on Thursday fell roughly 4 per cent to DKr179.2, while Ørsted’s rose almost 3 per cent to DKr391.8.