FT : Nippon Steel takeover of US Steel faces opposition in Washington

Nippon Steel takeover of US Steel faces opposition in Washington
Republican lawmakers demand probe into deal while Pennsylvania senator vows to block it

Nippon Steel’s $14.9bn purchase of US Steel is facing a bipartisan political backlash in Washington, with prominent lawmakers vowing to scrutinise the deal and have it blocked by the Biden administration on national security grounds.

On Tuesday, three Republican senators sent a letter to Treasury secretary Janet Yellen asking for the Committee on Foreign Investment in the US, which vets international takeovers, to launch a review of the deal. 

“[Cfius] can and should block the acquisition of US Steel by NSC, a company whose allegiances clearly lie with a foreign state and whose record in the United States is deeply flawed,” wrote JD Vance of Ohio, Josh Hawley of Missouri and Marco Rubio of Florida. The Treasury declined to comment on the letter.

The proposed takeover is also facing some resistance from across the aisle. Summer Lee, a Democratic member of Congress from Pennsylvania, where US Steel is based, said she felt “blindsided and concerned” by the agreement.

She and Democratic senators John Fetterman and Bob Casey, both from the state, sent a letter on Tuesday to Nippon Steel’s president Eiji Hashimoto, complaining that the United Steelworkers union had not been consulted or notified before the agreement was announced, and demanding “further clarity on the proposal and its potential impacts to Pennsylvania’s industrial base and workers”.

On Monday, Fetterman released a video on X, with a US Steel plant near his home in the background, saying it was “absolutely outrageous that they have sold themselves to a foreign nation and company.

“I am committed to doing anything I can do — from using my platform and my position — in order to block this and I’m going to fight for the steel workers and their union way of life here. We cannot ever allow them to be screwed over or left behind.”

The burgeoning firestorm around the proposed takeover of US Steel could pose a political dilemma for President Joe Biden, who has cast himself as the most pro-union president in decades and a champion of American jobs. Biden will probably need to win Pennsylvania and Michigan, where the company has plants, to clinch re-election in 2024. The White House has not yet commented.

FT : Odey Asset Management says FCA ‘will not be taking any action’ after closin

Odey Asset Management says FCA ‘will not be taking any action’ after closing probe
Crispin Odey remains under investigation by the UK’s financial watchdog

The Financial Conduct Authority has closed its investigation into Odey Asset Management and “will not be taking any action,” said the firm on Tuesday.

Odey Asset Management announced in October it was shutting down, five months after allegations of sexual assault and harassment against its founder, Crispin Odey, plunged one of London’s oldest hedge fund groups into crisis.

A Financial Times investigation in June reported claims from 13 women against Crispin Odey over alleged sexual misconduct carried out over decades. The financier, who strenuously denies the allegations, was ejected from the partnership. Banking partners, including Morgan Stanley and JPMorgan, cut ties and within a week, the firm announced it was breaking up. 

In July, the FCA issued its first public confirmation of its investigation into Odey Asset Management, as well as its founder. 

At the time, Nikhil Rathi, chief executive of the UK financial regulator, wrote in a response to the Treasury select committee that the investigation into Crispin Odey was focused on “allegations that he dismissed OAM’s executive committee for an improper purpose” and whether he was a “fit and proper person” to work in financial services.

The regulator also said it was looking at whether he had “failed to comply” with conduct rules on integrity, due skill, care and diligence.

Crispin Odey fired the hedge fund’s executive committee in 2021, a decision he took after they tried to bring disciplinary proceedings against him for violating a final written warning regarding his conduct towards female employees.

The FT’s previous reporting, which exposed a culture of complicity at the firm, revealed the firm had settled misconduct allegations against its founder as far back as 2004 and had other complaints against him on file from 2005 and 2020.

After the FT published its investigation in June, seven further women then came forward with similar allegations of assault or harassment against Crispin Odey, expanding the timeline of his alleged abuse to a period of five decades, from 1985 to 2021.

The financier did not respond to a request for comment regarding the first six of these later complaints. In response to the last, regarding an incident in 2005, he admitted he did “grab” his female employee’s breasts but said it was due to the aftereffects of anaesthetic he had been given at the dentist that day.

Of the 20 women in total who brought allegations against the financier, 13 were employees of the firm. 

The FCA has now closed its investigation into OAM, Rathi wrote to the Treasury committee this month. 

The letter said: “The firm has announced that it is winding down its business and we continue to supervise the firm as it does so. It remains open to us to consider taking enforcement action in the future in relation to matters concerning our investigation into OAM, should new information come to our attention.” 

Rathi told the select committee last week that the investigation into Crispin Odey himself “remains ongoing, given the conduct under investigation relates to him.”

Crispin Odey did not immediately respond to a request for comment.

>>> US Gapping down

Gapping down
In reaction to earnings/guidance:
  • QIPT -5.4%, FCEL -4.6%, FDS -2.7%, ACN -2.0%
Other news:
  • BLUE -15.1% (commences $150 mln stock offering)
  • INMB -14.4% (Company received notification by the FDA that the US Phase II Alzheimer's trial remains on full clinical hold pending a request for additional information on long-term potency.)
  • QURE -6.2% (announces update on phase I/II clinical trials of AMT-130 gene therapy for the treatment of huntington's disease)
  • EXK -5.8% (announces at-the-market offering of up to $60 mln)
  • MAMA -4.9% (announces pricing of previously announced offering of 5,629,921 shares by selling stockholders at a price to the public of $3.50 per share)
  • CCLP -2.4% (Kodiak Gas Services (KGS) to acquire CSI Compressco LP in an $854 million all-equity transaction)
  • RYN -2.0% (declares special cash dividend of $0.20/share)
  • PR -1.8% (announces secondary public offering of class A common stock)
  • ADMA -1.7% (executes definitive credit agreement with Ares Management credit funds for $135 mln in total senior secured credit facilities)
  • PAAS -1.4% ( announces preliminary economic assessment of the La Colorada skarn project)
  • QRVO -1.2% (Luxshare will acquire Qorvo's assembly and test facilities in China)
Analyst comments:
  • PLUG -5.2% (downgraded to Underweight from Neutral at Piper Sandler; tgt lowered to $2.30)
  • PTCT -1.1% (downgraded to Underweight from Equal-Weight at Morgan Stanley; tgt $28)
  • EQNR -1.0% (downgraded to Sector Perform from Outperform at RBC Capital Mkts)

>>> US Gapping up

Gapping up
In reaction to earnings/guidance:
  • HEI +2.4%
Other news:
  • ALDX +17.2% (Announces Statistically and Clinically Significant Improvement from Baseline in Phase 2 Clinical Trial of ADX-629 in Patients with Atopic Dermatitis)
  • PTGX +6.2% (Point72 increased passive stake to 5.5%)
  • KVUE +5.0% (favorable court ruling in Tylenol case)
  • KRYS +4.5% (Receives Orphan Drug Designation from the Japanese MHLW for Beremagene Geperpavec-svdt (B-VEC))
  • TSE +3.8% (Director bought 50,000 shares at $7.03 - $7.40 worth ~$361K)
  • DNA +3.2% (subsidiary, FGen AG, awarded funding through the European Innovation Council's Pathfinder Challenge program for sustainable milk protein production project)
  • DADA +3.0% (Mr. Lijun Xin will step down as the Chairman of the Board and a member of the nominating and corporate governance committee of the Board; Beck Zhaoming Chen resigns as CFO and Board named Henry Jun Mao to succeed)
  • CHDN +2.3% ( announces repurchase of one million shares for $123.75/share)
  • XOMA +2.0% (entered into a non-dilutive, non-recourse, royalty-backed loan for up to $140 mln of capital with certain funds managed by the credit platform of Blue Owl Capital Inc.)
  • FMC +1.8% (initiates global restructuring plan dubbed "Project Focus"; launches voluntary separation program in select jurisdictions and workforce reduction actions in Brazil business)
  • HQI +1.9% (Director bought 6,000 shares at $16.18 - $16.31 worth ~$97K)
  • AU +1.6% (to make a strategic investment in G2 Goldfields Inc.)
  • CHWY +1.6% (Director bought 12,242 shares at $20.13-$20.67 worth ~$250K)
  • CD +1.3% (announces completion of going private transaction)
  • MRTX +1.2% (Mirati Therapeutics / Bristol-Myers Squibb (BMY) required waiting period under the HSR Act with respect to the Merger expired at 11:59 p.m. Eastern time on December 18, 2023)
Analyst comments:
  • WVE +7.6% (upgraded to Outperform from Market Perform at Leerink Partners; tgt raised to $12)
  • ARVN +5.8% (upgraded to Overweight from Equal Weight at Wells Fargo; tgt raised to $63)
  • ACAD +4.1% (upgraded to Overweight from Equal-Weight at Morgan Stanley; tgt raised to $40)
  • FOLD +4.1% (upgraded to Overweight from Equal-Weight at Morgan Stanley; tgt raised to $20)
  • NOVA +5.3% (upgraded to Overweight from Neutral at Piper Sandler; tgt raised to $26)
  • RUN +4.2% (upgraded to Overweight from Neutral at Piper Sandler; tgt raised to $31)
  • RYTM +3.8% (upgraded to Overweight from Equal-Weight at Morgan Stanley; tgt raised to $55)
  • CHWY +3.3% (initiated with a Buy at Jefferies; tgt $27)
  • AMGN +1.5% (upgraded to Outperform from Market Perform at BMO Capital Markets; tgt raised to $326)
  • AIG +1.4% (upgraded to Outperform from Market Perform at BMO Capital Markets; tgt raised to $83)
  • ITRI +1.4% ( upgraded to Overweight from Neutral at Piper Sandler; tgt raised to $91)
  • ROK +1.4% (upgraded to Overweight from Equal Weight at Wells Fargo; tgt raised to $357)

>>> US Research Calls

Research Calls
  • Upgrades:
    • ACADIA Pharmaceuticals (ACAD) upgraded to Overweight from Equal-Weight at Morgan Stanley; tgt raised to $40
    • American Intl (AIG) upgraded to Outperform from Market Perform at BMO Capital Markets; tgt raised to $83
    • Amgen (AMGN) upgraded to Outperform from Market Perform at BMO Capital Markets; tgt raised to $326
    • Amicus Therapeutics (FOLD) upgraded to Overweight from Equal-Weight at Morgan Stanley; tgt raised to $20
    • Arvinas (ARVN) upgraded to Overweight from Equal Weight at Wells Fargo; tgt raised to $63
    • Invivyd (IVVD) upgraded to Equal-Weight from Underweight at Morgan Stanley; tgt raised to $4
    • Itron (ITRI) upgraded to Overweight from Neutral at Piper Sandler; tgt raised to $91
    • Rhythm Pharmaceuticals (RYTM) upgraded to Overweight from Equal-Weight at Morgan Stanley; tgt raised to $55
    • Rockwell Automation (ROK) upgraded to Overweight from Equal Weight at Wells Fargo; tgt raised to $357
    • Sunnova Energy (NOVA) upgraded to Overweight from Neutral at Piper Sandler; tgt raised to $26
    • Sunrun (RUN) upgraded to Overweight from Neutral at Piper Sandler; tgt raised to $31
    • Wave Life Sciences (WVE) upgraded to Outperform from Market Perform at Leerink Partners; tgt raised to $12
  • Downgrades:
    • Array Tech (ARRY) downgraded to Neutral from Overweight at Piper Sandler; tgt lowered to $22
    • Banco de Chile (BCH) downgraded to Hold from Buy at HSBC Securities
    • Banco Santander Chile (BSAC) downgraded to Hold from Buy at HSBC Securities
    • Disc Medicine (IRON) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt raised to $65
    • Equinor (EQNR) downgraded to Sector Perform from Outperform at RBC Capital Mkts
    • Kymera Therapeutics (KYMR) downgraded to Equal Weight from Overweight at Wells Fargo; tgt $26
    • Masonite International (DOOR) downgraded to Neutral from Outperform at Robert W. Baird; tgt lowered to $92
    • PepsiCo (PEP) downgraded to Neutral from Overweight at JP Morgan; tgt lowered to $176
    • Plug Power (PLUG) downgraded to Underweight from Neutral at Piper Sandler; tgt lowered to $2.30
    • Piper Sandler (PIPR) downgraded to Market Perform from Outperform at Northland Capital
    • Prelude Therapeutics (PRLD) downgraded to Underweight from Equal-Weight at Morgan Stanley; tgt lowered to $4
    • PTC Therapeutics (PTCT) downgraded to Underweight from Equal-Weight at Morgan Stanley; tgt $28
    • PureCycle Technologies (PCT) downgraded to Neutral from Buy at ROTH MKM; tgt $3
    • ScanSource (SCSC) downgraded to Neutral from Buy at Northcoast; tgt $36
    • SiteOne Landscape Supply (SITE) downgraded to Hold from Buy at Stifel; tgt raised to $167
    • SolarEdge Technologies (SEDG) downgraded to Neutral from Overweight at Piper Sandler; tgt lowered to $105
    • uniQure (QURE) downgraded to Neutral from Buy at Mizuho; tgt lowered to $10
    • Vertex Energy (VTNR) downgraded to Hold from Buy at Stifel; tgt $4
    • Vigil Neuroscience (VIGL) downgraded to Underweight from Equal-Weight at Morgan Stanley; tgt lowered to $4
    • Zurn Elkay Water Solutions (ZWS) downgraded to Hold from Buy at Stifel; tgt $31
  • Others:
    • Apollo Global Management (APO) resumed with a Buy at William O'Neil
    • Arcellx (ACLX) initiated with a Sector Outperform at Scotiabank; tgt $66
    • BARK Inc. (BARK) initiated with a Hold at Jefferies; tgt $1.34
    • Bruker (BRKR) initiated with an Equal Weight at Wells Fargo; tgt $72
    • Chemomab Therapeutics (CMMB) resumed with a Buy at ROTH MKM; tgt $7
    • Chewy (CHWY) initiated with a Buy at Jefferies; tgt $27
    • Elanco Animal Health (ELAN) initiated with a Buy at Jefferies; tgt $17
    • Equifax (EFX) initiated with an Outperform at Oppenheimer; tgt $273
    • Exelixis (EXEL) initiated with a Buy at BTIG Research; tgt $27
    • Freshpet (FRPT) initiated with a Hold at Jefferies; tgt $80
    • Hillenbrand (HI) initiated with a Strong Buy at CL King; tgt $61
    • Immunome (IMNM) initiated with an Outperform at Wedbush; tgt $12
    • Kinetik (KNTK) resumed with a Neutral at Citigroup; tgt $35
    • Legend Biotech (LEGN) initiated with a Sector Perform at Scotiabank
    • Myriad Genetics (MYGN) initiated with an Equal Weight at Wells Fargo; tgt $20
    • Netflix (NFLX) resumed with a Buy at William O'Neil
    • Nextracker (NXT) initiated with an Overweight at Piper Sandler; tgt $60
    • Patterson-UTI (PTEN) initiated with a Neutral at Goldman; tgt $12
    • Pool (POOL) initiated with an Equal Weight at Wells Fargo; tgt $400
    • Petco Health and Wellness (WOOF) initiated with a Hold at Jefferies; tgt $3.11
    • PetIQ (PETQ) initiated with a Buy at Jefferies; tgt $22
    • Qiagen (QGEN) initiated with an Equal Weight at Wells Fargo; tgt $44
    • Revvity (RVTY) initiated with an Equal Weight at Wells Fargo; tgt $95
    • Shift4 Payments (FOUR) resumed with a Buy at William O'Neil
    • South State (SSB) initiated with an Equal-Weight at Stephens; tgt $78
    • Synovus (SNV) initiated with an Equal-Weight at Stephens; tgt $40
    • TransUnion (TRU) initiated with an Outperform at Oppenheimer; tgt $81
    • Yum China (YUMC) initiated with a Buy at Deutsche Bank; tgt $58
    • Zoetis (ZTS) resumed with a Buy at Jefferies; tgt $230

FT : Norway’s Equinor and German state energy group sign €50bn long-term gas dea

Norway’s Equinor and German state energy group sign €50bn long-term gas deal
Agreement will give Europe’s biggest economy enough gas to cover a third of its industrial demand

Norway’s Equinor signed its biggest long-term gas contract in nearly 40 years on Tuesday in a €50bn deal with German state energy group SEFE.

It comes as EU countries seek stable supplies to compensate for the loss of piped gas from Russia.

The deal will supply Germany with 129bn cubic metres of gas up to 2039, enough to cover a third of the country’s industrial demand, Anders Opedal, chief executive of state-owned Equinor, told the Financial Times.

It ensured energy security for Europe’s industrial hub and showed “close collaboration” between Germany and Norway after Moscow cut gas supplies in retaliation for sanctions over its full-scale invasion of Ukraine, he added.

The agreement would reflect market prices, which at current value would make the deal worth about €50bn, according to people with knowledge of the contract.

The sudden depletion of cheap Russian gas last year left EU countries rushing to find gas supplies and secure contracts with other friendly countries.

The European Commission has signed memorandums of understanding with several gas producing nations such as Qatar and the US in order to guarantee stable flows.

EU energy ministers will discuss the level of gas supplies this winter and agree on the extension of emergency measures introduced last year, such as cuts to gas demand, at a meeting on Tuesday.

EU energy commissioner Kadri Simson said it was “necessary” to extend the measures “due to the fact that despite the relatively good start to the winter the geopolitical situation remains very fragile”.

Opedal said Equinor’s deal with SEFE was part of increasing appetite for long-term gas contracts as EU governments lock in supplies despite ambitious decarbonisation targets. The bloc aims to reach net zero emissions by 2050.

“We are signing contracts now that are longer and for larger volumes,” Opedal said, adding that between 2021 and 2023 the total number of contracts agreed by Equinor had more than doubled, with a notable increase in long-term deals.

He added that the trend had also been driven by the realisation that renewable energy would not come online quickly enough to replace fossil fuel demand. “It takes time to develop a new energy system and we will need gas,” he said. Gas when burnt produces less emissions than coal or oil.

The gas will be delivered through pipes from Norway to hubs in the UK, Netherlands and Germany.

SEFE, previously named Gazprom Germania and owned by the Russian energy group Gazprom, was nationalised by Berlin in November 2022 and recapitalised for €6.3bn in December after incurring big losses.

The bailout was meant to cover the cost of having to find alternative gas supplies after Moscow reduced piped gas flows.

Norway has replaced Russia as the EU’s largest gas supplier, providing half of the bloc’s piped gas.

The Equinor deal also includes a non-binding letter of intent for SEFE to buy hydrogen produced by the Norwegian group using gas but with carbon capture technologies.

Hydrogen is seen as a crucial fuel for decarbonising heavy industries such as fertiliser and steel but low carbon hydrogen has yet to be produced at any significant scale.

SEFE would become “a long-term off-taker of giga-scale hydrogen supplies from Equinor starting in 2029 and continuing towards 2060”, the Norwegian company said.

In January, the German and Norwegian governments agreed to co-operate on development of clean hydrogen supplies and carbon capture technology, which is similarly unproven at commercial scale.

Henning Gloystein, director of energy, climate and resources at the consultancy Eurasia Group, said the agreement was “a bit theoretical but you’d hope that the combined financial engineering efforts of Norway and Germany could achieve some results in this sector by the 2040s”.

(ZH) Rolls-Royce In Talks To Build Mini-Nuke Plants In Ukraine

Rolls-Royce In Talks To Build Mini-Nuke Plants In Ukraine

While Germany shuttered the last of its nuclear power plants this year, like idiots, British aerospace and defense company Rolls Royce is in talks with Ukraine's largest power company to build a series of mini nuclear plants across the country - including two sites currently occupied by Russia, The Telegraph reports.

Ukraine's DTEK, owned by billionaire oligarch Rinat Akhmetov, has held early-stage, and obviously ambitious, discussions with Rolls about the small modular reactors (SMRs) at sites which are currently using coal power stations. CEO Maxim Timchenko says he expects nuclear power to constitute a vital part of DTEKs future portfolio amid the rebuilding of Ukraine, as the country shifts away from fossil fuels.

SMRs under development are a new and commercially-unproven technology that wouldn't be deployed until 2030 at the earliest.
DTEK and Rolls are examining whether up to eight existing coal power station sites, two of them currently in territory occupied by Russia, could eventually be converted to house SMRs in the 2030s.
It comes as Ukraine is scrambling to deploy less centralised and more renewable sources of energy, such as wind and solar farms, in the face of a targeted bombing campaign by Russia to take out grid infrastructure during the harsh winter months. -The Telegraph
DTEK began generating wind power in May at the Tyligulska wind farm, located around 60 miles from the frontline of the war. This month the company announced plans to quadruple the site's output capacity.
Timchenko went against the climate cult, saying that while renewables remain a key to boosting energy security in Ukraine - as wind turbines make for more difficult targets than large coal power plants, a large portion of Ukraine's power will need to come from 'less intermittent' sources such as nuclear.
"We are trying to find a way to install these SMRs," he told The Telegraph, adding "From our side, we have quite a big capacity of coal-fired power stations and we are in discussions with Rolls-Royce SMR to convert [them]."
Ukraine is already heavily reliant on nuclear, with four state-owned plants generating more than half of the country's power before the Russian invasion. One of the sites, the Zaporizhzhia Nuclear Power Plant, is currently sitting in occupied territory.
Via The Telegraph
As part of the current discussions, DTEK is seeking to establish some of the supply chain in Ukraine, which has significant expertise with nuclear engineering.
"The details of these discussions are commercially confidential," Rolls-Royce SMR told the outlet.
DTEK is also understood to have held talks with other companies developing SMRs.
The company provides one fifth of Ukraine’s electricity, largely through coal plants, but its infrastructure has come under heavy fire from Russian forces since the conflict erupted in February 2022.
Talks with Rolls emerged as bidders in the UK competition to fund SMR designs were told that the next stage is being pushed back.
Six companies including Rolls are vying to build government-funded SMR projects. They were expecting to submit a formal tender this month but have now been told the process will start in January. -The Telegraph
A spokesman for Great British Nuclear told the outlet that 'The next phase of the competition will launch as soon as possible and we look forward to receiving vendor bids."

>>> Accenture beats by $0.13, reports revs in-line; guides Q2 revs below consens

Accenture beats by $0.13, reports revs in-line; guides Q2 revs below consensus; reaffirms FY24 EPS guidance, revs guidance
  • Reports Q1 (Nov) earnings of $3.27 per share, $0.13 better than the FactSet Consensus of $3.14; revenues rose 3.0% year/year to $16.22 bln vs the $16.17 bln FactSet Consensus.
  • Co issues downside guidance for Q2, sees Q2 revs of $15.4-16.0 bln vs. $16.25 bln FactSet Consensus.
  • Co reaffirms guidance for FY24, sees EPS of $11.97-12.23 vs. $12.24 FactSet Consensus; sees FY24 revs of +2-5% yr/yr to $65.4-67.3 bln vs. $66.47 bln FactSet Consensus.
  • New bookings for the first quarter of fiscal 2024 were $18.45 billion, a 14% increase in U.S. dollars and a 12% increase in local currency over the first quarter of fiscal 2023.
  • For fiscal 2024, the company continues to expect operating cash flow to be in the range of $9.3 billion to $9.9 billion; property and equipment additions to be $600 million; and free cash flow to be in the range of $8.7 billion to $9.3 billion.