FT : Investor group Kimmeridge offers $6bn for gas driller at centre of clash

Investor group Kimmeridge offers $6bn for gas driller at centre of clash
Energy PE firm says its offer is superior to proposed fund-to-fund transfer that led to accusations of self-dealing

US energy investment group Kimmeridge has submitted a $6bn offer to buy Ascent Resources, the gas driller at the centre of a legal dispute in which a Middle Eastern sovereign wealth fund accused a US private equity group of self-dealing.

Kimmeridge’s managing partner Ben Dell told the Financial Times its offer is superior to a plan by Ascent’s current private equity backer, Energy & Minerals Group, to transfer its stake in the company from one of its funds to another, at a price that the fund’s investors say undervalues the company.

The bid is the latest challenge to EMG’s efforts to sell a more-than 30 per cent stake in the driller between the two funds. The Abu Dhabi Investment Council, a sovereign wealth fund, sued EMG earlier this month seeking to block the deal, arguing that it would short-change investors while creating a windfall for its PE backers.

The fund-to-fund deal valued Ascent at about $5.5bn, but also called for selling investors to be paid over two years’ time, the FT reported previously. In its lawsuit, the sovereign wealth fund accused EMG of underplaying Ascent’s prospects to be sold to other investment groups or strategic buyers to selling investors.

Now, Ascent is facing a takeover bid from Kimmeridge that comes at what the fund says is a higher price than the mooted fund-to-fund deal. The transaction was structured as a continuation fund deal, which has become more common in recent years as private equity groups struggle to find buyers for trillions of dollars in portfolio holdings.

“Our view is that this is a significant premium versus the valuation proposed in the continuation funds,” said Dell in an interview, referring to the fund-to-fund deal.

Kimmeridge’s offer is contingent on Ascent offering it 60 days of exclusive negotiations and is subject to due diligence. It was also offering existing Ascent investors the ability to participate in the takeover, acquiring up to a 49 per cent stake in the driller, Dell said.

Kimmeridge is a private equity group with a shale gas production business in Texas and a liquefied natural gas export terminal in Louisiana. It also has an activist investment arm, which recently disclosed that it had taken a stake in Devon Energy, a shale producer based in Oklahoma City.

In April Kimmeridge sold a 24.1 per cent stake in its shale gas production business to Mubadala Energy, which is owned by the Abu Dhabi sovereign investor Mubadala. The business produces about 500mn cubic feet of natural gas equivalent per day from the prolific Eagle Ford region of south Texas and was Mubadala Energy’s first big investment in the US.

Dell said in the interview that while there was some question of how valuable Ascent’s shale reserves in the US Midwest would last, he was confident that the company deserved a valuation of $6bn.

“It is a high-quality asset with significant strategic value,” said Dell. “When we look at the valuation that is being floated out there, our belief is there are better options for investors.”

Last week, the FT reported that hedge fund Mason Capital had also submitted an offer to buy Ascent and asked the driller to run a full sale process.

Ascent did not respond to a message seeking comment. EMG did not immediately respond to a request for comment.

FT : JPMorgan takes fire in Patrick Drahi’s war

JPMorgan takes fire in Patrick Drahi’s war

In the distressed debt wars, big banks typically like to play Switzerland. 

Money centre financial institutions are busy trading with, lending to and advising big private equity firms and hedge funds, with the total annual fees they earn from this work reaching into the hundreds of millions of dollars.

With so much business on the line, they’re too occupied to go belligerent.

But in serious scrapes, is it even possible to avoid being drawn on to the battlefield? DD’s Eric Platt and Sujeet Indap on Friday told the story of JPMorgan Chase, the biggest bank in the US, taking heat for getting in the middle of the blood sport at Patrick Drahi’s telecoms group Altice USA.

The House of Dimon recently lent $2bn to Altice, which is struggling under the weight of $26bn of debt. But in the course of that messy transaction, collateral that other creditors — Apollo, Ares, Oaktree, BlackRock and hundreds of others — had depended on was moved outside their reach. The JPMorgan financing also torpedoed the covenants creditors had previously secured.

Those creditors are now furious with JPMorgan for enabling what they see as so-called creditor-on-creditor violence, when lenders go at each other as a way of improving their own returns.

The JPMorgan loan isn’t an unusual tactic. But the key difference is that it’s typically executed by a private capital firm such as Angelo Gordon or Centerbridge; not a regal white-shoe bank that claims the ethos of doing “first-class business in a first-class way”.

Of course, we wonder if hard-edged private capital firms should be the judges of decorum. Adding to the hostilities, Kirkland & Ellis is taking fire for its role in the wheeling, dealing and suing going around at Altice.

Expect the parties to be consulting their office copies of The Art of War looking for advice on what to do next.

>>> US After Hours Summary: F +1.2% ticks higher after confirming $19.5 bln char

After Hours Summary: F +1.2% ticks higher after confirming $19.5 bln charge and plans to invest in higher return growth opportunities; RILY +34.3% surging on earnings; NAVN -6.4% lower on earnings

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: RILY +34.3%

Companies trading higher in after hours in reaction to news: ORGO +14.3% (completes Type-B meeting with FDA; plans BLA for ReNu), PYPL +1.3% (confirms applications to establish PayPal Bank), F +1.2% (confirms $19.5 bln charge in special items; no longer plans to produce select larger electric vehicles; investing in higher return growth opportunities; raises 2025 adj. EBIT guidance), AIV +1.2% (agreement to sell Chicago apartment portfolio), SNDL +1% (co and 1CM amend and restate arrangement), PLNT +0.6% ($350 mln accelerated share repurchase agreement with Citibank (C)), NOW +0.5% (completes acquisition of Moveworks), WM +0.4% (increases dividend; also new $3 bln share repurchase program), AG +0.1% (reports exploration success at Santa Elena), ARAY +0.1% (first phase of comprehensive strategic, operational, and organizational transformation plan)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: NAVN -6.4%,

Companies trading lower in after hours in reaction to news: SVRE -33.1% (stock offering by selling shareholders), LWLG -12.7% (stock offering), KYTX -10.3% (stock offering), KOD -4.5% (stock offering), IMNM -1.5% (stock offering), OABI -1.5% (launches OmniUltra platform), ULCC -1.4% (names interim CEO), SMX -1.4% (stock offering by selling shareholders), BAH -1.2% (CFO to resign), OVID -0.4% (stock offering by selling shareholders), SEZL -0.3% (authorizes additional $100 mln to stock repurchase program), VSTM -0.2% (strategic transition plan), AZN -0.1% (ENHERTU plus pertuzumab approved in the US)

The Information : Why xAI Has an Uphill Battle Selling Grok to Businesses

Why xAI Has an Uphill Battle Selling Grok to Businesses

The Takeaway
  • Grok’s clients include Morgan Stanley, Palantir
  • Some Tesla staff choose rival AI tools over Grok
  • xAI’s consumer business remains larger than enterprise

Elon Musk’s xAI wants companies around the world to buy its Grok AI models as it tries to build a moneymaking business. To get there, xAI has created an enterprise AI sales group over the past half-year that has expanded to more than a dozen people.

But xAI’s lack of experience in selling to big businesses is holding many potential customers back. While xAI has signed up some big clients—including Morgan Stanley and Palantir—they’re generally conducting small tests of its technology, each bringing in hundreds of thousands or single-digit millions in revenue, according to two people who have worked for xAI.

And many of the companies that are the most interested in buying Grok already had existing business relationships with Musk or his other companies, one of the people said.

Morgan Stanley, for instance, was Elon Musk’s main adviser on his purchase of Twitter—now called X—in 2022 and also helped arrange the financing for that deal. Palantir’s controlling shareholders include Peter Thiel, who worked with Musk at PayPal.

Adam Mansfield, a practice leader at UpperEdge who helps large companies negotiate deals with cloud firms and software providers, said he does not have clients who use or are seriously considering using Grok for business. Executives at companies deciding what kind of AI tools to buy “are not ready to put their neck on the line” by choosing a vendor that doesn’t have a record of working with enterprises, Mansfield said. Instead, many companies want to see how spending on AI services from trusted existing software suppliers like Microsoft pays off before buying products from other vendors, he said.

Palantir chief architect Akshay Krishnaswamy said in an email that the company offers clients models from xAI alongside others from the likes of OpenAI, Anthropic and Google through a service called the Palantir AI Platform. Palantir also uses Grok and other models through the AI Platform internally for managing its own logistics, recruiting and other tasks, Krishnaswamy said. In addition, Krishnaswamy pointed to an announcement from May in which Palantir said it was partnering with xAI and investment firm TWG Global to build AI for financial services.

Morgan Stanley didn’t respond to requests for comment. In an automated response to an email seeking comment, xAI said: “Legacy Media Lies.”

XAI has raised a total of $27 billion in debt and equity, according to PitchBook, to finance the buildout of data centers needed for AI computing. Its major AI startup rivals—OpenAI and Anthropic—have made significant strides in selling their products, and each generates billions in revenue. Musk’s SpaceX has invested $2 billion in xAI, while Tesla has indicated it’s considering investing as well.

Details of xAI’s finances couldn’t be learned. The company’s only existing business is X, whose main revenue is advertising. Despite relentless cost cutting, X has consistently struggled to turn a profit. Bloomberg reported on Friday that X’s revenue rose 17% to $752 million in the third quarter, but the company was still losing money.

Aside from X, xAI’s biggest source of revenue is selling Grok subscriptions to consumers, according to two people who have worked at xAI. And while Grok has its own app, xAI has also integrated some of Grok’s features into the X app and upsells X users on Grok subscriptions.

Grok has a free tier, but a $30 a month “SuperGrok subscription” offers unlimited access to virtual “companions,” digital characters designed to serve as romantic partners and friends. Musk unveiled the companions at an xAI all-hands meeting in July, according to two people who were there.

When xAI launched companions that month, one was Ani, a 22-year-old female with blond hair. Grok users were allowed to engage in sexually explicit conversations with the character and change her into various skimpy outfits. Throughout the day, Ani would send users flirty notifications encouraging them to open the Grok app and talk to her again. And xAI would go on to add a “streaks” feature that let users unlock new outfits for Ani if they talked to her every day.

The SuperGrok subscription also includes unlimited access to Grok’s AI image- and video-generation tool, which has become a popular way to create pornography because it has less strict content moderation than rival products.

XAI isn’t alone among the top AI labs in pursuing this market. In October, OpenAI CEO Sam Altman said the company plans to start allowing ChatGPT “erotica” for verified adults in December. OpenAI executive Fidji Simo said in a media briefing on Thursday that the company now plans to launch an “adult mode” in the first quarter of 2026, according to The Verge.

Azure’s Help

XAI is continuing to try to build up the enterprise business. In September, xAI added Grok to Azure AI Foundry, a Microsoft cloud service that lets developers choose between a variety of AI models including those from OpenAI, Anthropic and DeepSeek.

XAI has also started selling Grok $30-per-month business subscriptions on Amazon Web Services’ Marketplace. But xAI has not made Grok models available on Bedrock, AWS’ primary AI service for developers, which offers models from a wide variety of companies including OpenAI and Anthropic, similar to Azure’s Foundry. However, there are signs that xAI could start working more closely with AWS—this month, xAI hired a salesperson from AWS, who wrote on LinkedIn that he would focus on selling xAI products to AWS customers.

XAI, like other top AI labs, also sees the U.S. government as a big customer. Over the summer, xAI was one of several AI labs that signed deals worth up to $200 million each with the Department of Defense. However, a generative AI site the Pentagon made available in December to military service members only included Google’s Gemini at launch.

Meanwhile, Musk’s other companies are potential sources of business for xAI, although they’re not guaranteed to become huge customers.

Tesla, for instance, offers the Grok chatbot in its vehicles and is integrating Grok into its Optimus robot. But Tesla internally encourages employees to use a variety of AI models, according to a former xAI employee and a former Tesla employee.

Some Tesla software engineers have experimented with Grok for coding, but many others prefer Anthropic’s Claude, the former senior Tesla employee said. Others at Tesla have experimented internally with customized versions of open-source models like Meta’s Llama instead of Grok. (In a recent post on X, Musk said Tesla’s chip design team prefers Grok over Claude.)

SpaceX, meanwhile, has been using Grok to help it respond to Starlink customer support requests, according to a former xAI employee. And Musk in recent months has repeatedly talked about building data centers in space—an endeavor that would almost certainly involve both SpaceX and xAI.

However, there’s a hurdle to closer cooperation with SpaceX that xAI staff have discussed: As a U.S. military contractor, SpaceX is subject to national security restrictions that severely limit its ability to hire noncitizens, Musk has said.

That puts constraints on the ability of xAI’s engineering teams, which include a large number of Chinese nationals and others who aren’t U.S. citizens, to work closely with their counterparts at SpaceX on more-sophisticated projects, according to a person who was involved in discussions about the topic at xAI.

FT : Brussels plans to scrap 2035 combustion engine ban

Brussels plans to scrap 2035 combustion engine ban
Carmakers will be allowed to make a limited number of petrol and diesel-fuelled cars after deadline

Brussels plans to scrap the EU’s 2035 combustion engine ban, allowing carmakers to continue making a limited number of petrol and diesel-fuelled cars after the ban was meant to come into effect.

The original ban was due to force carmakers to cut their production of all combustion engine vehicles to zero by 2035.

But under a revision of the law to be proposed by the European Commission on Tuesday, European car manufacturers would be allowed 10 per cent of 2021 emissions levels as long as they meet certain conditions.

According to two officials involved in the talks, these may include using green steel to produce vehicles. The bloc may also allow EVs to make use of range extenders — small backup fuel engines — which were previously set to be banned from 2035.

But the conditions are still being discussed by policymakers ahead of the proposal’s presentation, and any change would have to be endorsed by EU governments and the European parliament before becoming law.

The EU’s combustion engine ban was seen as a totemic part of the bloc’s Green Deal climate law. Carmakers heavily lobbied against it, arguing that it would be impossible for them to meet because of the slow take-up of EVs and patchy charging infrastructure.

Governments including Germany and Italy have also been highly critical of the ban, with German Chancellor Friedrich Merz saying on Friday that he supported its easing. “The reality is that there will still be millions of combustion engine-based cars around the world in 2035, 2040 and 2050,” he said.

The EU’s move may increase pressure on Britain’s Labour government to follow suit, even as the UK has said it will not dilute its own plans to shift all new car sales to EVs from 2035.

Other countries such as Spain and France have supported enforcing the ban in the bloc. In a joint paper in October, Paris and Madrid said that the proposed move “must not be called into question” and that the future of the European car industry “will be electric”.

The two countries did, however, advocate for some flexibility such as “super credits” for cars made with European materials to ease pressure on the industry, which is also battling an influx of cheap Chinese EVs and high energy prices.

The commission was due to review the rules next year but brought forward the review under pressure from industry. It declined to comment on the talks.

The changes come even as sales of EVs in the EU have risen 26 per cent from January to October this year, accounting for 16 per cent of the new car market, according to European car industry body Acea.

The strong growth has been driven by more affordable models from both European and Chinese carmakers.

Environmental groups have argued that scrapping the 2035 ban now would widen the gap between the west and China, which has led the transition to EVs.

“Scrapping the ban would be a major mistake for Europe,” said Simone Tagliapietra, senior fellow at the Brussels-based think-tank Bruegel. ‘‘It would do little to help carmakers, as electrification is the future of the industry, and it would seriously undermine what is left of Europe’s reputation as a global climate leader.”

But manufacturers from BMW and Renault to Stellantis have all argued that the pace of transition has been slower than expected, while the industry is under additional pressure since EVs generate less profit than traditional combustion engine models.

Thomas Schäfer, chief executive of the Volkswagen brand, insisted that ‘‘the future is electric”, speaking in Barcelona on Friday. ‘‘On the way there, you need a bit more flexibility to make sure that you can deliver what customers actually want.”

FT : Brussels imposes sanctions on oil trader Murtaza Lakhani over Russia allega

Brussels imposes sanctions on oil trader Murtaza Lakhani over Russia allegations
EU accuses Canadian-Pakistani businessman of helping to provide ‘a substantial source of revenue’ to Moscow

The EU has imposed sanctions on the high-profile oil trader Murtaza Lakhani for allegedly assisting Russia’s Rosneft in exporting crude and other petroleum products in breach of western restrictions.

Lakhani is the best known trader to have been targeted by Brussels since Russia’s 2022 full-scale invasion of Ukraine.

The Canadian-Pakistani businessman made his name working for commodities company Glencore in Iraq in the 1990s and later became a key player in the export of oil from the semi-autonomous Iraqi region of Kurdistan.

He founded Mercantile & Maritime Group in 2015 and later invested in state-run Rosneft’s multibillion-dollar Arctic oil project in a joint venture with energy trader Vitol.

M&M and Vitol divested their stake in the project in 2022 in response to western sanctions against Russia. At the time, M&M said it had wound down all commercial activity with Russia in compliance with the west’s restrictions.

However, Lakhani has since faced allegations that he has remained involved with other companies set up to export Russian oil following the invasion.

The Financial Times last month reported that Lakhani had been involved in the supply of Russian oil with three companies incorporated in the United Arab Emirates since 2022. At the time, Lakhani’s lawyers said he did not “own or control” any of the businesses but had “provided them with ad hoc advice and assistance”.

In its decision, published on Monday, the EU accused 63-year-old Lakhani of involvement in an economic sector that provided “a substantial source of revenue” to the Russian government.

“Through his companies, he enables shipments and export of Russia oil, notably from the Russian state-owned oil company Rosneft,” the EU said in official documents. “In particular, Murtaza Lakhani controls vessels transporting crude oil or petroleum products, originating in Russia or being exported from Russia, while practising irregular and high-risk shipping practices.”

In the same package, the EU also sanctioned Azerbaijani oil trader Etibar Eyyub and two other individuals involved in a network of companies including United Arab Emirates-registered 2Rivers Group, which was previously known as Coral Energy.

Through this network Eyyub enables the export of Russian oil, notably from Rosneft, and controls “a large proportion of the vessels in Russia’s so-called ‘shadow fleet’,” the EU said. Eyyub was sanctioned by the UK in May. Eyyub could not immediately be reached for comment.

Lakhani criticised the EU decision to sanction him. “I do not own any vessels, either directly or indirectly, and consider the basis for these measures to be unfounded,” he said in a written statement sent to the FT.

However, he also sought to distance M&M from the designation, stating that his companies were not named in the EU measures and that those businesses would continue operations as normal.

“I will be stepping down from all managerial positions within all companies owned by myself and will undertake a detailed review to ensure full compliance with all applicable regulations,” he said.

Lakhani has continued to travel to Russia since the start of the Ukraine war, regularly attending the annual St Petersburg International Economic Forum.

In a video interview on the sidelines of the event in June, Lakhani said none of his companies were currently doing business with Russia but defended Moscow’s role in the global energy system.

“I see everybody. I still talk to everybody,” he said. “This country is the largest resource country in the world. Hampering it is . . . not a long-term goal for anybody. They will always need Russia.”

>>> Europe : Brokers Upgrades & Downgrades - 15th of December 2025 V3(++)

>>> Up
* Aedifica Raised to Buy at Bank Degroof Petercam; PT 82 euros (++)
* BNP Paribas Raised to Market Perform at KBW; PT 85 euros
* Bridgepoint Raised to Buy at Deutsche Bank; PT 345 pence
* Care Property Invest NV Raised to Accumulate at KBC Securities (+)
* Coca-Cola PT Raised to $87 from $81 at Piper Sandler
* Cofinimmo Raised to Buy at Bank Degroof Petercam; PT 97 euros (++)
* CTP Raised to Buy at Bank Degroof Petercam; PT 23 euros (++)
* El.En. Raised to Buy at Banca Akros (ESN); PT 16 euros (++)
* Engie SA price target raised to EUR 24.50 from EUR 23 at JPMorgan
* E.ON price target raised to EUR 17.50 from EUR 16 at JPMorgan
* Hilton Worldwide Raised to Buy at Goldman (++)
* Hydrogen Refueling Solutions Raised to Buy at Gilbert Dupont (++)
* Las Vegas Sands Raised to Buy at Goldman (++)
* Marriott Intl Raised to Buy at Goldman (++)
* Neste Raised to Buy From Hold by Berenberg, Target Raised to EUR26.00 From EUR16.50 by Berenberg
* Novartis Raised to Hold at Intron Health; PT 105 Swiss francs (+)
* Primary Health Raised to Buy at Van Lanschot Kempen (+)
* Swedbank Price Target Raised to SEK 345 from SEK 330 by SEB
* UCB Raised to Buy at Intron Health; PT 300 euros (+)
* Viking Holdings Raised to Buy at Jefferies; PT $80

>>> Down
* 1Spatial Cut to Hold at Canaccord; PT 73 pence (+)
* AB Foods Cut to Underperform at Jefferies; PT 1,800 pence
* ADP cut to Underperform from Market Preform at Bernstain, PT Euro 119 (+)
* ARM Holdings ADRs Cut to Sell at Goldman; PT $120 (++)
* Caesars Entertainment Cut to Neutral at Goldman (++)
* Choice Hotels Cut to Neutral at Goldman (++)
* Costco Cut to Sell at Roth Capital Partners; PT $769
* Demant Cut to Equal-Weight at Morgan Stanley; PT 221 kroner
* DiaSorin Cut to Equal-Weight at Morgan Stanley; PT 63 euros
* Drax price target lowered to 960 GBp from 1,000 GBp at JPMorgan
* eDreams ODIGEO Cut to Neutral at BNP Paribas; PT 4.10 euros
* Fondia Cut to Accumulate at Inderes; PT 5.20 euros (++)
* GSK Cut to Hold at Intron Health; PT 1,800 pence (+)
* Inclusio Cut to Hold at Bank Degroof Petercam; PT 20 euros (++)
* Lindt PT cut from 130,500 to 125,500 CHF at MS
* Next Cut to Hold at Jefferies; PT 14,000 pence
* Norwegian Cruise Cut to Hold at Jefferies; PT $20
* Panostaja Cut to Reduce at Inderes; PT 35 euro cents
* Raiffeisen Cut to Accumulate at Erste Group; PT 43 euros
* Reckitt Cut to Equal-Weight at Morgan Stanley; PT 6,100 pence
* Remedy Entertainment Cut to Accumulate at Inderes; PT 19 euros
* SKF Cut to Sell at Danske Bank Markets; PT 225 kronor (++)
* Smith & Nephew Cut to Sector Perform at RBC; PT 1,350 pence
* Tesco Cut to Hold at Jefferies; PT 450 pence
* Texas Instruments Cut to Sell at Goldman; PT $156 (++)
* VGP Cut to Hold at Bank Degroof Petercam; PT 115 euros (++)
* Wacker Chemie price target lowered to EUR 68 from EUR 71 at Citi
* Wyndham Hotels Cut to Neutral at Goldman (++)

>>> Initiation
* Beiersdorf resumed with an Equal Weight at Morgan Stanley (++)
* DBV Tech ADRs Rated New Overweight at Cantor; PT $42
* Icade Resumed Reduce at Bank Degroof Petercam; PT 19.50 euros (++)
* Magnum Ice Cream Rated New Neutral at Goldman; PT 13.70 euros (++)
* Planisware Rated New Buy at Kepler Cheuvreux; PT 26 euros (+)
* Ramsdens Reinstated Buy at Cavendish; PT 480 pence
* SCA Rated New Buy at SB1 Markets; PT 160 kronor
* Tenaris initiate with Neutral, PT a Euro 18.8 at Goldman Sachs
* Vallourec initiate with BUY, PT Euro 19.50 at Goldman Sachs
* XP Power Rated New Buy at Shore Capital; PT 2,084 pence

>>> Call
* BNP Paribas Upgraded on Capital Build, Valuation: KBW (+)
* Morgan Stanley Strategists Say Weak US Jobs Data to Lift Stocks (+)
* Capital Compromise Would Be “Better Outcome” for UBS: JPMorgan (+)
* Goldman’s Bell Says Valuations Are Biggest Case for UK Stocks (++)
* Neste Shares Rise as Berenberg Upgrades, Raises Price Target (++)
* Schweiter Plummets as ZKB Says Profit Warning Comes as Surprise (++)