WSJ : The Future of Classic Porsches and Jaguars? Electrification

The Future of Classic Porsches and Jaguars? Electrification
Owners of vintage sports cars and hot rods are giving them a second life by installing recycled Tesla powertrains. Dan Neil gets the lowdown on EV conversions.

IT WAS A quiet day at Moment Motor Company, an electric-vehicle conversion garage in Austin, Texas, when founder Marc Davis said he heard “squealing.” He knew it wasn’t a fan belt. Christy Butler had arrived with her family to inspect the car of her dreams: an ivory-white ’67 Mercedes-Benz 250 SL with the “pagoda” top. After months of searching for her ideal car, Mr. Davis had found one whose engine he could replace with powerful electric motors, inverters and batteries. Since the work would take several months, he suggested Ms. Butler drive the roadster around for the weekend, pre-surgery.

“She called me on Monday to tell me how much she loved it,” Mr. Davis said, “and in the next breath how she could not wait for me to get it out of her garage. It reeked of gasoline and was dripping oil on the floor. It’s hard to start. It’s got two chokes, an old four-speed transmission. So what happens? Her passion, her dream of the car fades away.”

“When she gets it back,” Mr. Davis said, “she can just press the pedal and go.”

Gasoline-to-EV conversions are not new. I met a JPL scientist in Pasadena, Calif., who had done the same to his MG British sports car in 1965, using lead-acid batteries. Facebook and the website EValbum.com document decades of such projects, from mild to wild, mowers to dragsters, by over-functioning DIY Quixotes.

What is new is everything else, in bulk, starting with the cargo ships of automotive-grade lithium battery packs, high-torque motors, inverters, battery-management systems and controllers now readily available to privateers—much of it being exported from China, the spindrift from that country’s tidal wave of electrification.

Supply, meet demand: During the pandemic, tens of thousands of suddenly unscheduled people scratched an itch to buy a classic car or truck. Data from Hemmings, a classic-car auction and lifestyle site, suggest many of these quarantined dream-chasers were millennials. Which means, right about now, these 21st-century car-lovers are learning the hard lessons of 20th-century cars. Like a pound puppy that piddles on the carpet, the vintage Austin-Healey seeping oil in the mancave gets less adorable, more returnable by the day.

The performance, packaging, costs and availability of the technology extend to today’s enthusiasts a once-impossible hope: a classic car that starts when you turn the key.

“I own a Lamborghini Espada with a V12 engine,” said Aaron Robinson, an editor at large for Hagerty Drivers Club magazine. “The engine is both the best and worst thing about it. The hassle of getting it going is the #1 reason it sits in the garage.”

“Our phone has been ringing off the hook,” said Michael Bream, founder of EV West, in San Marcos, Calif., one of the oldest and best-known conversion shops and purveyors of kits. The installation shop can complete the most minimal conversions of a good, straight VW-like donor car in as little as 60 days. However, the shop is booked out for five to six years, Mr. Bream said.

Feelings in the classic-car world are mixed, as I discovered in my canvassing of the crowd at last month’s Cars & Coffee at Amelia Island, Fla., before the pageant-like Concours d’Elegance car show on Sunday. Some gear heads scorned the very idea of swapping internal combustion with infernal lithium. “Keep walking,” growled a man I met at the coffee bar, when I tried to get his hot take.

Conversions “depend on the spirit with which they’re undertaken,” said Donald Osborne, a well-known historian and car consultant to the stars. Mr. Osborne admitted he’s not generally a fan of electrics. But, for some cars—a Rolls-Royce Silver Ghost or Packard town car, for example—“the engine sounds are not central to the experience.” Also, he observed, “everyone loves ’50s pickup trucks but nobody really likes the way they drive.”

Speaking of which: In November GM previewed its first electric “crate” motor (performance replacement) aimed at hot-rodders and vintage truckers. The Chevy K5 Blazer E—a converted 1977 SUV—had its 175-hp, 400-cubic-inch V8 removed, along with its three-speed automatic transmission, fuel and exhaust systems. Into that hole went a 200-hp electric motor from a Chevrolet Bolt EV and a fresh four-speed automatic. “The rest of the Blazer drivetrain,” said GM, “remains untouched, including the transfer case, drive shaft and axles.”

GM’s Electric Cruise and Connect packages will also include electric steering and braking systems to supplant the former, belt-driven accessories.

And here’s a kick in the head: Most conversions are reversible. To the extent possible and safe, “We have a no-cut policy,” said Mr. Bream. Reversibility means owners of valuable automobiles could keep the original motor and parts, to be included when the car changes hands, thereby preserving its pedigree and provenance. In the meantime, they can enjoy the car without fear of blowing up the original engine.

I found David Jacobson, the CEO of the online auction site PcarMarket and all-around wheeler-dealer, staring longingly at Totem Automobili’s rapturous electric prototype, based on an early-’70s Alfa Romeo Giulia GT. “I love the idea of this car,” said Mr. Jacobson. “I’m a petrol guy, I have a car museum. But I separate them in my brain: This is my petrol life, and this is the future.”

The handiwork of 26-year-old designer Riccardo Quaggio, formerly of Alfa Romeo, the electric Alfa has a party trick that is provocatively on-point: It can mimic, with surprising similitude, the revs, burrs, snores, snaps and wails of a gas-powered Alfa with a dual-cam motor.

“It can make many different sounds, as you like,” said Mr. Quaggio, including the song of V8s or V10s. The crowd gathered around the Alfa agreed: They liked what they were hearing.

In Europe, electro-retrofitting has special currency because cities like London have announced future bans on tailpipe emissions, and exceptions for beloved old classics are not being contemplated. Lunaz Design, a luxury-car converter in Silverstone, England, offers “remanufactured” versions of Jaguar XK120, Bentley Continental and Flying Spur (1955-1965); and Rolls-Royce Silver Cloud I, II, and III and Phantom V.

“We doubled our workforce in 2020-2021,” said company spokesperson James Warren, “And we’ll double it again this year [around 100 employees]. It just feels like something’s ticked over, and collectors are now seeing this as a reasonable step, something they want to do.”

Like many things in the EV space, this timeline begins with Tesla. In 2012 Elon Musk and company launched the mighty Model S, a fully electric luxury sedan with one or a pair of powerful, virtually bulletproof AC motors, with high-capacity inverters, controllers and up to 85 kWh worth of lithium-ion cells, arranged in neatly modular packs. Fast and lovely, the Model S quickly became the bestselling luxury sedan in the U.S.

But, as the fate of glass is to break, soon thousands of Model Ss and Model Xs were being decommissioned annually, due to collision, flooding, or other damage, and sold at auction. These salvaged parts now provide a steady stream of state-of-the-art motors and batteries with which to make mischief.

Tesla’s power units have a particularly salubrious effect on old Porsche s. The San Diego-based Zelectric, owned by entrepreneurs David Benardo and Bonnie Rodgers, recently built a Tesla-powered 1968 Porsche 912 that Jay Leno called “the best electric car he’s ever driven,” after a test ride arranged by the company. Taking up half the space of the smudgy flat-four engine, the 500-hp drive unit sits like a cast-aluminum watermelon between the rear wheels. The upper part of the now-vacant engine compartment has become a carpeted trunk. The steering and brake hydraulics remain unassisted.

Up front, consuming all the space under the bonnet, is 32 kWh’s worth of LG Chem cells in a liquid-cooled enclosure. Like a lot of conversions, the Porsche has comparatively modest range (120-140 miles) but can fast-charge, with dual onboard chargers and Level 2 sockets.

A decade after the first Model Ss were parted out, the conversion industry is looking beyond Tesla for its muscle. One reason, said Mr. Davis, is Tesla’s latest battery-pack design, in which the batteries are structurally integrated into the vehicle, making the cells hard to repurpose. Of course, Tesla doesn’t want to make it easy. The company offers no support to converters and discourages repurposing salvaged components. (Tesla did not respond to a request for comment.)

And if you think you are going to roll up to a Tesla Supercharger in your home-brewed EV Cobra? Nyet. The Supercharger won’t even talk to you.

EV-ification is, as far as I can tell, never cheap. Bare-boned, bust-a-knuckle kits can be found for under $20,000. Zelectric offers turn-key conversions for air-cooled VWs starting at $68,000, not including the donor car. The artisans at Lunaz are pricing their projects around the half-million-dollar mark, which includes a concours-quality restoration, but not the car.

“A conversion will never be as simple as an engine swap,” said Mr. Davis. “The hardest thing is always finding enough space for the batteries.” The procedure on the 250 SL will run north of six figures, according to Mr. Davis, not including the Jackie O sunglasses.

However, once reassembled, caulked, greased, and fitted with EV propulsion, such cars could run virtually trouble-free into the 22nd century.

“The motor has two parts that touch,” Mr. Davis said. “This car will live forever.”

WHEN I LOOK at the 2022 Ford F-150 Lightning, I see infrastructure. Some versions of the all-electric F-150 pickup will be able to export up to 9.6 kW of electricity to owners’ homes during service interruptions—enough to last three days, on average, says Ford. To do so, the truck needs to be connected to the Ford Charge Station Pro, an 80-amp device that supports bi-directional charging.

There it is: Bi-directional charging—technology that allows battery-electric vehicles to supply power to the home and, further upstream, to the grid—has the potential to transform the way Americans consume, share, generate and move by electricity, while saving billions in public money.

The utilities crisis in Texas and the wildfires in northern California illustrate a common vulnerability of current infrastructure: Power generation facilities are remote from population centers they serve, relying on thousands of miles of transmission lines and substations, down to the last dismal mile of transformers on wooden poles.

Bi-directional charging addresses these vulnerabilities on three time scales: First and most immediately in the interests of consumers, the technology could help prevent loss of life in weather crises or national disasters. Plugged into the Charge Station Pro device, the F-150 Lightning would act like a Tesla Powerwall on wheels.

Tesla cars do not, as yet, support bi-directional charging—after all, that’s what the Powerwalls are for. But as the national rolling stock transitions to electrification, the wisdom of Ford’s approach will become self-evident. It will make no sense for houses to be dark while days’ worth of electrical power are just sitting in the driveway.

As V2G technology matures, it will be possible for large numbers of BEVs to provide cloudlike energy storage, charging up earlier in the day and surging power during the so-called “duck curve” of demand (5-9 p.m., local), when electrical equipment is most stressed.

V2G-enabled BEVs could also improve resiliency by fostering microgrids—local service areas with some percentage of their own generation, storage and distribution. The state of California is requiring utilities to increase energy storage systems, such as battery farms, at a cost of several billion over the next decade.

But maybe Ford has a better idea?

>>> Big tech firms comment on G7 minimum corporate tax agreement - Amazon: we be

Big tech firms comment on G7 minimum corporate tax agreement
- Amazon: we believe an OECD led process that creates a multilateral solution will help bring stability to the international tax system
- Facebook: FB has long called for global tax reform and welcomes the progress made at the G7; we want the international tax reform process to succeed and recognize that this could mean that Facebook will pay more in taxes and in different places
- Alphabet: we strongly support the work being done to update international tax rules and hope countries will work together to ensure a balanced and durable agreement will be finalized soon.

>>> G7 Fin Mins reach deal committing to a global minimum tax of at least 15% on

G7 Fin Mins reach deal committing to a global minimum tax of at least 15% on a country by country basis
- Communique: "We commit to reaching an equitable solution on the allocation of taxing rights, with market countries awarded taxing rights on at least 20% of profit exceeding a 10% margin for the largest and most profitable multinational enterprises...We will provide for appropriate coordination between the application of the new international tax rules and the removal of all Digital Services Taxes, and other relevant similar measures, on all companies."
- Agree to the importance of progressing the agreement in parallel on both pillars and expect to reach an agreement at the July meeting of G20 Fin Mins and central bank governors.
- Agree no global stablecoin project should begin operation until it adequately addresses relevant legal and regulatory requirements through appropriate design and by adhering to applicable standards.
- G7 committed to sustaining policy support as long as needed
- Once the recovery is firmly established, we must ensure the long term sustainability of public finances
- France Fin Min Le Maire: will fight over the months ahead to make the minimum corporate tax as high as possible
- German Fin Min Scholz: the G7's historic tax deal will stop companies from dodging taxes by booking profits in low tax countries
- US Treasury Sec Yellen: global minimum tax deal would end a race to the bottom in corporate taxation and will help the global economy thrive; the G7 agreement protects national sovereignty to set domestic tax policy

WSJ : NO PARKING: CITIES RETHINK GARAGES FOR A WORLD WITH FEWER PERSONAL CARS

NO PARKING: CITIES RETHINK GARAGES FOR A WORLD WITH FEWER PERSONAL CARS

Public parking may never disappear, but autonomous vehicles, remote work and generational trends are prompting planners to reconsider its function in the downtown core

The Future of Everything covers the innovation and technology transforming the way we live, work and play, with monthly issues on health, money, artificial intelligence and more. This month is Cities & Real Estate, online starting June 4 and in the paper on June 11.

What would cities do if they didn’t need so many parking spaces?

Architects, urban planners and parking industry experts are now imagining a future in which parking garages are turned into commercial kitchens, fitness centers and transportation hubs where driverless taxis recharge between trips. Parking structures whose sloping floors make them hard to repurpose would be candidates for the wrecking ball, clearing the way for green spaces or new development.

“We won’t need street parking, we won’t need parking structures that much, and we certainly won’t need below-grade parking structures,” says Andy Cohen, Los Angeles-based co-CEO of Gensler, a global architecture firm.

Mr. Cohen and other experts say the demand for urban parking spaces will plummet in coming years as a result of several trends.

Shifting demand
The rise of autonomous ride-hailing vehicles and micro-mobility devices such as electric bikes and e-scooters will play a key role, they say, as will lower rates of car ownership among Gen-Z and millennials. In addition, cities have been moving away from minimum parking requirements that in some cases forced developers to build more square footage per car than per office worker. And remote work and online shopping—both trends that accelerated during the pandemic—mean fewer trips downtown for office workers and shoppers.

“That is going to change parking demand significantly, and in the near term, long before you get to shared electric autonomous vehicles,” Mary S. Smith, senior vice president at the parking and mobility consulting firm Walker Consultants, says of the decline of commuting into urban centers. By 2040 or 2050, she predicts, parking demand in city centers could fall to around 30% of pre-pandemic levels—closer to 15% if hybrid workweeks become the norm.

“There will always be a need for parking, no matter what vehicles are driving us around in the future,” says Robert Zuritsky, president and chief executive of Parkway Corp., a Philadelphia-based parking and real-estate company. But he calls the post-Covid era “a big experiment” given the shift to hybrid work schedules.

A multipurpose mobility hub
The prospect of urban streets bustling with shared roving robotaxis or other autonomous vehicles has spurred Gensler to design office buildings with parking facilities that can easily be repurposed—even though that raises front-end costs by up to 15% for features like higher ceilings.

The National Parking Association envisions the parking garage of the future as a multipurpose mobility hub. A 2018 rendering from the industry group shows a garage with electric-vehicle charging stations, stacked parking for autonomous vehicles, or AVs, and separate entry lanes for shared cars driven by humans. There are shops on several levels, with pickup and drop-off zones out front.

“AVs could pick up a person in their neighborhood on demand, and take them to a terminal station where the person goes on heavy train or subway to the central core of the city,” says Giovanni Circella, director of the 3 Revolutions Future Mobility Program at the University of California, Davis.

The range of EVs will likely become vastly greater, Mr. Circella says, and one day charging a battery could take minutes—two developments that would shrink the need for storage for electric AVs. Wherever AVs parked, the absence of drivers would mean they could squeeze in more tightly than today’s cars. Automated garages that whisk cars to other levels are already in operation.

As long as there have been cars, people have needed somewhere to stash them. A 2011 estimate by researchers at Arizona State University and the University of California, Berkeley, found that the U.S. had at least 722 million parking spaces. That is about three spaces for each of the 240 million passenger vehicles.

“If indeed AVs become viable and pervasive, then we may very well end up in a situation where parking inventories are less or not needed,” says Mikhail Chester, an associate professor of civil, environmental and sustainable engineering at Arizona State who helped with the estimate.

As of 2017, San Francisco—one of the rare cities that manually tallies its parking supply—had more than 442,000 publicly available spaces. The city says its 275,500 on-street spaces, measured end to end, would stretch nearly 900 miles, longer than California’s coast.

Parking plus perks
Even as demand continues to exist, companies are starting to rethink how parking works.

Parkway, the Philadelphia firm, wants to make it easier for drivers to find, access and pay for parking without taking a ticket or pulling out a credit card. It has teamed up with Austin-based FlashParking to digitize Parkway’s facilities, a step toward creating a frictionless process that would start with motorists using voice commands to ask one’s car to locate parking.

Before long, drivers should be able to ask their car for parking suggestions and be prompted by questions—“Do you want to park very close to the place? Are you willing to walk a few blocks?”—to get the best option from a menu of garages near their destination, says Donald Shoup, an urban planning professor at the University of California, Los Angeles.

“ Parking demand in city centers could fall to around 30% of pre-pandemic levels—closer to 15% if hybrid workweeks become the norm. ”

In Seattle, Flash is working with a parking operator to house e-scooters in a garage near the Space Needle, part of a plan to put about 500 scooters in such facilities around the city. That location will also host electric-vehicle chargers that Flash says will have a reservation system and provide real-time availability.

“It’s parking plus last-mile mobility, and it’s parking plus EV charging,” says Dan Sharplin, FlashParking’s executive chairman. “Those are the two things we think are ripe today.”

For existing garages, Mr. Sharplin sees a role as logistics hubs where delivery companies transfer truckloads of packages to smaller conveyances like robots. Ghost kitchens to prepare food for delivery would work on the ground floors, Ms. Smith says. And below-ground parking could become data centers or fitness clubs, says Mr. Cohen, whose firm has developed a concept for turning the top level of a San Jose, Calif., garage into an activity-filled park.

Before the pandemic, Flash helped Las Vegas use excess garage capacity in an attempt to entice Uber drivers off jammed streets during downtime using an app. In the evenings, two city-owned garages little used by tourists were outfitted as lounges with Wi-Fi and bathrooms. The city recently relaunched the program and expects it to ease congestion when tourism and ride-hailing rebound, says Brandy Stanley, city parking services manager.

That same model could also apply in a world dominated by shared self-driving fleets, minus the drivers and bathrooms. Those vehicles would need somewhere to recharge, be cleaned and await pings from customers, and today’s garages could work, with pickup and drop-off on the lower level, Ms. Smith says.

The owners of garages that wind up being demolished will be left with precious real estate, says Christopher Leinberger, emeritus professor at George Washington University’s Center for Real Estate and Urban Analysis. “They’re going to be out of the 20th century business that they’re in now,” he says, “and the 21st century business is going to be much more valuable.”

WSJ : In Aviation, the Revolution Won’t Be Supersonic

In Aviation, the Revolution Won’t Be Supersonic
United’s plane purchase from Boom Technology raises hopes of a return to supersonic travel, but the Concorde failed for a reason

People say they hate being stuck for hours on a narrow plane seat, but they haven’t usually been eager to pay for the experience to fly by faster. Just ask the operators of the Concorde.

On Thursday, United Airlines announced a deal to buy 15 Overture supersonic passenger jets from Boom Technology. The 88-seat aircraft, designed to fly at 1.7 times the speed of sound, versus 0.8 times for subsonic jets, is scheduled to enter service around the end of the decade.

Buzz around the potential return of supersonic travel—18 years after the retirement of the Anglo-French Concorde project—has been audible in the aviation industry for years. United’s vote of confidence will likely make it a notch louder.

The idea is that many of the problems that made the Concorde a money-losing proposition—only 14 entered commercial service between 1976 and 2003—can now be mitigated. Some backers believe that more efficient designs could bring ticket costs in line with a regular first-class fare, compared with the Concorde’s roughly 10% premium.


New projects also promise to reduce the “sonic boom” that created intolerable levels of noise and can even break windows. The Overture’s plans to fly exclusively on sustainable fuel should quell some environmental concerns too. Supersonic jets are estimated by the International Council on Clean Transportation to burn five to seven times as much fuel per passenger as regular ones.

Analysts at Swiss bank UBS believe that faster-than-sound flights could be a $180 billion market for commercial operators by 2040. Their proprietary survey of fliers suggest that a third would be willing to pay at least 25% more if travel time could be cut in half.

But it is doubtful fliers would put their money where their mouth is.

The one constant in aviation economics since the industry was liberalized 50 years ago is that price is the overwhelming factor in buying plane tickets. This is why, between 1968 and 2014, aircraft didn’t get any faster while fuel burn—the main cost of operating them—dropped by 45%, ICCT data shows. Boeing abandoned its Sonic Cruiser project to build a near-supersonic jet in 2002 for a reason: People don’t pay much to fly faster.

To be sure, supersonic flights are targeted at price-insensitive executives. But with in-flight internet services getting better and allowing them to work comfortably, getting to London from New York City in 3½ hours rather than six hardly seems like a game-changer, especially since a big part of the hassle is traveling to and from airports. Supersonic cabins would be more cramped than business folk are used to.

Also, noise can only be cut so far without sacrificing fuel efficiency, so officials might refuse to lift the ban on supersonic flights over land. This severely limits the number of routes these planes would be able to operate.

Supersonic jets are undoubtedly cool, which explains why aerospace engineers and the general public are eager to see more of them. Paying $5,000 to get aboard, though, is a different story.

WSJ : Private-Equity Group Reaches Deal to Buy Medline for Over $30 Billion

Private-Equity Group Reaches Deal to Buy Medline for Over $30 Billion
Blackstone, Carlyle and Hellman & Friedman agree to what would be one of the largest leveraged buyouts since the financial crisis

A group of private-equity firms reached a deal to acquire Medline Industries Inc. that would value the medical-supply company at more than $30 billion, in one of the largest leveraged buyouts since the financial crisis.

Medline said Saturday that Blackstone Group Inc., BX 0.95% Carlyle Group Inc. CG 0.63% and Hellman & Friedman LLC had reached a deal to take a majority stake in the company.

The Wall Street Journal reported earlier Saturday that the group was close to a deal after beating out a rival bid from the private-equity arm of the Canadian investing firm Brookfield Asset Management Inc. BAM 0.12%

Including debt, the transaction would be valued at about $34 billion, and north of $30 billion excluding borrowings, people familiar with the matter said. That could potentially make it the largest healthcare LBO ever.

Based in Northfield, Ill., family-owned Medline is a little-known but major player in the field of medical equipment. It manufactures and distributes equipment and supplies used in hospitals, surgery centers, acute care and other medical facilities in more than 125 countries.

Medline’s vast array of products include surgical gowns, examination gloves and diagnostic equipment, as well as consumer-facing brands such as Curad bandages. It has some $17.5 billion in annual sales, according to the company’s website.

The brothers James and Jon Mills founded the company in 1966, taking it public in 1972. The brothers bought back the shares five years later. James’s son Charlie has been Medline’s CEO since 1997.

The family would remain the single largest shareholder in the company after the buyout, and the management team would remain in place, the company said Saturday.

The sale of Medline would be the latest sign that private-equity firms have regained their taste for big buyouts. They all but disappeared after a number of them performed poorly or filed for bankruptcy in the wake of the 2008-09 financial crisis, weighed down by mountains of debt. Firms are now sitting on more than $1.6 trillion of unspent cash, according to data provider Preqin—and that doesn’t take into account the billions that big institutional investors are clamoring to invest directly in deals.

The fact that three private-equity firms came together—they are equal partners, some of the people said—harks back to an earlier era before the crisis, when so-called club deals were common. They fell out of favor as firms have generally preferred to partner with their biggest investors, but have started to appear more lately, and this deal was too large to do without partners.

In a sign of how hungry the firms were for the deal, senior executives from the bidders made pilgrimages to Medline’s suburban-Chicago headquarters to woo members of the family.

The Wall Street Journal reported in April that Medline was exploring a sale, likely to private equity, and had hired Goldman Sachs Group Inc. GS 0.70% to run the process. The winning consortium beat out a field of bidders that over the course of the auction included a who’s who of the biggest buyout firms.

BDT & Co. also acted as financial adviser to Medline, and Wachtell, Lipton, Rosen & Katz was legal adviser. BofA Securities Inc., J.P. Morgan, Barclays, Morgan Stanley and Centerview Partners advised Blackstone, Carlyle and Hellman & Friedman, and Simpson Thacher & Bartlett LLP was the group’s legal adviser.

FT : Reckitt Benckiser to sell baby formula unit in China in $2.2bn deal

Reckitt Benckiser to sell baby formula unit in China in $2.2bn deal
Division has weighed on the consumer goods company’s growth for several years

Reckitt Benckiser has agreed to sell its baby formula business in China to the private equity firm Primavera, as it seeks to bring an end to its struggle with a division that has weighed on its growth for years.

The deal values the unit at $2.2bn. The UK-based consumer goods company expects to receive about $1.3bn in cash from the transaction, which it will use to pay down debts, and will keep an 8 per cent stake in the unit, it said in a statement on Saturday.

The deal will help Reckitt “to rejuvenate growth and create long term value,” its chief executive Laxman Narasimhan said in a statement, adding that the group is “actively, and decisively, managing our portfolio.”

Reckitt entered the baby formula business in 2017 when it bought US baby milk group Mead Johnson in a £13bn deal, part of a push by former chief executive Rakesh Kapoor to refocus the company on higher-margin consumer healthcare products. The unit makes brands such as Enfamil.

However, it has since hit difficulties, partly because of falling Chinese birth rates and local competition.

Last year, Reckitt took a £5bn impairment on the acquisition of Mead Johnson, writing off almost a third of its previous book value.

In 2018, a production outage at the business’s Dutch baby formula factory left Reckitt unable to meet customer demand, knocking £70m off the company’s revenues and hitting its share price.

Martin Deboo, an analyst at Jefferies, said in March that he thought Reckitt’s shareholders “would be happy to be out [of the China baby formula business] at almost any price”.

Reckitt expects a net loss of about £2.5bn as a result of the sale to Primavera, as it remeasures the unit’s goodwill and intangible assets, it added.

The company’s baby formula division as a whole reported a 7.4 per cent sales decline in the first quarter of 2021, compared to a year earlier.

Under the deal Primavera, which has previously invested in Alibaba, Ant Group and ByteDance, will take control of Reckitt’s manufacturing plants in the Dutch city of Nijmegen and Guangzhou in China.

Reckitt will still own the Mead Johnson and Enfa brands but Primavera will have a royalty-free permanent licence to use them in China.

Narasimhan, who took over in 2019, has been seeking to turn round Reckitt’s performance, which had suffered towards the end of Kapoor’s tenure.

Its like-for-like revenues rose 4.1 per cent in the first quarter of this year, it said in April, as sales of hygiene products such as Lysol disinfectant soared.

Narasimhan said Reckitt was keen to grow its other businesses in China, the largest market for its Durex condoms.

Fred Hu, founder and chair of Primavera, said the deal would lead to a “strong collaboration” with Reckitt.

The Guangzhou-based China baby formula business employs about 3,000 people and made £861m in net revenues in the year to December.

FT : Private equity group reaches deal to buy Medline for $34bn

Private equity group reaches deal to buy Medline for $34bn
Acquisition of medical supply company is largest buyout of the year

A consortium of private equity groups, including Blackstone and Carlyle, has reached a deal to buy medical supply group Medline for about $34bn, including debt, in what is the largest buyout of the year.

The transaction, announced by Medline on Saturday, is the largest buyout involving a club of private equity investors since the 2007 financial crisis. It ranks as one of the largest-ever private equity deals, behind the $44bn buyout of US energy group TXU Corporation in 2007.

Blackstone, which has also partnered with Hellman & Friedman on the deal, beat other consortiums of buyout groups, including one involving Bain Capital and CVC and another one led by Brookfield.

Medline, founded in 1966 by Jim and John Mills, is one of the largest manufacturers of medical supplies. The family-owned business is now run by Charles Mills.

Medline said that after the transaction it would continue to be led by the Mills family, which would remain its largest shareholder.

In 2018 Blackstone agreed its largest deal since the financial crisis by pulling together $17.3bn to take a controlling stake in the financial terminals and data business of Thomson Reuters. Canada Pension Plan Investment Board and Singapore state fund GIC helped finance the deal.

Club deals were popular in the years that preceded the financial crisis as they allowed private equity groups to be exposed to more and larger transactions. They came to an abrupt end after the crisis as credit dried up but have recently gained traction.

FT : Mario Draghi sets tone in cooling EU-China relations

Mario Draghi sets tone in cooling EU-China relations
Italy has changed tack since it signed up for China’s Belt and Road Initiative two years ago

It was this year’s aborted takeover of an obscure Italian company with little more than 50 employees that illustrated just how far one of China’s biggest diplomatic successes in Europe had unravelled.

In 2019, Rome stunned its US and European allies when Italy’s then populist coalition government became the first G7 member to sign up to China’s Belt and Road Initiative. Signed during a state visit by Chinese president Xi Jinping, the agreement propelled Italy to the frontline of Beijing’s battle for global power and influence.

But then, two years later, Italy’s newly appointed prime minister Mario Draghi quietly signed a decree that symbolically ended China’s Italian courtship and contained Beijing’s beachhead in western Europe.

Italy’s last government had already begun to cool on Chinese investment amid significant US pressure. Even so, Draghi’s move marked a decisive Italian shift towards a foreign policy he has described as “strongly pro-European and Atlanticist, in line with Italy’s historical anchors”.

It also presaged a broader EU rethink of Chinese relations that, most recently, has led to the European parliament freezing its pending trade deal with Beijing.

“To make it look like Italy is aligned with the US, sometimes you need to do little things to prove it,” said Michele Geraci, a China expert who, as undersecretary for economic development, was one of the architects of Italy’s Belt and Road agreement with Beijing.

It was “a political statement to show we are worried about predatory acquisitions, and that we are aligned with our American friends”, Geraci added. Italy’s participation in China’s BRI remains technically in force but has been rendered essentially meaningless and no major deals have taken place.

The Sino-Italian unravelling began in December, two months before Draghi was appointed prime minister. Shenzhen Investment Holdings, a partially state-owned Chinese company, struck a deal to buy a 70 per cent stake in LPE, a privately held Milan-based company that makes semiconductor equipment.

But in March, with the Draghi government now in place, the decision to grant permission for the takeover landed, as a matter of routine, on the desk of Italy’s new minister for economic development, Giancarlo Giorgetti.

A veteran lawmaker from the rightwing League party, Giorgetti proposed invoking Italy’s so-called Golden Power laws to block foreign takeovers. Draghi signed the decree blocking LPE’s sale at a cabinet meeting on March 31, citing a shortage of semiconductors, which made LPE part of a “strategic sector”.

LPE, which produces components for power electronics applications that are also used “in [the] military field”, as the decree described it, declined to comment. Shenzhen Invenland Holdings has said it will continue to co-operate with LPE in certain areas.

Draghi’s decision was a watershed for Italy and, Italian diplomats say, perhaps also for the EU.

Only a few years ago, Italian politicians had enthused about how Chinese money would help the struggling economy. Italy was Europe’s third-biggest beneficiary of Chinese investment between 2000 and 2019, according to Rhodium Group, receiving a total of €15.9bn versus €50bn in the UK, €22.7bn in Germany and €14.4bn in France.

As of 2020, more than 400 Chinese groups also held stakes in 760 Italian companies across “highly profitable or strategic sectors”, according to Italy’s parliamentary committee on national security, Copasir.

But today, partly because the pandemic has left many Italian businesses vulnerable, Draghi’s government is taking a less lenient approach towards strategic foreign investments than previous administrations and is not holding back from exercising its golden rules to curtail them.

Last month, buttressed by €205bn of EU recovery funds, Italy co-ordinated with France to undercut the sale of Italian truckmaker Iveco to China’s FAW group. This week, although Rome conditionally authorised a 5G infrastructure supply contract between Vodafone Italy and China’s Huawei, it came with strict security conditions.

“The shift towards China belongs to the past,” said Edoardo Rixi, a League MP. “That political current today barely exists.”

Not everyone believes cooler relations with Beijing are in Italy’s or Europe’s best interests.

Speaking this week, former prime minister Romano Prodi said: “Up until a few months ago . . . the situation [between China and the EU] was more relaxed, but now the accord has been frozen.” Prodi added that, given the mutually strained relations, “both sides must change their attitude . . . right now it’s formally impossible to do anything”.

Geraci also fears the shift by the Draghi government towards China will have economic repercussions for Italian companies in Beijing.

“Officially the market for Italian goods in China is €13bn a year, but in fact it is three times that size when you count products made in Italy that then are bought by China via third countries. It is a hugely important market for us.”

How relations might be recalibrated, though, remains an open question.

Lia Quartapelle, a member of the Italian parliamentary foreign affairs committee for the centre-left Democratic party, said that the previous pivot towards China was an aberration of Italian foreign policy that opened a “geostrategic gash” in the heart of Europe.

Now, however, “Draghi’s calibre not only enables us to reinforce western values, but to be the engine of recovery in the post-pandemic era”, she added.

Furthermore, with Germany absorbed by elections this year and France next year, Draghi is an important European player whose staunch Atlanticism could influence broader EU policy towards China.

“Italy’s role in keeping the rudder straight will soon become even more crucial,” said Emma Bonino, a former Italian minister of foreign affairs.

“Certainly dealing with China’s policy remains complicated; we cannot pretend that the country does not exist,” she added. “We can trade with China as with the rest of the world, but we must be clear about the differences and divergences between us and them.”