TheChek News Flow

* Altia Raised to Buy at SEB Equities; PT 9 euros

* Aumann Raised to Hold at Commerzbank; PT 12.30 euros

* Road to Recovery for Travel Operators Will Be Long: Jefferies

* Royal Mail’s Unprofitable UKPIL Has No Valuation Floor: Liberum

* Teleperformance Cut at MS on Travel Pressures for TLS Unit

Nikkei -1.05% Hang Seng -1.35% CSI -0.29% Shanghai -0.29% Shenzen -0.05%

Eur$ 1.1303 CNH 7.0777 CNY 7.0826 JPY 107.15 GBP 1.2581 CHF 0.9442 RUB 70.0693 WTI$ 35.64 -1.93%

S&P +1.37% Nasdaq +1.15% EuroStoxx -0.60% FTSE -0.59% Dax -0.50% SMI

Macro :

- Credit Concerns Are Front-and-Center in the U.S. Stock Selloff

- Bain Said to Make Rival Bid for Stake in Top Italy Soccer League

- Hedge Fund Positioning Data Shows How Market Ran Away From Them

- Third Point Hedge Fund Seeks to Raise More Than $500 Million

Keep an eye on :

- ADS GY : Lululemon Sinks After Sales Lose Steam Amid Covid-19 Pandemic

- AIR FP : Airbus Set to Drop Plans for Derivatives Trading Market: FT

- ALM SM : Almirall to Replace Mediaset Espana in Ibex 35

- ATC AN : France’s 5G Spectrum Auction to Start Between Sept. 20-30: Arcep

- ARYN SW : Aryzta Investor Veraison Laments Shareholder Meeting Delay

- ATL IM : Atlantia First Quarter Revenue EU2.21 Bln, Est. EU2.15 Bln

- BEST IM : Generali, BTG Pactual to End BSI Sale Arbitration

- BIFF LN : Biffa to Offer Up to 50m Shrs

- EN FP : France’s 5G Spectrum Auction to Start Between Sept. 20-30: Arcep

- IAG LN : British Airways Is Said to Weigh Voluntary Redundancy for Pilots

- DIA IM : DiaSorin: Simplexa Test to Detect CMV Infection Gets CE Marked

- EDF FP : France Says Some Nuclear Plants Must Be Halted This Summer

- ETL FP : Eutelsat Tells U.S. Not to Help Rivals Too Much on C-Band Costs

- EUCAR FP : Hertz Proposes $1 Billion Stock Sale to Capitalize on Odd Rally

- FCA IM : Fiat Chrysler Wins Trade Case Against Mahindra Over Jeep Copy

- HBMN SW : HBM Healthcare Says Novo’s Corvidia Deal Boosts NAV by 1.2%

- HTWS LN : Helios Towers Holders to Offer Shares

- ILD FP : France’s 5G Spectrum Auction to Start Between Sept. 20-30: Arcep

- IMPN SW : Ina Invest Final Offer Price CHF22.42 per new Share

- ITP FP : Moncler, Interparfums Sign License Agreement for Fragrances

- LHA GY : Belgian Lufthansa Deal Held Up Over Any Breaches Penalty: Echo

- LBIRD FP : Lumibird Raises EU36.3m in Capital Increase

- TL5 SM : Almirall to Replace Mediaset Espana in Ibex 35

- MONC IM : Moncler, Interparfums Sign License Agreement for Fragrances

- NESN SW : Nestle Dilutes Water Sales to Focus on High-Margin Brands: React

- NDA SS : Nordea Unveils New Stock Bonus Plan for Its Nine Top Executives

- OCI NA : OCI COO Ahmed El-Hoshy to Succeed Sawiris as CEO

- ORA FP : France’s 5G Spectrum Auction to Start Between Sept. 20-30: Arcep

- PARG SW : Pargesa Says Parjointco, Parties Control 94% of Voting Rights

- UG FP : PSA Bringing 500 Polish, Spanish Workers to French Factory

- PHARMASPG IPO : PharmaSGP IPO Order Book Is Covered on Base Deal Size: Terms

- PUM GY : Lululemon Sinks After Sales Lose Steam Amid Covid-19 Pandemic

- QLRO SS : Kinnevik Sells Most of Its Qliro Stake, May Exit Altogether

- RNO FP : Renault Rattled by Threat From Imports of Chinese Electric Cars

- RNO FP : Nissan to Cut 248 Manufacturing Jobs at Sunderland Plant in U.K.

- PROX BB : Proximus, Belfius Sign Pact for Digital Bank, Phone Offering

- CFR SW : Richemont HR Head Guieysse Steps Down From Senior Exec Committee

- RYA ID : *RYANAIR CEO SAYS MORE AIRLINE CONSOLIDATION COMING: EXPANSION

- SOBI SS : Sobi, Selecta Enter Licensing Pact for Gout Treatment

- SW FP : Sodexo to Drop Out of CAC 40 in Review; Teleperformance to Join

- SRAIL SW : Stadler Secures CHF172.9m Rhaetische Bahn Order for 20 Trains

- TKWY NA : Grubhub CEO Says Just Eat Takeaway Deal Had More Certainty: CNBC

- TEP FP : Sodexo to Drop Out of CAC 40 in Review; Teleperformance to Join

- UBI IM : Italy Mkt Regulator Likely to Approve UBI, Intesa Merger: Sole

- UBSG SW : UBS Hires Le From Point72 to Head Asia Financing Risk Team

- UNA NA : Unilever Long-Term Shareholders Back Fresh Unification Plan

- WAND LN : WANdisco to Offer 3.04m Shrs GBP6.50/Shr

- ZM US : Zoom confirms Chinese government asked it to ban activists commemorating Tiananmen Square

- FHZN SW : Zurich Airport May Passenger Traffic -98.4%

The need to get deals done and raise fresh equity is driving the move

Hungry for deals, Unilever pivots to London

British business minister Alok Sharma got a bit of good news on Thursday morning. Consumer goods group Unilever revealed plans to become a single company based in London after almost a century of operating under a dual Anglo-Dutch corporate structure. 

“A clear vote of confidence in the UK,” he wrote on Twitter. Is it though? DD would like to take Sharma back to 2018 when Unilever said it would simplify its dual stock market listing and consolidate its headquarters in . . . Rotterdam. 

Saying Unilever chose London is a bit like asking for chocolate ice cream and being told it has run out but there’s vanilla instead. It’s not the preferred choice but it’s the only other feasible one.

Unilever’s move to Rotterdam largely fell apart because of a colossal miscalculation by the company’s leadership at the time. DD ran through the whole saga here. 

The problem was that Britain had just two years previously voted to leave the EU. Making shareholders choose between the Netherlands and the UK was bound to stir up nationalist sentiments. 

Perhaps then-chief executive Paul Polman was feeling extra confident having survived the “near-death experience” of a takeover from 3G Capital-backed Kraft Heinz. But things didn’t go to plan. UK shareholders were overwhelmingly against the idea. Some were shocked that it had even been entertained given that it would mean Unilever would have to abandon its London listing.

Back to Thursday: Polman’s successor Alan Jope has decided to go the other way. Shareholders will of course have to approve the fresh plan to scrap the dual structure as well. 

FT’s Lex thinks there is more chance of success. Under the new plan the company will remain listed on both the FTSE and Dutch AEX indices. And Unilever needs only 50 per cent of Dutch shareholders to approve the move, while 75 per cent of UK shareholders had to vote in favour of going to Rotterdam. 

You might find yourself asking why Unilever bosses are so eager to consolidate its Anglo-Dutch corporate structure. The answer is simple: it’s much easier to get deals done, pursue demergers, and raise fresh equity. 

Unilever chairman Nils Andersen indicated that the company was expecting a lot of opportunities post-pandemic so it’s easy to see why it wants to get it done now.

The company currently has two equity structures, or TopCos, so anything that requires shareholder approval (like the move itself) has to be voted on by Dutch and UK shareholders. Private equity group KKR, which agreed a €6.8bn deal to buy Unilever’s spreads business in 2017, can tell you that it doesn’t make for a very efficient system.

If Unilever is going to streamline its operations, this is a necessary move. The old structure is a relic from a long-ago merger. It’s time for a new structure and new deals. 

What’s to follow once Unilever pushes this simplification through? Big M&A. Go deeper. 

Airbus warns more risk to jobs in UK than in France and Germany

Europe’s aerospace champion urges Britain to provide support measures similar to Paris and Berlin

Airbus has warned that its UK employees face “more permanent” job cuts than counterparts in France or Germany, which are both planning to maintain wage subsidy schemes for up to two years to offset the economic impact of the coronavirus pandemic.

Guillaume Faury, chief executive of Europe’s aerospace champion, also called on the UK to “recommit” to the future of its aerospace industry with a package of support measures similar to those unveiled by Paris and Berlin that would help accelerate the development of a new generation of carbon free aircraft.

“It is time for the UK to do what France and Germany have done,” he said. “One year from now, those projects will be launched and then it will be too late.”

The Airbus boss was speaking to the Financial Times just days after France unveiled a €15bn package to support its aerospace industry and as the group prepares a wide-ranging restructuring to adapt to a collapse in demand from airline customers.

The near global grounding of the world’s passenger jets has left many airlines begging for state bailouts to survive. In April, Airbus cut production by roughly a third, prompting a chain reaction of job losses at suppliers.

Mr Faury said he “regretted” the UK’s decision to set an October deadline to end the government payroll subsidy scheme, which foots roughly 80 per cent of the wages of employees on furlough. 

Such measures “are ways of damping the workforce reduction and retaining skills”, he said. “If we don’t have that system in the UK, we have to look for more permanent solutions when we could have avoided those . . . for part of the workforce. We would have used it if we had it in the UK.”

In France and Germany, workers are paid virtually their full wage in return for part-time working. This would mitigate the scale of permanent job cuts in these countries, he said, while other measures such as export credit guarantees would help to stabilise demand.

There were no immediate plans to reduce production any further, he added. The job cuts, initially expected this month, would not now be outlined until late July. 

Mr Faury’s comments will fuel a rising level of anxiety in the UK aerospace industry, where Airbus employs 13,500 people. The UK has already lost share of the global aerospace market in recent years, falling from second place after the US to third, behind France and roughly equal to Germany.

Moreover, one of the UK’s flagship aerospace companies, aero-engine maker Rolls-Royce, has been particularly hard hit by the crisis, due to its focus on the wide-body jet market, which will be significantly slower to recover.

The concern was that the French and German aerospace industries would emerge from the crisis more competitive, further eroding the UK’s share, said Paul Everitt, head of the aerospace industry lobby group, ADS.

“The longer we wait to do anything, the more entrenched the advantage in other countries becomes,” he said. The UK should consider measures such as accelerating public procurement and stepping up investment in research and development.

Mr Faury said it was urgent that the UK took steps to secure its position on carbon-free aircraft technologies. France has set aside €1.5bn to support development of a next generation carbon-free jet by 2035, while Germany has also announced a €7bn national hydrogen strategy which could accelerate the development of alternative fuels.

While the UK had invested heavily in new wing technology, which would be part of the next Airbus jet, “there are other areas like propulsion where we think the UK has the opportunity to fund more”, he said, in a clear reference to Rolls-Royce. “We are at tipping point.”

A UK Treasury spokesperson said the UK’s support measures — including income support, loans and grants and tax deferrals — were among “the most generous in the world”.

“We will continue to look at how to adjust our support in a way that ensures people can get back to work, protecting both the UK economy and the livelihoods of people across the country,” the spokesperson said.

Mr Faury concluded by saying he was concerned by the “deadlock” between the UK and the EU over the terms of their relationship after the transition period for Brexit ends this year. 

“The aerospace ecosystem today includes the UK. Today the UK is in Easa [the EU aviation safety regulator]. European programmes include the UK. This is an asset we need to preserve,” he said. “If the UK were to isolate itself through a bad Brexit agreement that would be a pity.”

Diamond sales freeze: ‘I’ll sort out the ring when the madness ends’

Global industry that relies on sight and touch to attract consumers grinds to a halt

When Kenneth Monahan, a financial analyst in New York, got down on one knee to propose to his girlfriend on a Delaware beach at dawn earlier this month, he presented her with a fake diamond ring.

With jewellery shops closed because of the lockdown, he said: “I’ll sort out the full ring when the madness ends.”

For many consumers, a diamond ring is a big financial — and emotional — investment, one that they are loath to make online, where it is harder to assess the cut and the clarity.

With malls and jewellery stores shut during the coronavirus lockdowns, the $80bn diamond industry has ground to a halt.

From the diamond mines of South Africa and the polishers in India, to the grading of stones in Antwerp and retailers in London’s Hatton Garden and New York’s Diamond District, each stage of the diamond value chain requires close personal contact and human handling. As a result, the industry has been hit hard by the coronavirus crisis.

“[The global lockdowns] impacted everything. Nobody [in the industry] was unaffected,” said Stephen Lussier, the head of consumer and brands at De Beers, the diamond group. 

French luxury conglomerate LVMH is seeking to renegotiate the $16.5bn purchase of US jeweller Tiffany, agreed before the pandemic, while jewellery retailer Signet this week announced it would close more than 10 per cent of its total stores in the US and UK this year.

The pandemic struck at a time when the diamond industry was already struggling with competition from synthetic lab-made diamonds and a glut of smaller, lower quality stones. Sales rebounded soon after the 2008 financial crisis but with a global recession looming, there is uncertainty over how the luxury industry will fare.

While the lockdown restrictions are easing, operations are only slowly returning to normal.

At the top of the supply chain, miners have been badly affected, with analysts expecting consolidation among the weaker producers. Alrosa, the world’s largest producer of rough diamonds, said last week that first-quarter net profits fell almost 90 per cent and announced plans to curtail production at its huge Lomonosov mine in Russia. De Beers, the second-largest miner, said it would now produce between 25m and 27m carats of diamonds this year, down 20 per cent from its prior forecast.

“It’s an unprecedented situation for the industry,” said Richard Hatch, analyst at investment bank Berenberg.

The flow of diamonds through the supply chain has seized up and De Beers last month cancelled a major sales event in Botswana. The industry was hit by lockdowns in India, when about 200,000 migrant diamond workers in Surat — where most of the world’s diamonds are cut and polished — left the city.

Many workshops have slowly started to reopen but those in Surat are operating at about 25-30 per cent capacity, with Mumbai’s Bharat Diamond Bourse, one of the world’s top trading hubs, at 10 per cent. The grading of the stones in Antwerp and other diamond centres largely stopped.

Sanjay Shah, a diamond convener at India’s Gem and Jewellery Export Promotion Council and a manufacturer, said the industry was hoping to fully reopen before the end of the year. In the US, which accounts for almost half of global diamond sales, about a third of annual revenues are generated in November and December. “It’s a very dicey situation,” Mr Shah said. “You can’t predict what’s going to happen three months or six months later.”

There is some room for optimism. China, which was the first to ease its lockdown, has experienced strong demand, according to industry executives. Year-to-date sales — from January, April and May — are up 20 per cent from a year ago, with the bridal business particularly strong, according to Mr Lussier. “People have rediscovered what’s important to them and [are] committing to their partners,” he said.

Anish Aggarwal, co-founder of consultancy Gemdax, warned that what was harder to gauge “at this stage is whether this is a sustained rebound or so-called revenge buying”, referring to the post-lockdown rebound spending binge on luxury goods in China. Gemdax forecasts that global diamond demand will fall more than 25 per cent this year compared with last year.

With 90 per cent of diamond jewellery bought at physical stores rather than online before the pandemic, jewellers must develop their online services if they want to survive, said Martin Rapaport, founder of the world’s largest diamond wholesale trading platform. “The crisis is forcing the diamond and jewellery industry to reinvent themselves,” he said.

Falling demand has hit wholesale polished stone prices, down more than a tenth from a year ago. It is unclear how much of that will be passed on to the retail market.

Mr Monahan’s new fiancée accepted his proposal, posting a picture of the happy couple on social media with the fake ring on her finger. She will receive a real ring, Mr Monahan said, but it “should be purchased in a process that is more tactile and personal”.

The return of turn of millennium style hints at a desire among young people for easier times

There it was, dangling like a forgotten rag from its hanger, wedged between a Mongolian wool tippet and a funnel-necked coat. With its sequins winking in the late-spring sunshine it was almost calling: “Remember me?”

I hauled it out and admired it all over again. Rediscovering this Millennium-eve dress after a morning sorting through wardrobes stuffed with “archives” was a highlight of lockdown. Many of us found comfort and distraction in revisiting stored treasures during those frightening weeks.

A black sheer slip with spaghetti straps and giant rectangles of opaque pewter sequins stitched to the front, bought at huge expense with the excuse that it was a “classic”, my dress held, at the end of the last century, all the promise and sophistication of a CD-ROM. I tried to recall where else I had worn it: to dinner at the once-swanky but ill-fated Titanic restaurant on Leicester Square. Another time to the premiere of an unwatchable Nicolas Cage film.

I sent pictures to a friend. Minutes later, her 20-something daughter messaged back. “Love the dress!” What, she wondered, were my “plans” for it? 

Fashion revivals turn on 20-year cycles, or so the theory goes. According to GQ, millennium-era gear is “the hottest thing in the vintage clothing world”; Google searches for Y2K fashion are up threefold in two years; British pop star Charli XCX has recently taken to wearing miniature plastic butterfly clips in her hair. That a generation born in the 1990s and early 2000s are in thrall to that brazen aesthetic, and drawn to what New York Times writer Lindsay Zoladz calls “a retro-futuristic early-aughts extravaganza”, is the natural order of things.

Viewed from today, the clothes we wore in the handful of years before 2001 were the manifestation of a bright imagined future, says Geraldine Wharry, a 43-year-old fashion trend forecaster based in New York, who says she has “been at parties where I feel like I’m time-travelling”. Looking back at contemporaneous music videos, she is right. The action often seemed to take place in space (Britney Spears’ “Oops! . . . I Did It Again”, 2000), or on spaceships (TLC’s “No Scrubs”, 1999, Kylie Minogue’s “Love at First Sight”, 2001), and involved scrappy outfits in white and silver metallics (Mel C and Lisa Lopes’ “Never Be the Same Again”, 1999).

These were the last moments before 9/11 and the financial crash — events that traumatised a generation and priced them out of a stake in the future. The pre-smartphone era meant young lives weren’t tracked and traced with today’s ferocity. Our biggest existential threat was the Millennium bug.

“It is a subconscious craving for those things,” says Wharry. “And, of course, a way of saving money and owning unique things.” There is also a lot of Y2K gear around, on Depop, eBay and idling in parental wardrobes, for example. Whereas “good ’70s and ’80s stuff is super-expensive and hard to find.” 

What does Wharry remember as the defining looks of the Y2K era? She cites “really low-rise denim” and cargos worn with stiletto heels. I suddenly remember a pair of Maharishi cargos embroidered with an elaborate Chinese dragon, now languishing in a box under my bed. Their side-pocket flaps stuck out like elephant ears, but they made excellent post-maternity wear. “Keep them, they are valuable,” says Wharry. 

Zowie Broach, head of fashion at the Royal College of Art, is unsettled by the return of Y2K. Dressing up in millennium garb, says Broach, “allows people not to feel like they are living in a time that may hurt or scratch. It’s not dada or punk, it’s not a protest era or an era of disruption.

“We are living through a pandemic and in the ricochet of the financial crisis. Is it right to soften when we should be arming ourselves? We have to warn young people to be smart, not pulled back by nostalgia.”

Back in my wardrobe, I am suddenly struck by how my old Y2K-era clothes really are sunnily retro-futuristic. A pair of claret Miu Miu dolly shoes have metallic-pink flashes at the heel and enormous rubber soles reminiscent of squid suckers. Flimsy cardigans and camisoles in dusty shades of Parma violet edged in garish neon lace. More cargos, trailing hardware and with elasticated ankles. 

Should I pass on my Millennium eve dress? It is still a shock to be on the wrong end of a style revival, something akin to being circled by vultures. On the other hand, it would make my friend’s daughter happy, and as Broach reminds me, it would be the sustainable thing to do. It turns out, with its scrappy shape and glittery facade, it was no more “classic” than a scrunchie. What does my young friend like about it, I wonder? She messages back: “Looks like a lot of fun!!”