TheChek News Flow

Big pharma/cancer: the allure of a cure

Commercial rewards will be elusive in a crowded market

Nearly 50 years ago, Richard Nixon declared “war on cancer”. Hopes of a quick victory were shortlived. Yet scientific understanding has deepened. The number of recent new cancer drug approvals is “staggering”, says the US regulator’s new acting head. That is good news for patients. Investors should brace for trouble ahead.

Drugs companies are investing heavily, for reasons that are not hard to fathom. There is a lot of unmet need. Prices are high. However cash-strapped the health system, insurers have to pay for whatever oncologists prescribe in most US states.

The annual cost of treatment with a new cancer drug in 2017 averaged more than $150,000, nearly twice the price in 2013, says research group Iqvia. Revenues can be as much as 10 times higher than research costs.

The market is accordingly crowded and competitive. More than 700 cancer drugs are in late-stage development — up more than 60 per cent from a decade ago. The proportion in the late-stage pipeline of the 14 biggest pharma companies has more than doubled since 2010 to nearly 40 per cent, says Deloitte. Given that cancer drugs now generate just a tenth of industry sales, pharma groups may see poor returns on their research and development, says UBS. It detects signs of a R&D bubble.

Such concerns fuelled recent debates over the value of Celgene’s pipeline. The US biotech group has some of the sector’s highest cancer drug revenues, says Evaluate. But it faces expiring patents. Starboard, the activist that campaigned against its purchase by Bristol-Myers Squibb, raised doubts over the blockbuster potential of some of its hotly tipped new drugs.

Survival rates have improved dramatically since President Nixon’s time. Some cancer drugs have superstar status. Former president Jimmy Carter was saved from dying from skin cancer in 2015 after being treated with Merck’s immune response booster Keytruda. Its sales are tipped to hit $16bn a year by the mid-2020s.

Such forecasts underline the sector’s potential. But investment has outpaced the market. For many, commercial rewards will be elusive.

Company also reveals plan to sell assets as it seeks to outduel Chevron for Anadarko

Occidental Petroleum Corp. OXY 1.05% revised its offer for Anadarko Petroleum Corp. , increasing the cash portion of its bid and removing any requirement for a shareholder vote as the company seeks to best Chevron Corp. CVX 0.76% in a contest for prized assets in the heart of the U.S. oil boom.

The revised offer of $76-a-share, $59 of which will be cash, significantly raises the stakes for Anadarko as it weighs a previous deal it struck with Chevron that is now valued at slightly less than $62 a share as of Friday’s close.

Occidental Chief Executive Vicki Hollub expressed frustration with Anadarko’s board in a letter Sunday that suggested growing tension between the two companies.

“We remain perplexed at your apparent resistance to obtaining far more value for Anadarko shareholders which has been expressed clearly through our interactions over the last week,” she wrote. Occidental also objected to demands by Anadarko for three board seats as part of a deal.

In a statement, Anadarko said it is reviewing the offer and that its board and management team has been “actively engaged throughout the entirety of this process.”

A spokesman for Chevron referred questions to Anadarko. Chevron previously has said its deal “provides the best value and the most certainty to Anadarko’s shareholders.” Anadarko’s board is currently weighing Occidental’s offer.

While Ms. Hollub’s decision to remove a shareholder vote may strengthen the company’s offer, it also sets up a confrontation with some Occidental investors who have publicly expressed concerns about the costs of the company’s push for Anadarko, which holds prime acreage in the Permian Basin of Texas and New Mexico.

Occidental also released its first-quarter earnings a day early on Sunday evening, reporting net income of $631 million, about 10% less than during the first three months of 2018. Production in its Permian unit surged 47% to the equivalent of 261,000 barrels a day of oil and gas. The results beat analysts’ expectations. Occidental is scheduled to have a conference call about the earnings at 8 a.m. EDT Monday.

Earlier on Sunday, Occidental also said that it had reached a contingent agreement to sell Anadarko’s assets in Africa to French oil giant Total SA TOT 0.16% for $8.8 billion if it completes a deal for the company. The assets include Anadarko’s multibillion-dollar Mozambique project and other developments in Algeria, Ghana and South Africa.

Occidental previously had disclosed plans for roughly $10 billion to $15 billion in asset sales following a deal for Anadarko, as it seeks to decrease the added leverage on its balance sheet that would come with a purchase of a company only slightly smaller than itself.

The revised offer and potential transaction with Total marked two additional steps by Occidental to shore up its bid for Anadarko, after the company last week received $10 billion in backing for the potential deal from Warren Buffett’s Berkshire Hathaway Inc.

If Occidental’s proposed acquisition of Anadarko goes through, Berkshire will receive 100,000 preferred shares in Occidental that pay an 8% annual dividend and a warrant to purchase $5 billion in Occidental common stock.

The Berkshire funds made it possible for Occidental to avoid a shareholder vote on the transaction. If Occidental issues less than 19.9% of its existing shares, no vote is required. While Occidental has signaled that it believes it could win shareholder support, the company still moved to do the deal in an effort to strengthen its offer. Anadarko’s deal with Chevron doesn’t require the approval of Chevron shareholders.

Some Occidental shareholders have expressed concerns about the transaction and the potential that they won’t have a say on the deal. T. Rowe Price Group Inc. said last week that the deal would push Occidental into new business lines and weaken its balance sheet. The asset manager also signaled that if the transaction doesn’t come up for a vote, T. Rowe will vote against Occidental’s directors at its annual meeting May 10.

Chevron and Occidental have both seen their shares decline as the push to win Anadarko continues, a factor that has brought down the value of a potential transaction from either party. Chevron is down about 7% since April 11, and Occidental is down about 15% since then.

Occidental’s revised offer is worth 23%, or about $7 billion, more than Chevron’s as of Friday’s closing price. Under the April 12 deal with Chevron, Anadarko shareholders would receive 0.3869 share of the San Ramon, Calif., oil company and $16.25 in cash for each Anadarko share. That was $65-a-share on April 12 but has since fallen to $61.62 a share for a total value of $30.93 billion as of Friday’s close.

For Occidental’s new proposal, Anadarko shareholders would receive $59 in cash and 0.2934 shares of Occidental. That equals the original $76-a-share value of Occidental’s initial public offer on April 24, when the company made its bid public.

Uber executives are eager to avoid the pitfalls that sunk the debut of smaller rival Lyft

Uber Technologies Inc., gearing up for its landmark IPO this week, has taken steps to avoid setbacks that turned the debut of ride-sharing rival Lyft Inc. LYFT 1.64% into a disappointment.

Among other things, Uber has trimmed its valuation and is now targeting between roughly $80 billion and $90 billion. That comes as Lyft shares have tumbled more than 20% from their peak the day they started trading in March.

Uber executives also have discussed with their underwriters and Lyft’s what went wrong with its rival’s listing with an eye toward avoiding the same pitfalls, according to people familiar with the matter.

One of those pitfalls was a big hedge related to a trade between investing legends George Soros and Carl Icahn that was seen as weighing on Lyft shares. Uber’s lawyers have scoured Lyft’s lockup agreement—which prohibits early investors from selling the shares until a set time after the IPO—for the kind of loopholes that permitted the hedge, so that Uber might close them ahead of its IPO.

Mr. Soros bought a 2.7% stake in Lyft from Mr. Icahn in the days leading up to the San Francisco company’s IPO. Before buying the shares, for about $550 million or $60 apiece, Mr. Soros hedged a big chunk of the stake, people involved in the process said. Hedges, which can take various forms, are typically used to mitigate potential losses on an investment.

The hedge created a big supply of shares for sale that pressured the stock initially, these people say. It isn’t clear whether other, similar trades may also have been a factor.

Others close to the process dispute the impact of the Soros hedge, arguing that it represented a small portion of volume in Lyft shares in the initial days of trading.

After Lyft shares went south, Uber added as a risk factor to its IPO paperwork the possibility that its existing shareholders could engage in “sales, short sales or hedging transactions…whether or not we believe them to be prohibited.”

The stumbling of Lyft’s much-hyped listing caught many in Silicon Valley and Wall Street by surprise, and it stands in contrast to others that followed and have been roaring successes.

Last month, Pinterest Inc. and Zoom Video Communications Inc. skyrocketed in their trading debuts. Pinterest remains nearly 50% above its IPO price and Zoom shares have more than doubled. Meanwhile, alternative-meat startup Beyond Meat Inc. more than doubled in its first day of trading last week. The environment for new issues is ideal, with major stock indexes near records.

Lyft’s late-March IPO was the first big technology listing in a year that is expected to be full of them, and initially it appeared to be a success.

Even though Lyft executives skipped the pre-IPO investor meetings that have become routine for companies going public, investors clamored for the company’s stock during its roadshow pitch, leading JPMorgan Chase & Co. and the other underwriters to price the shares well above initial expectations and sell more of them than originally planned.

On the morning the stock began trading, Lyft founders Logan Green and John Zimmer, surrounded by employees, drivers and their families, rang the Nasdaq remote opening bell in downtown Los Angeles at the site of what is to become a rest stop and service center for drivers. The stock opened up 21% above its IPO price of $72 a share, hitting its high a few minutes later.

But the early enthusiasm faded quickly and the stock pared gains in afternoon trading, closing up a more modest 8.7%. By its second trading session, Lyft shares had fallen below the IPO price, hurt by some downbeat analyst commentary. When a stock trades below its IPO price that soon, it makes prospective investors wary of jumping in. The stock subsequently marched steadily downward, closing Friday at $62.51.

Pricing an IPO is an art; what type of investors get shares, how many they receive and at what price all play into how a stock trades initially. For Lyft’s IPO, the shares overwhelmingly went to what traders and bankers call “safe homes”—fund firms like Scottish investment firm Baillie Gifford & Co. that tend to hold shares, a person familiar with the offering said.

Those firms may not have been selling in the early days, but according to traders who closely watched the deal, they also weren’t buying enough to offset Mr. Soros’s hedge and other selling because for the most part they got the shares they desired in the IPO.

Meanwhile, JPMorgan was tasked with stabilizing the stock. This role is coveted because of the prestige and potential additional fees and trading commissions it can generate. As the stabilization agent, JPMorgan played a major role in deciding whether to exercise the so-called green shoe option to buy additional shares from the company to support the stock.

The bank tried to use the green shoe on the second day of trading, according to people familiar with the matter, but it was largely ineffective given the torrent of sell orders. Some investors in the IPO questioned whether JPMorgan could have supported the stock more aggressively to stem the tide of selling. None of them agreed to speak on the record.

A fateful decision by Lyft may also have played a role. Lyft could have blocked the sale of Mr. Icahn’s stake but didn’t, people familiar with the matter said. It was eager to see off the activist investor, who had been opposed to giving the company’s founders extra voting power, they said.

Lyft’s disappointing debut is an unfortunate outcome for JPMorgan. The bank is regularly among the top underwriters on big tech deals, but this marked a rare instance in which it landed the coveted lead role on a marquee Silicon Valley offering. As part of the deal, it was forced to sign an 18-month agreement not to work with Uber, whose IPO will be one of the biggest in years.

New intelligence suggests allied interests and American forces could be imperiled

WASHINGTON—The U.S. is deploying a carrier strike group and a number of bombers to the Middle East to serve as a deterrent to Iran based on new intelligence that suggests allied interests and American forces could be imperiled, multiple U.S. officials said.

The Pentagon is sending a carrier and its accompanying ships as well as what is known as a bomber task force to the region in coming days in response to “a number of troubling and escalatory indications and warnings,” National Security Adviser John Bolton said in a statement Sunday.

“The United States is not seeking war with the Iranian regime, but we are fully prepared to respond to any attack, whether by proxy, the Islamic Revolutionary Guard Corps, or regular Iranian forces,” he said.

The move, which comes after top-level discussions over the weekend, is considered a significant deployment of forces to a region from which the U.S. has been gradually drawing down its military footprint as it realigns its security priorities to compete with Russia and China.

Officials said new intelligence about the threat posed by Iran has alarmed the White House and is the trigger for the deployment, which has only been under discussion in recent days.

The move to deploy additional forces to the region was based on a specific threat to U.S. forces operating in the region, according to a U.S. official. There have been indications recently of Iran or its proxies assembling and moving assets both on land and at sea, the official said.

The deployment comes weeks after the White House decided to designate Iran’s Islamic Revolutionary Guard Corps as a foreign terrorist organization, which Iran has cast as an American provocation.

Top officials gathered in the past couple of days for an emergency meeting to discuss new intelligence assessments on Iran. U.S. officials described the fresh concerns as troubling and that they specifically prompted them to restore some of the American military assets to the region which are no longer kept there on a regular basis as the U.S. has shifted more of its focus to other parts of the world.

The carrier USS Abraham Lincoln and its accompanying ships, which recently deployed from Norfolk, Va., may have ended up in the Persian Gulf eventually, but this move sends it there directly, officials said.

In the past, B-1 Lancers or B-52 Stratofortresses strategic bombers have been based at al-Udeid air base in Qatar. The U.S. has maintained a carrier in the Persian Gulf for years, but more recently minimized such deployments in favor of putting limited assets such as carriers and jet fighters in other areas of the globe. The deployment is expected to restore, at least for now, some of the military assets that have been removed from the region, officials said.

While President Trump has attempted to lean away from conflicts in the Middle East and has sought for example to bring troops home from where they are deployed fighting Islamic State in Syria, some of his senior advisers, including Mr. Bolton, are seen as more aggressive.

The Trump administration has been pushing to drive Iran’s oil exports to zero and has taken other steps to ratchet up the economic pressure on Iran, including by designating Iran’s Islamic Revolutionary Guard Corps as a foreign terrorist organization.

The administration’s larger goal is to dissuade international companies from doing business with important sectors of the Iranian economy and, thus, induce Tehran to cease its support for militant groups and pull back militarily in the region.

But the administration’s policy has raised concerns that pushing the Iranian regime into a corner might cause it to lash out, either directly with its own forces or through proxies, at Western facilities or perhaps those of the U.S.’s Arab allies in the Persian Gulf region.

In recent years, the U.S. and Iran have been careful not to get into a military confrontation. During the campaign against Islamic State, U.S. forces in Iraq and Iranian-backed militias avoided targeting each other and instead focused on their common foe. The U.S. shot down two Iranian drones in 2017 that approached Syrian fighters the U.S. were training to fight ISIS in southeast Syria, but that episode didn’t escalate.

More recently, there have been concerns that military tensions might grow.

In September, the U.S. said that it was closing its consulate in Basra, Iraq, after rockets or mortars landed several hundred meters from the structure. Iranian officials denied Tehran was responsible and noted that Iran’s own consulate in Basra was burned to the ground during violent demonstrations in the city.

But Secretary of State Mike Pompeo warned at the time that the U.S. would hold Iran responsible for any harm done to Americans or U.S. diplomatic facilities “whether perpetrated by Iranian forces directly or by associated proxy militias.”

Iranian Foreign Minister Javad Zarif also warned last month of a potential military confrontation in the region, though he insisted that it wouldn’t be caused by Iran but could be the result of a miscalculation or a provocation by Iran’s enemies.

Shifting additional forces to the Middle East as a deterrent against Iran would represent something of a course correction for the Pentagon, which has sought to move forces away from the region so it could build up its capability to deter possible aggression by Russia and China.

Chief executive reassures investors over engine problems that have hit confidence

The name Rolls-Royce is synonymous with engineering excellence — but Richard Turner begs to differ.

A former Rolls-Royce employee and now a shareholder, Mr Turner told the company’s annual meeting in Bristol last week he was concerned about a lack of “serious engineering” capability at the top.

“There has never been a situation where a substantial portion of a Rolls-Royce-powered [airline] fleet has been grounded for so long,” he said, eliciting a round of applause.

Mr Turner’s criticism underlined the weight of the problems that Rolls-Royce, a British engineering icon, has faced as it has battled to resolve issues with its Trent 1000 engine that powers Boeing’s 787 aircraft. 

Ian Davis, chairman of the 113-year-old company, parried the attack by stressing the company’s expertise at Thursday’s shareholder meeting, pointing out that chief executive Warren East is an engineer and nearly two-thirds of the board have an engineering background. 

But even he had to acknowledge in his opening remarks that the engine problems had damaged confidence and sparked worries over the group’s operational performance. The issue “has caused pain for us and even more importantly for many of our customers,” Mr Davis conceded.

The Trent 1000 accounts for 11 per cent of Rolls-Royce’s commercial fleet. Turbine blades on certain variants of the engine have been wearing out faster than expected, forcing Rolls-Royce to embark on an extensive and costly programme of repairs. Airlines around the world, including British Airways and Virgin Atlantic, have had to ground aircraft, disrupting their schedules — leaving them not best pleased with Rolls-Royce. 

The problems have been costly; in February, Rolls-Royce said it expected the cash cost of the Trent 1000 programme to be about £1.5bn between 2017 and 2021. 

But despite coming under fire from some private investors last week, Mr Davis and Mr East held out the prospect of light at the end of the tunnel. Mr East told shareholders the company had now “settled compensation claims with all airlines to be affected in the next two years”. 

The number of aircraft on the ground has dropped, from 40-50 late last year to 30-40 in the first quarter. That number is expected to be in the single digits by the end of this year. New orders have also been won for the Trent 1000 Mr East said later on the sidelines of the meeting, compared with “a complete drought last year”.

“The airlines can see the problems starting to appear in the rear-view mirror now,” he added. 

For Rolls-Royce investors the statement might not be quite as categoric as they would like but coming from Mr East, whose direct demeanour has won supporters, it signals progress.

Shares in the company rose on the day of the shareholder meeting after the company confirmed it was on track to meet its full-year targets. 

But there is still a long way to go before Rolls-Royce is truly back on a roll. Its shares closed at 934p on Friday — up 15 per cent since the start of the year — but still below the three-year high of more than £10 a share of last August.

The past few years have been nothing if not turbulent even before Mr East took the helm in July 2015 in the wake of several profit warnings.

The company agreed to a deferred prosecution agreement with the Serious Fraud Office in January 2017 under which it paid a fine of almost £500m. The SFO in February announced it had dropped its investigation into individuals associated with Rolls-Royce, ending the probes — but they have left a mark.

Last summer Mr East announced plans to cut 4,600 jobs in a bid to drive change through an organisation that has resisted years of serial restructuring. The restructuring comes as Rolls-Royce’s engineers are busier than ever, building more than five different engine types. 

The group has made free cash flow a key measure of performance and promised to deliver more than £1bn by 2020, up from £641m for the year to the end of December 2018. It is a target Rolls-Royce cannot afford to miss. 

“There is quite a lot to do,” admitted one Rolls-Royce insider, adding that “it was never supposed to be like that with several new engines coming through at the same time”.

The scale of the tasks the company faces became evident in February when Mr East said Rolls-Royce had withdrawn from the competition to power Boeing’s new midsized plane. The chief executive said at the time the company was not ready to meet the timetable to provide an engine by 2025. 

Rolls-Royce is also developing the UltraFan, a next generation engine that it expects to be ready for service in the second half of the next decade. Boeing has been considering the launch of a new “middle of the market” plane to bridge the gap between its biggest narrow body passenger jet and the 787 Dreamliner twin aisle.

Asked whether the current crisis at Boeing, which is grappling with the fallout from two deadly crashes of its best-selling 737 Max aircraft, might delay the launch of the proposed jet and thereby provide another opportunity for Rolls-Royce, Mr East said the company might be able to “reassess” things.

“We think technically we have a good solution,” he added, cautioning that the company did not want to jeopardise the success of the UltraFan by launching it too soon.

The engine will be scaleable, meaning it will be suitable for wide-body and narrow-body aircraft. It will also be 25 per cent more fuel efficient than the earliest version of the Trent engine and as such is part of Rolls-Royce’s plan for the longer-term.

With the industry facing tough emission reduction targets and noise restrictions that need to be met by 2050, the company will need to come up with new technologies, including electrification. It cannot afford to be shut out of the next technological wave.

For Mr East and his board there is a lot to do. Nick Cunningham, analyst at Agency Partners, credits him for using the company’s crises to help drive change. 

“Warren has used the series of crises over the past few years to exact change from the organisation, something that has been notoriously difficult to do at Rolls which has had a very institutionalised culture,” he said. 

For investors, who have endured a turbulent ride, the one thing that is guaranteed is that there will be risks. 

The Trent 1000 issues “are a reminder that there is intrinsic programme risk in the aerospace business,” said Mr Cunningham. 

“Until the Boeing 737 Max issues, investors had sort of forgotten this about the industry.” 

A falling share price, insider trading conviction and controversial pay scheme add to annoyance

When Iliad holds its first investor day for years on Tuesday, the upstart of the French telecom sector will have its work cut out to rebuild trust with shareholders.

It is grappling with a 43 per cent drop in its share price in the past year, a recent insider trading conviction for its chairman, and criticism of an “opaque” executive pay scheme.

Keval Patel, who works in specialist sales at Citi, wrote in a note to clients last week that some Iliad shareholders feel a “deep distrust of the management team” and a sense of “management hubris.” He said: “Investor perception is that the management team comes across as arrogant and unwilling to accept they have made mistakes.”

Founded by telecoms billionaire Xavier Niel, one of France’s richest men, Iliad’s Free Mobile burst on to the scene in France in 2012. For years it was a darling of investors, trading at a premium to its peers as its low-cost mobile offering broke up the country’s telecoms oligopoly and grew to a fifth of the market.

Over the past two years this all changed. Iliad’s share price reached an eight-year low in February and is down by a fifth since the start of the year, reflecting commercial challenges in France, concerns about its ability to generate cash, and lack of visibility over a foray into Italy.

Since Iliad’s share price started falling, a controversial pay scheme for some senior executives has been attracting greater scrutiny.

In 2010 and 2011, Free Mobile, an unlisted subsidiary of Iliad that represents the mobile network operator, set up a share grant plan involving shares representing up to 5 per cent of its share capital. Twenty-three employees and executives, including chief executive Thomas Reynaud and chairman Maxime Lombardini, were granted shares representing 5 per cent of Free Mobile’s share capital.

Under the terms of the plan, they have an option to receive their entitlements in either cash or Iliad shares, with the price determined by an “independent valuer”. Analysts say this unusual scheme means the interests of these executives are not aligned with those of Iliad’s shareholders, because their pay is linked to the performance of Free Mobile rather than to that of the entire listed company in which investors buy shares.

Iliad does not say exactly how the independent valuation is carried out. However, a spokesperson for the group said it believes that the long vesting period of the remuneration scheme should reassure investors.

Last year Iliad lost about 250,000 mobile subscribers and 93,000 broadband clients in France, and total revenue in France fell 1.9 per cent to €4.8bn. Overall, the group’s profit from ordinary activities dropped by a fifth to €690m in 2018.

Meanwhile, under the management incentive scheme, the board authorised €53.2m in entitlements to be distributed among five executives for the 2018 financial year, according to a statutory auditors’ report published on Iliad’s website. The five were Mr Reynaud, Mr Lombardini and Iliad’s three deputy CEOs.

“The remuneration structure is opaque,” said a shareholder. “You have a senior management team and you don’t know how much money they’re actually making.”

A report published by corporate governance group Proxinvest last week, ahead of Iliad’s shareholder meeting on May 21, recommended investors oppose resolutions to approve the 2018 pay of the five Iliad executives who are part of the Free Mobile incentive scheme.

The report cited concerns about the independent valuer’s role, noting that “the lack of information that would allow shareholders to estimate whether valuation is fair or not is not acceptable.” Proxinvest recommended that investors approve Mr Niel’s pay.

Meanwhile, adding to the pressure, last week Mr Lombardini was fined €600,000 by the French financial watchdog for selling Iliad shares in July 2014, weeks before their price fell sharply when it announced a failed takeover approach for T-Mobile USA. Iliad was fined €100,000 “for breach of its disclosure requirements”.

Iliad and Mr Lombardini, who was chief executive at the time, are planning to appeal the conviction. But Loïc Dessaint, head of Proxinvest, said: “It’s not acceptable to see this type of negligence or bad behaviour.”

Mr Niel, Iliad’s chief strategy officer and its majority shareholder, continues to back the management, most of whom have worked at Iliad for more than a decade.

In recent years Mr Niel’s profile has soared, reflecting his €250m backing of Station F, a vast start-up incubator in Paris; his investment in French newspaper Le Monde; and his early support for president Emmanuel Macron.

Iliad last May announced a management shake-up after reporting disappointing quarterly earnings, promoting Mr Reynaud from chief financial officer to CEO, replacing Mr Lombardini, who became chairman.

Several investors said this reshuffle was little more than a game of musical chairs that has not improved performance. “The one thing that is clear is that this management has underperformed yet been promoted,” said an investor.

“Iliad changed the management without changing the management,” said another shareholder. “They haven’t brought in new blood; you can’t change the recipe if you still have the same ingredients.”

Looking ahead, Iliad will try to reassure investors on Tuesday that its new strategy is working. A spokesperson said its strategy was bearing fruit in France and the Italian launch has been a success. Iliad has also sought to address concerns about cash flow by saying that it may try to raise funds by selling part of its mobile network.

But analysts believe investors’ patience with Iliad’s management is running out. Citi’s Mr Patel said: “I’d like to see Xavier Niel giving the management his backing but also telling the market that heads will roll if the business hasn’t turned around in 2020.”

 Equities tumbled and the yuan plunged after President Donald Trump’s threat to increase tariffs on Chinese imports called into question whether a would-be-final-round of trade talks will take place this week.

Treasury futures climbed and oil sank following Trump’s plan to hike tariffs on Friday and news that China is considering delaying the upcoming talks. Chinese stocks were hit especially hard, with benchmark indexes tumbling about 6 percent. The government even called on its “National Team” of state investors to prepare to stabilize the market if needed on Monday, according to people familiar with the matter. The yen rose and the Aussie slid. Futures on the S&P 500 Index sank as much as 2.2 percent, signaling a nasty start to the week on Wall Street. European futures also retreated.

Nikkei Closed Hang Seng -3.13% CSI -5.83% Shanghai -5.61% Shenzen -7.06%

Eur$ 1.1191 CNH 6.7920 CNY 6.7758 JPY 110.73 GBP 1.3117 CHF 1.0161 RUB 65.4594 TRY 5.9971 WTI$ 60.60 -2.61%

S&P -1.82% EuroStoxx -1.68% FTSE Closed CAC -1.40% Dax -1.73% SMI -0.99%

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