>>> Jabil beats by $0.03, beats on revs; guides NovQ EPS in-line, revs in-line;

Jabil beats by $0.03, beats on revs; guides NovQ EPS in-line, revs in-line; reaffirms FY18 EPS guidance
  • Reports Q4 (Aug) core earnings of $0.64 per share, excluding non-recurring items, $0.03 better than the Capital IQ Consensus of $0.61 and within prior guidance of $0.50-0.74; revenues rose 13.4% year/year to $5.02 bln vs the $4.86 bln Capital IQ Consensus and vs prior guidance of $4.70-5.10 bln.
  • Co issues in-line guidance for Q1 (Nov), sees core EPS of $0.65-0.91, excluding non-recurring items, vs. $0.84 Capital IQ Consensus Estimate; sees Q1 revs of $5.25-5.75 bln vs. $5.42 bln Capital IQ Consensus Estimate.
  • Co reaffirms guidance for FY18, sees core EPS of $2.60, excluding non-recurring items, vs. $2.58 Capital IQ Consensus Estimate.

WSJ : Uber Shutting Down U.S. Car-Leasing Business

Uber Shutting Down U.S. Car-Leasing Business
Decision to close down Xchange Leasing will affect some 500 jobs

Uber Technologies Inc. on Wednesday confirmed it is shutting down its U.S. auto-leasing business, months after it discovered it was losing 18-times more money per vehicle than previously thought.

The ride-hailing firm on Wednesday began informing employees of the decision to close down the business, known as Xchange Leasing, which will affect some 500 jobs, representing roughly 3% of Uber’s 15,000-employee staff. It marks Uber’s first mass layoff in its eight-year history.

“We have decided to stop operating Xchange Leasing and move towards a less capital-intensive approach,” said a spokesman. The Wall Street Journal first reported on the decision to wind down the business last month.


The move suggests Uber was unable to find a buyer for the business, a prior hope of some executives.

Uber has been working to curtail costs after posting at least $4.4 billion in total losses over the past six quarters, particularly as its new chief executive, Dara Khosrowshahi, eyes an IPO in as little as 18 months. Earlier this year, Uber merged its money-losing Russian operations with its competitor there and last year sold its China unit to a rival.

Uber started the Xchange Leasing division about two years ago under former CEO Travis Kalanick, investing about $600 million in the business, according to people familiar with the matter. The division was financed in part by a $1 billion credit facility from a consortium of banks, including Goldman Sachs Group Inc., Citigroup Inc. and Morgan Stanley.

The idea was to sign up new drivers whose spotty or nonexistent credit histories prevented them from getting their own cars. Uber wanted to maintain a healthy supply of drivers, crucial to keeping fares and wait times low.

But by charging high-lease fees in exchange for the risk, many drivers worked longer hours and returned the vehicles in poor shape, damaging their resale value, people familiar with the matter have said. Uber had relied on a network of established dealers to offer leases, but soon found they were pushing drivers into more expensive vehicles, lowering their likelihood of turning a profit, according to a person familiar with the business.

In July, Uber executives discovered the unit was losing around $9,000 per vehicle, compared with previous estimates of just $500, and decided to halt the business, according to these people. Uber had about 40,000 car titles in Xchange Leasing and had begun opening branded showrooms in some key U.S. markets, rather than relying on existing dealers.

Uber plans to honor the existing leases, most of which have a three-year term, a person familiar with the matter said. It is unclear what Uber will do with the vehicles it holds under title.


The company is expected to continue its vehicle-leasing operation in southeast Asia, known as Lion City Rentals Pte Ltd. That business has had its own issues—in August, The Journal reported the unit knowingly leased defective cars to drivers in Singapore, and delayed taking them off the road. Uber said it has since added safety measures and has addressed the problem.

Maintaining enough drivers is a crucial task for Uber, as many quit the service for rivals or for other “gig-economy” jobs. As a result, Uber has begun offering new goodies to drivers such as in-app tipping and improved customer service to address some of their lingering concerns—and it is working to develop self-driving vehicles that would make drivers in some markets obsolete.

>>> Siemens/Alstom works council consultations to kick off in two weeks - source

Siemens/Alstom works council consultations to kick off in two weeks - sources

  • Siemens still had Bombardier option on the table until yesterday
  • Political opposition appeased by commitments on jobs and governance
  • Nothing to prevent full takeover by Siemens after standstill expires

Consultations with French and German works councils on the tie-up between French rail equipment specialist Alstom [EPA:ALO] and Siemens' [FRA:SIE] Mobility Division will kick off in two weeks, two sources close to the situation said.

Siemens and Alstom today (27 September) signed a Memorandum of Understanding to combine the German company's rolling stock and rail business (Mobility) with Alstom is a merger of equals. The deal will see Siemens issued with 50% of the new entity. The listing and the headquarters of the new entity will be in Paris, and led by Alstom's CEO.
Siemens' work councils were only formally informed yesterday evening or this morning (27 September) on a possible deal with Alstom, a third source close said.

Up until yesterday, Siemens had two different options on the table - a tie-up with Bombardier[TSE:BBD.A/B] or with Alstom, the third source said. The deal with Alstom eventually won because Siemens and Alstom are more complementary, while Bombardier has some 'structural problems', the source said.

Bombardier approached Siemens a few months ago and the deal stalled partly because job safeguards were not guaranteed in Germany, a banker following the situation said. Bombardier is probably not satisfied about this merger, this banker said.

However, in the mid term, a greater merger between Siemens/Alstom and Bombardier to compete against Chinese Railway Rolling Stock Corporation (CRRC), cannot be ruled out, this banker added.

Jobs safeguard in France and Germany will be key in the coming negotiations with work councils, the first two sources said.

A spokesperson for Siemens said German and French unions have publicly said the tie-up between Siemens and Alstom takes the rail industry forward in a context of economic pressure and growing competition from Asian players.

Alstom declined to comment.

The advance of China's state-owned CRRC in the European market with the ongoing acquisition of Czech company Skoda Transportation is seen as a greater threat, encouraging political approval of the deal.

“The French government supports this merger of equals which will be the advent of a French and German champion of rolling stock and signalization (…) and which will strengthen the European companies competitivity in a more and more concentrated global market," French economy minister Bruno Lemaire said in a statement.

The French State also supports the transaction based on undertakings by Siemens, including a standstill at 50.5% of Alstom's share capital for four years after closing, the headquarters and the listing remaining in Paris and employment protections, according to the deal statement.

In light of the strategic interest of the transaction, which is acknowledged by most employees of Alstom, it is likely there will be no frontal opposition of the works council at the end of the day, Emmanuel Durand, partner and EU competition lawyer at De Pardieu Brocas Maffei said. In four years, however, nothing prevents Siemens from fully taking over Alstom, he added.

The Siemens/Alstom tie-up is welcome to compete against CRRC should the job safeguards be insured, French MP and deputy head of the French assembly European affairs committee, Pieyre-Alexandre Anglade, told this news service.

A German company is acquiring a French company to create a European champion for the greater good of the EU economy. PSA acquired Opel for the same reason and we did not have that much opposition to it, he added.

The standstill and employment commitments are to appease French political opposition and push the deal through, as, while presented as a merger of equals, it is effectively a takeover of Alstom by Siemens, a second Paris-based banker said.

There is political opposition surrounding the deal in France as Alstom is compared to Airbus [EPA:AIR], which has a balanced shareholding structure between German and French counterparts, the banker said. This is not the case for Alstom which already sold its power operations to General Electric's [NYSE:GE] in 2014, he said.
Some politicians are pushing the French government to take a significant stake in the new entity by using the 20% stake it could take from French construction group and minority shareholder Bouygues [EPA:EN] which currently holds a 28% stake, the banker said.

The French government yesterday confirmed that the loan of Alstom shares from Bouygues SA (20%) will be terminated in accordance with its terms of no later than 17 October 2017 and that it will not exercise the options granted by Bouygues to acquire the stake.

Alstom has 8,500 employees in France and 2,000 in Germany. In total, the new entity will have 62,300 employees in over 60 countries and a combined revenue of EUR 15bn.

FT : Syngenta’s $7bn bond sale hinges on settlement funding plan

Syngenta’s $7bn bond sale hinges on settlement funding plan
Investors concerned by suits alleging sale of GM corn seeds in China before approval

Syngenta has reached a legal settlement that could help it salvage a failed $7bn bond sale, but analysts and investors warned that the Swiss company must first outline how it will fund the legal liabilities while keeping an investment-grade credit rating.

Banks postponed the debt sale on Monday after nervous investors shunned a key part of the financing for ChemChina’s $44bn takeover of the seed and pesticide maker. The sale was meant to refinance $6.5bn of bridge loans backing ChemChina’s $44bn acquisition, shifting banks’ exposure to debt investors.

A chief concern for investors was the raft of lawsuits Syngenta was facing over allegations of selling genetically modified corn seeds before they were approved for sale in China. But a day after pulling the deal, Syngenta said it had reached a settlement in a key trial in Minnesota, which — subject to court approval — would establish a settlement fund for eligible claimants.

The settlement with US farmers does not include separate claims from grain exporters such as Cargill and Archer Daniels Midland, and a spokesman for Syngenta said the company will “continue to defend itself against these claims”. He declined to comment on the size of the settlement, although reports have suggested it is about $1.5bn.

Andrew Brady, an analyst at credit research firm CreditSights, said that to revive the bond sale, Syngenta would have to outline a structure for funding the legal settlement that would not rob it of its investment-grade rating from Standard & Poor’s.

“Given they just did a roadshow to talk about how important the investment-grade rating is to them, I don’t see how they can just scratch all that,” Mr Brady said. “They would have to pay so much more for the bond deal if they blew through those promises.”

BNP Paribas, Citigroup, Credit Suisse, HSBC, MUFG and Santander were bookrunners on the deal.

Syngenta carried strong single A credit ratings before ChemChina’s acquisition, but S&P now pegs the company at BBB-, the lowest rung of investment grade, while Moody’s rating is even lower, in junk territory.

S&P said in a report published last month that ChemChina had indicated that both it and China’s state-owned Assets Supervision and Administration Commission “remain committed” to maintaining this rating “under all scenarios”.

“Given the considerable leverage at ChemChina, financial support to mitigate any litigation liabilities would need to come from Sasac in the form of equity, so that there is no additional debt imposed on Syngenta or ChemChina,” the report said, adding that the ratings could be lowered if this funding is not extended in a “timely and full manner”.

A bond investor said that during calls for the failed offering Syngenta’s management referred to these assurances ChemChina provided to S&P.

“They said they were going to keep it investment-grade and, luckily for them, they’ve now got an early opportunity to prove it,” he said.

Banks running the deal have already indicated to investors that they will insert coupon step-ups into the bond’s documentation, which increase the interest rate Syngenta pays if its credit ratings are cut.

“We plan to come back to the market in coming months, having had productive meetings with potential investors,” the spokesman for Syngenta said.