TheChek News Flow

Weekly Update

Dow +0.06% S&P +0.24% Nasdaq +0.67% Russell Mexico +3.17% (+6.04% in $) Brazil -0.72% (+0.90% in $) Nikkei -0.42% (+1.42% in $) Hang Seng +3.15% CSI +0.52% Shanghai +0.77% EuroStoxx +0.94% (+1.56% in $) FTSE +1.12% (+3.06% in $) CAC +0.72% (+1.34% in $) Dax+1.10% (+1.72% in$) Ibex +2.39% MIB +2.12% SMI +0.33% (+1.61% in $)

While German Chancellor Merkel and President Trump met at the White House to discuss their differences, the stock market continued to post gains on Friday, and closed up on the week. Major indices had faltered when the week began, as investors keep looking for promised fiscal policy implementation to buy at higher prices. While most economic data this week was strong and better than expected, that alone was not enough to send equities to new highs. For the week the DJIA gained 0.1%, the S&P rose 0.2%, and the Nasdaq added 0.7%. Wednesday's FOMC meeting statement sent stock markets rallying again as the Fed framed a 25 basis point hike as a vote of confidence in the economy and reiterated it would raise rates gradually. The committee noted inflation is near the 2% target, but that it may also be willing to let inflation exceed that level for a while. Signals from Chair Yellen that interest rate normalization wouldn't happen faster than the economy could handle reassured buyers, as the market took on more risk, sending all major indices higher for the day. Those perceived reassurances on the speed of hikes didn't help bond prices, however, as fixed-income products sold off after the statement, reversing their rise from the beginning of the week.

Macro :

- China, U.S. Agree Korea Tensions at Dangerous Level: Tillerson

- U.S. Banks Fall to February Lows as Market Reverses Gains

- G-20 Nations Renew Commitment to Global Bank-Capital Overhaul

- Dubai Stocks Decline Most in Mideast as Emaar Falls: Inside EM

Keep an eye on :

- ADS GY : Adidas Sues Asics Over Patents for Fitness Tracking

- AZA IM : Alitalia’s Bank Investors in Talks on State Guarantee: Corriere

- AKZA NA : Elliott Said to Urge Akzo Nobel to Engage With PPG in Deal Talks

- AKZA NA : AkzoNobel could eye large-scale takeover or series of smaller acquisitions - telegraaf.nl

- ATC NA : Teads in talks with News Corp after rejecting offer from Altice

- AMGN US : Amgen’s Repatha Doesn’t Hurt Mental Ability, Study Shows

- AAL LN : Volcan Plans to Raise $2.4b Via Bond Sale for Anglo Stake: ET

- AAPL US : Apple’s Cook: Worst Thing We Can Do Is Say Globalization Bad

- MT NA : ArcelorMittal, Marcegaglia Said Offering EU1.6b for Ilva:Reuters

- ARYN VX : Aryzta to Cut Debt by EU1B, Chairman Tells Sunday Times

- AZN LN : AstraZeneca May Reduce U.K. Drug Research Program: Sunday Times

- BMPS IM : ECB Agrees to Paschi Extended Restructuring Plan: Messaggero

- BVN LN : Bovis bidder Redrow weighs revised offer; Galliard decides against bid - reports

- BLVN LN : BowLeven Chairman Seeking Offers for Company, Sunday Times Says

- KO US : Indian State Bans Sale of Coca-Cola Zero at McDonald’s: Times

- CSGN VX : Credit Suisse Said to Decide in April on Swiss Bank IPO: Reuters

- DBK GY : Deutsche Bank Review by ECB Shows Risk Management Weakness: Sole

- DBK GY : Deutsche Bank TERP ~EU15.79 Based on March 17 Price, Sale Terms

- DIS US : Disney Sees ‘Beauty and the Beast’ 3-Day Sales of $155m-$165m

- ELI BB : Elia Rises, Sofina Declines Ahead of BEL20 Index Reshuffle

- ENI IM : Eni CEO at Photovoltaic Plant Foundation Stone Laying in Algeria

- GXI GY : Gerresheimer Makes Preliminary Offer for Bormioli Rocco: Il Sole

- GBLB BB : GBL Raises Dividend 2.4%; Asset Rotation Cuts Cash Earnings 4.6%

- GKN LN : GKN May Issue GBP250m Bonds to Plug Pension Gap: Sunday Times

- LDO IM : Profumo Named Leonardo CEO as Italy Reshuffles State-Owned Firms

- MONC IM : Moncler to Focus on Commercial Network, Strengthen Retail: Sole

- PARG SW : Pargesa Swings to Loss on Engie Disposal, GBL Impairement

- RIO LN : Rio CEO Says Key Iron Ore Uncertainty Is Chinese Capacity: CNBC

- SFQ GY : SAF-Holland Looking at 1-2 Takeover Targets, Borghardt Tells BZ

- SIE GY : Siemens Boosts Commitment to U.S. After Meeting With Trump

- SNAP US : Snap’s Inclusion in FTSE Indexes Said Opposed by U.K. Investors

- SL/ LN : Standard Life CEO Defends Aberdeen Deal in Telegraph Interview

- SFM US : Sprout Farmers Market Climbs for Second Day; Upside Calls Active

- UHR VX : Swatch’s Tissot Aims to Double Stores in Japan: Nikkei

- SREN VX : Swiss Re rumoured to be eyeing UK acquisitions

- TESB BB : Picanol Unit Buys Additional EU0.39m of Tessenderlo Chemie Stock

- UBSG VX : UBS ‘Very Pessimistic’ About Settling Tax Case in France: JDD

- VIV FP : Vivendi CEO to Speak to Italy’s Agcom on March 23: Corriere

- VIV FP : Vivendi CEO Says Mediaset Misled Company During Talks: FT

- VOw3 GY : Volkswagen Seeks U.S. Market Share Gains: Automobilwoche

- VOW3 GY : Piech Sale of Porsche Stake May Be Finalized in April: Bild

Company rejects ‘concept’ of terrorist financing and says employee safety ‘priority’

Business partner of Isis and financier of terrorism. It is not an accusation a leading European industrial group would welcome. But it is one that has been used to describe LafargeHolcim, the Swiss-listed cement company as it faces allegations of associating with terrorist groups in war-torn Syria.

Some of the allegations against the company, which had a plant in Jalabiya in north eastern Syria, include paying protection money to militants and have now come to the attention of French prosecutors and human rights groups.

“People reading the news today say we were an ATM for Isis, but you can’t make a judgment without looking at the context,” says Jacob Waerness, risk manager at Lafarge cement in Syria until October 2013. However, the troubles that befell the Jalabiya plant, have come back to haunt LafargeHolcim, which was formed in 2015 by the €41bn merger of Lafarge in France and Switzerland’s Holcim.

This month, the company admitted “unacceptable” measures were taken to keep the plant running as the civil war intensified in 2013 until it was finally evacuated in September 2014. Those responsible for the plant had made “significant errors of judgment”.

LafargeHolcim told the Financial Times a report in coming weeks, compiled with law firms Baker McKenzie in Washington and Darrois Villey in Paris, would uncover “the full facts” about the plant’s operation.

But Paris prosecutors have already opened a preliminary inquiry into alleged dealings between Lafarge and sanctioned groups in Syria following a complaint by the French finance ministry.

The Switzerland-headquartered cement company also faces questions about whether profits took priority over staff, who faced kidnap risks. Human rights groups in France have filed a lawsuit and have alleged that the company had “business relations” with militant group Isis and may have taken part in financing the group.

“This is an example of a parent company which has not shown a duty of care,” says Marie-Laure Guislain, a lawyer at the Paris-based Sherpa organisation, which filed the French lawsuit and supports victims of “economic crimes”.

LafargeHolcim said in a statement in November that it “completely rejects the concept of financing of designated terrorist groups”.

In a statement last month, it added its initial probe had revealed that “the local company provided funds to third parties to work out arrangements with a number of . . . armed groups, including sanctioned parties, in order to maintain operations and ensure safe passage of employees and supplies to and from the plant. The investigation could not establish with certainty the ultimate recipients of funds beyond those third parties engaged.”

What action will result from such inquiries remains unclear. When unveiling its own initial findings, the company announced former Lafarge chief executive Bruno Lafont would step down as its co-chairman — a decision sources close to the company linked to the Syrian report.

Mr Lafont declined to comment when contacted by the FT, but one person close to him said there was “no connection” with Syria. “He always said that once the merger was working well, he would turn the page [and step down].”

The Lafarge plant near Syria’s border with Turkey was acquired in 2007 from Egyptian cement company Orascom and Min Ajl Suriya (MAS), a Syrian company owned by business tycoon Firas Tlass. Mr Tlass retained about a 1 per cent stake, according to LafargeHolcim.

From late 2012, after protests against President Bashar al-Assad had escalated into civil war and chaos, and with French nationals no longer allowed in Syria, the plant was managed remotely from Cairo.

Mr Tlass, who had defected to the Syrian opposition, also fled the country. But he continued to work on behalf of Lafarge. According to militant groups in the area, he paid the YPG, a Kurdish group that controlled the area around the plant, up to $100,000 a month in protection money.

The YPG is not listed on US or European sanctions lists, and is now the main US ground partner in its fight against Isis.

Mr Tlass’s role, however, resulted in him arranging deals with a constantly shifting constellation of militant groups.

“Syria in 2012 and 2013 was a total mess. Anyone could put a checkpoint on the road — anyone,” Mr Tlass told the FT.

Other foreign companies sold plants in Syria or simply abandoned them, including energy companies Shell and Suncor. But business at the Lafarge cement plant was bustling. “Everyone saw the Lafarge plant as the big cash cow,” says an opposition source in the area. “There was money to be made — a big demand for cement at that time.”

Producing cement was not easy, however. According to Mr Waerness, Lafarge paid €220,000 to so-called Free Syrian Army groups for the release of nine staff who were kidnapped in 2012.

LafargeHolcim said it was “aware of allegations involving kidnappings in Syria” but like other multinationals would not comment on security measures related to individuals.

Mr Waerness says Lafarge should have shut the plant in mid-2013, once militant Islamic groups were establishing a firm presence in the area.

Even before Isis encroached on the area, it appears Lafarge probably broke sanctions by making payments at regime-controlled checkpoints.

Once in control of a region, Isis deliberately sought to exploit economic assets to ensure financial self-sufficiency — rather than being financed from abroad like its predecessor al-Qaeda.

Mr Tlass said countless local intermediaries offered their services to try to secure safe passage through Isis areas — including access to pozzolana, an ingredient in cement, from Raqqa, the de facto capital of the jihadi group’s self-proclaimed caliphate — with various degrees of success.

So far, LafargeHolcim has not confirmed whether payments ended up with Isis. Nor has it said how much, if anything, senior managers — including Eric Olsen, who became chief executive in 2015 — knew about the activities of Mr Tlass, beyond pointing out that Mr Olsen was not responsible for operations in Syria.

The company said: “It would be imprudent to comment on any specific questions regarding the internal investigation until it is completed in the coming weeks.”

By September 2014, fewer than 30 employees remained at the Syrian works. Lafarge had prepared an evacuation plan and says all of the staff left safely. But Ms Guislain says: “They weren’t evacuated — the employees had to flee by themselves.”

LafargeHolcim stressed the safety of employees was “the group’s top priority”.

The company’s former risk manager Mr Waerness also points out that the livelihoods of local employees and their extended families depended on the salaries they received but asks: “Can you run a business in a chaotic region where nobody follows the rules — and still follow the rules yourself?”

Despite the exceptional conditions created by the conflict, the group’s reputation is at stake. It hangs on whether LafargeHolcim can provide satisfactory answers to how — and why — it kept operations going for so long in a region, where morals and ethics were blurred by war.

Trump’s antitrust division pick could mean trouble for mergers

President Trump’s pick to lead the Justice Department’s antitrust division is making a few big merger candidates nervous — AT&T and Time Warner included.

Makan Delrahim — an antitrust lobbyist who is close to Attorney General Jeff Sessions, according to Washington insiders — has extensive experience with antitrust law, having been former staff director and chief counsel to Senator Orrin Hatch, helping him deal with foreign antitrust issues.

But Delrahim’s close ties to Sessions, in particular, have also sparked worries that he’ll aggressively carry out the agenda of the Trump administration, sources said.

“I think it’s less likely the division will deliver an independent judgment” with Delrahim at the helm, a source close to the AT&T merger told The Post.

AT&T is in the process of trying to win Department of Justice approval for its $85 billion merger with Time Warner.

President Trump, senior adviser Jared Kushner and chief strategist Steve Bannon all believe the deal has serious regulatory issues, sources have speculated.

The DOJ’s antitrust chief has typically been independent from the White House, but legally there is no separation.

So an antitrust chief can simply follow White House wishes when judging mergers.

Meanwhile, Delrahim was Anthem’s lobbyist when the health insurer in July 2015 agreed to buy Cigna for $54 billion.

The DOJ has successfully sued to block the deal, and the merger is presently being heard on appeal.

Anthem Chief Executive Officer Joseph Swedish met Trump this week, and expressed his approval for the president’s health care plan, according to news reports.

Cigna at this point does not want to sell to Anthem, and would prefer to collect its $1.85 billion breakup fee, sources close to the situation said.

The DOJ under new leadership could settle the case before an appeals court decides and approve the merger.

“It’s certainly sketchy” that he is being named the same week Swedish saw the president, a source said.

The US Senate must approve Delrahim’s selection, and it’s likely he will not be in place, if confirmed, until after the appellate court has ruled in Anthem, sources said.

Meanwhile, the DOJ staff is about two-thirds of their way through their investigation of AT&T’s deal, and likely will give their recommendation to the DOJ Chief around May, and Delrahim will likely be in place by then.

For the past 11 years, before joining the White House in January to help the President make a Supreme Court selection, Delrahim was head of the antitrust lobbying practice at Brownstein Hyatt Farber Schreck.

The firm’s boss Norm Brownstein told The Post, “I am fully confident he will follow the law and not politics.”

The clients he advised to help win regulator approval for mergers ranged from Anheuser-Busch to fractional aircraft company Flexjet.

“He understands the role Congress plays in antitrust,” a source said.

Margarita Louis-Dreyfus: guarding a legacy

The LDC chair says safety lies in a shareholder supermajority

The French press portrays Margarita Louis-Dreyfus as a mysterious Russian at war with a business dynasty; the orphan from Leningrad who married into wealth and took control of a venerable domestic company.

Her route from circuit board seller in the former Soviet Union to the chair of Louis Dreyfus Company (LDC), one of the world’s top commodity trading houses, is certainly remarkable. It is also one the 54-year-old says has been distorted by the media during wrangles with her late husband’s family.

“Robert asked me to do this,” she says of the businessman and scion of the Dreyfus grain-trading empire, who died nearly eight years ago. “I am a guardian of the company’s interests.”

It is a point Ms Louis-Dreyfus will repeat many times during a 70-minute interview at a hotel in Switzerland, the country in which she now lives.

LDC, whose rivals include Archer Daniels Midland and Cargill, was founded in 1851 by Léopold Louis-Dreyfus, a French grain trader. It made $55bn in revenues in 2015 and claims to handle about 10 per cent of global food flows.

For the past 18 months, Ms Louis-Dreyfus has been at loggerheads with members of the Dreyfus clan, including two of Robert’s sisters. 

Having watched their sister-in-law take an increasingly active role in the private family business, they have exercised a clause in a shareholder agreement that forces Ms Louis-Dreyfus to buy most of their remaining shares in the trading house’s parent, Louis Dreyfus Holding (LDH).

But they have clashed over how to value the stake, which could be worth up to $1bn, and are now in arbitration. It’s unclear how Ms Louis-Dreyfus will finance the buyout.

“I’m a settler by character, a diplomat, I’m always looking for that option and I would love to have a solution, a quick solution and settlement,” Ms-Louis-Dreyfus says of the dispute. “It just has to make sense for the company.” 

Born in 1962, Margarita Bogdanova was orphaned at the age of 11 when her parents died in a train accident. Raised by her grandfather in Leningrad (now St Petersburg), she graduated with a diploma in accounting from the local school of commerce.

She met Robert, the great grandson of Léopold, in 1988 on a flight between Zurich and New York. They married three years later and had three sons.

A turnaround expert who owned Olympique de Marseille, the French football club, Robert had a successful career running Adidas and Saatchi & Saatchi. In 2006, at the age of 60, he returned to the family business and set about restructuring the company.

Robert’s death in 2009 thrust Ms

Louis-Dreyfus into the spotlight. At the time she lacked not only experience in grain trading but also in business. Today she appears to be firmly in control.

These are difficult times for the agricultural industry. Bumper harvests and overflowing stocks have cut into earnings at LDC and the handful of companies that dominate global flows of crops and staple foods.

To revive its fortunes LDC has been seeking partners for its noncore dairy, metals, fertiliser and orange juice units to help finance its expansion and growth. 

Progress has been slow but Ms Louis-Dreyfus says it important to find the right investor. “I prefer going step by step but not jumping,” she says. She sees her responsibilities as helping select the right senior executives for LDC and setting the company’s moral code.

She claims she does not interfere in the day-to-day running of the business. Reports that she has frequently clashed with executives are not correct, she adds. There have been four LDC chiefs since 2011 when Ms Louis-Dreyfus was appointed chair of the parent company.

She says just one was replaced during that time. The other two were interim appointments. “I don’t run the company,” she says. “It’s management who are running the company.”

In Gonzalo Ramírez Martiarena, the Argentine national who runs LDC, Ms Louis-Dreyfus says she now has a CEO who shares her long-term vision.

On leadership, she says she learnt the importance of teamwork after watching five of the best doctors in the world try to keep Robert’s cancer at bay. “There is no one person who knows everything. There is always a team.”

Ms Louis-Dreyfus, who last year gave birth to twins with her partner, Philipp Hildebrand, former chairman of the Swiss National Bank, says her objectives for the company are simple: keep the business safe, focus on the long term and set an example for employees.

The first two have been achieved, she says. Using the shareholder pact, Ms Louis-Dreyfus has been able to increase her stake in the holding company that controls LDC to 80 per cent from 65. That will rise to 96 per cent once the buyout of the family shareholders is completed.

“A family company needs to have one shareholder with a supermajority,” she says. “It ensures the orientation of the company is on long-term development as opposed to short-term gain, and the interests of the business are supported in one united voice.” 

She has attempted to address the other objective through the Louis Dreyfus Foundation, a charity she set up in 2013 to help foster sustainable farming. 

Ms Louis-Dreyfus insists she will have no trouble buying back the family stake. Even if a settlement were to be reached tomorrow, she says there would be plenty of time to fund the transaction because of the way the shareholder agreement is structured. 

Asked if she has been tempted to sell LDC, Ms Louis-Dreyfus says she has not.

“When Robert was dying, we spoke a lot about the company, to the extent it almost felt like Dreyfus became our fourth child,” she says. “I fully committed to safeguarding his heritage and building a long-term future.”