Biznews

Mergers & Aquisitions

Volkswagen acquires stake in Navistar Truck Manufacturer

German auto group Volkswagen has agreed to acquire a 16.6% stake in the US truck manufacturer Navistar International Corp. for USD 256 million. The companies expect that the synergy of the deal will be USD 500 million over five years. It is expected that the deal will enable Volkswagen to strengthen its position in the truck segment and to get access to the US market, which is crucial for the company’s future development.

 

Largest IT deal in history of Europe

Japanese company SoftBank has announced completion of the process to acquire ARM, the famous British developer of processor architectures. The transaction sum is 24.3 billion pounds (about USD 32.2 billion), which appeared to be the largest deal in the European IT sector. Within the framework of the deal Softbank has agreed to pay 17 pounds per share in ARM, making it the most expensive of all IT companies traded on the London Stock Exchange.

British ARM Holdings is best known as a developer of mobile and graphics processors, successfully used by most leading mobile devices manufacturers, including Samsung, Huawei and Apple. ARM’s business model is based on developing semi-conductor platforms with the subsequent sale of intellectual property rights for development and production of finished chips based on various ARM architectures.

 

Nordea and DNB merger

Financial group Nordea, the largest in the Nordic countries and the Baltic States, and Norwegian bank DNB, have decided to combine their operations in Lithuania, Latvia and Estonia. A deal between the banks must be approved by the supervisory authorities.

Nordea holds a strong position in the segment of large enterprises, and DNB — in the segment of small and medium-sized enterprises. After combining the business operations of both banks, the new bank will become the largest and the most influential player in servicing individuals. Moreover, the new bank will be more widely available and will have a broader geographic location, given the strong position of Nordea in Estonia and of DNB — in Lithuania, as well as equivalent positions in the Latvian market. The organizations of Nordea and DNB in the Baltic States currently employ 1,300 and 1,800 employees; the total volume of assets reached EUR 8.5 billion in Nordea and EUR 5.6 billion in DNB. Full completion of the transaction is scheduled for the 2nd quarter of 2017.

 

Bayer acquired Monsanto

The German company Bayer has acquired American company Monsanto, which is the world’s largest seed manufacturer, for USD 66 billion.

Monsanto management accepted Bayer’s improved offer, which is ready to pay USD 128 per Monsanto share, evaluating company at USD 66 billion, including its indebtedness. As a result of the transaction, closure of which is expected by the end of 2017, a leading world manufacturer of pesticides and seeds will appear on the market, able to compete with DuPont Co. and Dow Chemical Co., which announced their merger in December. The total revenue of the two companies amounted to EUR 23 billion in 2015. It is expected that synergy from the merger will amount to USD 1.5 billion in the fourth year after the merger.

Bayer intends to pay for the transaction in cash and shares. In particular, Bayer will receive from five banks (Bank of America, Credit Suisse, Goldman Sachs, HSBC and JPMorgan Chase) a bridge loan of USD 57 billion.

In case the regulators refuse to approve the transaction, Monsanto will receive compensation of USD 2 billion. Bayer shares rose in value by 2.3% in the course of trading in Frankfurt, while capitalization of rose by 0.2% Monsanto’s.

 

Infrastructure

Organization of railway-ferry transportation service through Ukraine and Georgia

On 13 September Ukraine and Georgia signed agreement between the Cabinet of Ministers of Ukraine and the Government of Georgia on organization of direct international railway traffic through ports of Ukraine and Georgia. Volodymyr Omelyan, head of the Ministry of Infrastructure, noted that currently the market demands are such that the speed of goods delivery is no less important than the price of delivery, and more and more companies are willing to bear additional costs for goods to be delivered not in two or three months, but in 9-15 days.

 

Banking & Finance

Royal Bank of Scotland abandoning global operations

The Royal Bank of Scotland Group Plc (RBS) has appealed to some 3,000 of its customers who use bank global transaction services to accelerate process of finding alternative financial institutions.

According to RBS data, it performs such work among nearly 7,000 customers in 32 countries for 18 months to find alternative banks as it goes out of business. And more than half of its customers have already made other banking arrangements. RBS decided to halt almost all of its foreign operations and to concentrate on the British domestic market.

The Bank intends to terminate its banking operations outside Great Britain and Ireland, as it is too costly to invest in technologies needed for customer service and will not give adequate return.

 

PSBC attracted more than USD 7 billion

Postal Savings Bank of China Ltd (PSBC), which is sixth in terms of assets in the country, attracted more than USD 7 billion in an initial public offering. This is the biggest IPO by volume in the world this year and the largest since the sale of shares in Chinese Internet giant Alibaba Group Holding Ltd., in New York for USD 25 billion back in 2014.

PSBC sold its shares at a price of 4.76 Hong Kong dollars (USD 0.61), which is closer to the lower boundary of the previously announced placement range of USD 4.68-5.18.

PSBC was founded in 2007 and is owned by the State postal service of China (China Post Group Corp.). At the same time, it has the largest number of branches in the country — more than 40,000 which are mainly located in post offices. In December 2015 PSBC sold nearly 17% of its shares to a group of foreign investors, who then estimated the bank’s value at USD 41 billion.

 

Energy

Government-backed Draft Act on electricity market

The Verkhovna Rada backed the Draft Act On Electric Energy Market of Ukraine in the first reading.

This Draft brings together three key objectives: improvement of state policy in electric power industry, implementation of requirements of the Third Energy Package of EU, as well as improvement of structure and operations of market under the current Act No.663.

Draft No.4493 provides for introduction, within two years from the date of its entry into force, of new market segments, including market of bilateral contracts, “day ahead” market, intra-day market, balancing market and ancillary services market.

By the end of 2018 the transitional period will be operational, during which a guaranteed buyer will be able to redeem up to 75% of nuclear power plant operating capacity and up to 40% of large HPP production at regulated prices. Due to this, it is planned to provide support for producers of electricity from renewable sources, as well as for thermal power plants.

 

Creation of independent regulator in energy and utility services

The Verkhovna Rada adopted the Act On the National Commission, which Performs State Regulation in the Fields of Energy and Utilities.

The National Commission is an independent public collegial body and is engaged in state regulation, monitoring and control over activities of economic entities in the fields of energy and utility services.

The approved Draft stipulates that the head or member of the National Commission may be a citizen of Ukraine with a higher education, work experience in the fields of energy and utilities of at least three years and work experience in senior positions of at least two years.

The commission shall not include members of political parties, direct or indirect owners of business or of corporate rights in the fields of energy and utilities, as well as persons who have citizenship of another country.

The selected committee consists of two people, who are appointed by the President of Ukraine, two — by Verkhovna Rada, and one by the Cabinet of Ministers.

Earlier G7 called on Ukraine to adopt the law on NKREKP as soon as possible. G7 also insisted on the importance of adoption of laws on the natural gas and electricity markets. Adoption of these laws is a key part, which lacks for implementation of a competitive and open gas and electricity market in Ukraine.

 

Money Laundering

Cabinet of Ministers established Council for combating money laundering

The Cabinet of Ministers has established the Council for combating money laundering, financing of terrorism and financing of proliferation of weapons of mass destruction.

The Council consists of representatives of all government agencies, including the National Anti-Corruption Bureau of Ukraine, involved in preventing and countering legalization (laundering) of proceeds from crime, financing of terrorism and financing of proliferation of mass destruction weapons.

Apart from its main task the Council also performs analysis of pieces of legislation, sources of international law in the field of preventing and combating money laundering, participates in preparation of drafts of regulatory legal acts for implementing international standards in the field of combating money laundering, including standards of Financial Action Task Force on Money-laundering (FATF), prepares action plans to combat illegal finances, submits to the Cabinet of Ministers of Ukraine recommendations and proposals, developed following results of its work. The State Financial Monitoring Service supervises the Council’s activities.