(Alliance News) - The following is a summary of top news stories Monday.
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COMPANIES
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LM Ericsson said it is acquiring US cloud-based communications provider Vonage Holdings, in the Swedish company's biggest acquisition in recent memory as it widens its operations beyond its traditional telecommunications equipment business. The USD6.2 billion deal is part of Ericsson's strategy to expand its presence in wireless enterprise and broaden its global offerings, the company said. The offer was unanimously approved by Vonage's board of directors, it said. Ericsson is among the world's biggest telecom equipment makers, battling China's Huawei and Finland's Nokia in fields such as 5G networks. At USD21 per share, the offer represents a 28% premium over Vonage's closing price in New York on Friday. Vonage shares jumped 26% to USD20.70 in pre-market trade on Monday. In Stockholm, Ericsson 'B' shares were down 3.8% at SEK94.49.
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BHP finalised the merger of its oil and gas arm with Sydney-listed Woodside. The all-stock merger will see Woodside shareholders have 52% of the new company and BHP shareholders 48%. Completion of the deal is targeted in the second quarter of 2022. The combined entity will be the largest energy company listed on the ASX exchange in Sydney, Woodside said. In addition, the Scarborough liquefied natural gas project Pluto Train 2 developments were approved, Woodside said. In announcing a final investment decision, Woodside said USD12.0 billion will be spent on the projects.
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Royal Dutch Shell announced plans to purchase online energy retailer Powershop Australia for an undisclosed sum. Powershop Australia is an electricity and gas retailer serving more than 185,000 customers in the Australian residential and small business markets. The company will form Shell's residential power platform in Australia, it said. The purchase is subject to regulatory approvals and is expected to be completed in the first half of 2022.
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Hochschild Mining warned of a regulatory threat to its mines in Peru. Shares in the FTSE 250 constituent dropped 50% in London in response. Hochschild said it has become aware that the Peruvian head of Cabinet is potentially looking to close some mining projects in southern Ayacucho, including Hochschild's Pallancata and Inmaculada mines, due to "alleged environmental complaints". "The company has not received any formal communication from the government regarding this matter," the miner said. It learnt through various media outlets of the minutes of the meeting, which say that a commission has been constituted to negotiate the closure of mines. The head of Cabinet subsequently indicated that approvals will no longer be granted for additional mining or exploration activities, Hochschild said."The company believes this conduct by the Peruvian head of Cabinet is not in accordance with Peruvian law and is wholly without merit," it said. "Accordingly, Hochschild will vigorously defend its position and take all action necessary to ensure that the rights of the company and its wholly-owned subsidiaries under Peruvian and international law are respected."
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Deutsche Bank announced that Alexander Wynaendts is to become chair of the supervisory board in 2022, replacing outgoing Paul Achleitner. The switch is set to take effect after the annual general meeting on May 19, 2022, Germany's largest financial institution announced in Frankfurt on Friday evening. The supervisory board's nomination committee recommended that shareholders propose Wynaendts for election at next year's AGM, meaning the board must approve the recommendation. The bank said Wynaendts, of the Netherlands, has decades of experience in the financial sector worldwide. Wynaendts began his career at ABN Amro, where he worked in private banking and investment banking in Amsterdam and London for 13 years.
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UBS has nominated former Morgan Stanley president Colm Kelleher as its next chair, taking over from Axel Weber from April's AGM. Weber will have reached his maximum term by then. Kelleher left Morgan Stanley in 2019 and previously held roles overseeing its Institutional Securities Business and Wealth Management. Lukas Gahwiler, meanwhile, has been nominated as UBS vice chair. He is currently chair of UBS Switzerland.
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US investor Kohlberg Kravis Roberts is seeking to take over Italian telecommunications company TIM, formerly Telecom Italia, and has filed its interest in buying the business. KKR's interest is "non-binding and indicative," TIM said in a statement after an extraordinary board meeting on Sunday evening. KKR seeks to take over 100% of TIM's shares then delist the group, and is offering EUR0.505 per share. Shares in TIM closed 3.6% higher at EUR0.35 on Friday, valuing the company at EUR7.55 billion. The stock was up another 27% in Milan on Monday to EUR0.44.
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German real-estate group Vonovia is raising around EUR8 billion gross via an increase in capital for the takeover of competitor Deutsche Wohnen. Vonovia wants to issue some 201 million new no-par shares to partially repay a loan for the acquisition of the company, the Dax group announced from its headquarters in the city of Bochum on Sunday evening. Having 20 existing shares entitles the holder to subscribe to seven new shares for a subscription price of 40 euros each via indirect subscription rights. The subscription period for the shares is expected to start on November 24 and end on December 7, the company said.
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MARKETS
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Stock markets were starting the week mostly higher, with Wall Street called to open strongly, led by the Nasdaq's tech stocks. Pandemic winners and the dollar were in favour amid a disquieting rise in Covid-19 cases in Europe, which has led to Austria re-imposing restrictions on movement. Also front-of-mind is a possible announcement of a Fed chair appointment by US President Joe Biden. New York has a shortened week ahead, with the market closed on Thursday for the Thanksgiving Day holiday and open for a half day on Friday.
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CAC 40: up 0.2% at 7,124.20
DAX 40: marginally higher, up 0.54 point at 16,160.51
FTSE 100: up 0.2% at 7,248.45
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Hang Seng: closed down 0.4% at 24,951.34
Nikkei 225: closed up 0.1% at 29,774.11
S&P/ASX 200: closed down 0.6% at 7,353.10
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DJIA: called up 0.4%
S&P 500: called up 0.4%
Nasdaq Composite: called up 1.0%
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EUR: down at USD1.1283 (USD1.1320)
GBP: down at USD1.3436 (USD1.3460)
USD: up at JPY114.13 (JPY113.86)
GOLD: down at USD1,845.00 per ounce (USD1,859.72)
OIL (Brent): flat at USD79.12 a barrel (USD79.05)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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Ahead of the Christmas holidays, Austria shut its shops, restaurants and festive markets Monday, returning to lockdown in the most dramatic Covid-19 restriction seen in Western Europe for months. The decision has prompted a fierce backlash, with tens of thousands taking to the streets, some blaming the government for not doing more to avert the latest coronavirus wave crashing into Europe. As they wake up Monday morning, Austria's 8.9 million people will not be allowed to leave home except to go to work, shop for essentials and exercise. The Alpine nation is also imposing a sweeping vaccine mandate from February 1 – joining the Vatican as the only places in Europe with such a requirement. Battling a resurgent pandemic almost two years since Covid-19 first emerged, several countries on the continent have reintroduced curbs, often choosing to ban unvaccinated people from venues like restaurants and bars. But not since jabs became widely available has a EU country had to re-enter a nationwide lockdown.
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Fifth-wave coronavirus infections in France are rising at an alarming rate, the government reported Sunday, with new daily Covid cases close to doubling over the past week. The seven-day average of new cases reached 17,153 on Saturday, up from 9,458 a week earlier, according to the health authorities, an increase of 81%. "The fifth wave is starting at lightning speed," government spokesman Gabrial Attal told media. The latest seven-day increase is three times the average rise of cases recorded over the previous three weeks, indicating an exponential acceleration of infections. For now the spike in infections has not led to a massive influx of Covid patients into hospitals, with the authorities attributing the limited number of intensive care patients to France's high rate of vaccinations which appear highly effective against the most dangerous forms of Covid.
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The UK will have to safeguard its position "in other ways" if it is not able to reach an agreement with the EU over the Northern Ireland protocol, according to the UK's Brexit negotiator. David Frost had said there was "momentum" for his government to "secure a solution based on consensus" following a meeting in Brussels with European Commission Vice-President Maros Sefcovic on Friday. Writing in the Mail on Sunday, Frost said: "The current problems with the protocol go to the heart of our territorial integrity, of what it means to be one country and one market. They will not just disappear. "I still hope the EU can show the ambition needed to fix the problem by agreement. If they can't, of course we will have to safeguard our position in other ways."
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The People's Bank of China left interest rates unchanged again as expected. China's central bank has now kept its benchmark interest rate at the same level for 17 months in a row. The one-year loan prime rate was held at 3.85% in September, the last time the rate was changed was back in April 2020. The five-year rate also was unmoved at 4.65%.
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Australia announced Monday it will re-open to foreign students and skilled workers from next month, easing some of the world's most stringent pandemic travel restrictions. Twenty months after Australia slammed shut its borders, some visa holders – as well as Japanese and South Korean citizens – will be able to enter from December 1. "Australia is re-opening to the world," said Home Affairs Minister Karen Andrews as she announced the news, adding it was "yet another step forward for Australia". The government of Prime Minister Scott Morrison lifted restrictions on Australians travelling overseas last month, sparking a flood of travel bookings for the southern hemisphere summer. But Morrison – who is hoping to be re-elected next year – had pointedly refused to relax travel rules for most non-Australians. That decision left an estimated 1.4 million skilled visa holders stuck in Australia, unable to return if they decided to leave.
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Australia formally embarked on a hotly-contested programme to equip its navy with nuclear-powered submarines in a new defence alliance with Britain and the US. Defence Minister Peter Dutton joined US and British diplomats in signing an agreement allowing the exchange of sensitive "naval nuclear propulsion information" between their nations. It is the first agreement on the technology to be publicly signed since the three countries announced in September the formation of a defence alliance, AUKUS, to confront tensions in the Pacific where China-US rivalry is growing. The deal will help Australia to complete an 18-month study into the submarine procurement, Dutton said. Details of the procurement have yet to be decided, including whether Australia will opt for a vessel based on US or British nuclear-powered attack submarines.
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By Tom Waite; thomaslwaite@alliancenews.com
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