Live news: SoftBank buys back Vision Fund’s 25% stake in chip designer Arm ahead of planned IPO

SoftBank has bought back a stake in Arm from its Vision Fund investment unit in a deal valuing the UK-based chip designer at more than $60bn.

The deal will give the Japanese conglomerate full control of Arm and set what it hopes will be a floor for its planned initial public offering.

According to people familiar with the transaction, SoftBank valued Vision Fund’s 25 per cent stake in Arm at around $15bn, about double the price that the Saudi-backed $100bn investment fund paid when it took the stake in 2017.

SoftBank bought Arm for $32bn in 2016 and is planning to list the company in New York as soon as next month, according to people familiar with its plans.

WeWork will swap 40 of its existing shares for a single new one to bring its price per share back above $1, making it compliant with the minimum price for continued listing on the New York Stock Exchange, the company said on Friday.

Its shares closed at 16 cents on Thursday, having lost 99 per cent of their value from a peak of $13.71 in April 2021. The company, which SoftBank once valued at $47bn, has a market value of about $333mn.

This month, WeWork warned that it faced “substantial doubt” about its ability to continue as a going concern.

The reverse stock split, which was approved in June by shareholders but without an agreed ratio, will take effect after the market close on September 1. WeWork said it did not expect the move “to impact its current or future business operations”.

Oil tycoon Eugene Shvidler has lost a High Court challenge seeking to
overturn UK sanctions imposed on him in the wake of Russia’s invasion
of Ukraine.

The billionaire businessman was blacklisted in March 2022 on the
grounds of his association with Russian oligarch Roman Abramovich and his former non-executive directorship of Evraz plc, a UK-incorporated multinational steel manufacturing and mining company with operations in Russia.

In a judgment on Friday, Mr Justice Garnham dismissed Mr Shvidler’s
challenge, saying: “In my view, it cannot properly be said that the secretary of state has failed to strike a fair balance between the rights of Mr Shvidler and his family and the interests of the community.”

The judgment on what was the first substantive legal challenge to British sanctions marks a significant victory for the UK government.

Former Austrian chancellor Sebastian Kurz has been charged with giving false testimony to parliament, in the first criminal legal action lodged against him since a corruption scandal forced him from government two years ago. 

Criminal charges against Kurz, 36, and his former chief of staff Bernhard Bonelli were filed by Austrian anti-corruption prosecutors in Vienna on Friday. 

The charges claim Kurz and Bonelli knowingly misled a special parliamentary investigatory committee set up to probe alleged corruption in the Kurz government, and centre on the establishment of Austrian sovereign wealth fund ÖBAG, valued at €31bn, and appointments to its board of directors. 

A spokesman for Kurz did not immediately respond for a request for comment.

The European Central Bank is preparing to publish its opinion on Italy’s plan for a bank windfall tax in the coming weeks after Rome sent official notification of its controversial move.

Italian banking shares lost €10bn the day after Giorgia Meloni’s government announced plans to impose a 40 per cent tax on lenders’ net interest income. Rome has since watered down the measure by saying the levy will be capped at 0.1 per cent of banks’ total assets.

The ECB has published opinions criticising many of the bank windfall taxes introduced by other eurozone members in recent years, including those in Spain and Lithuania, but its objections are often largely ignored.

US-Japan-South Korea: US president Joe Biden will host Japanese prime minister Kishida Fumio and South Korean president Yoon Suk Yeol for a summit at Camp David that will focus on deepening their security ties. The nations will establish a leader-level hotline and hold annual military exercises as part of a landmark trilateral agreement aimed at deterring China and North Korea.

Deere: Tractor maker Deere & Co will report its latest quarterly results, which are projected to show a nearly 10 per cent revenue increase to $14.25bn in the three months to July, from $13bn during the same period of 2022. Earnings per share are forecast to rise to $8.18 from $6.16.

Estée Lauder: Estée Lauder is expected to post a quarterly loss of 10 cents per share on revenue of $3.47bn for the quarter ended in June as US consumers pull back on discretionary items like beauty products and the Chinese market struggles to recover. In the same quarter in 2022, the company earned 14 cents a share on revenue of $3.56bn.

Washington has approved plans by the Netherlands and Denmark to export US-made F-16 fighter jets to Ukraine. 

Dutch defence minister Kajsa Ollongren on Friday welcomed the US decision in a post on social media platform X, formerly Twitter. “It allows us to follow through on the training of Ukrainian pilots,” Ollongren wrote.

“We remain in close contact with European partners to decide on the next steps,” she added.

Lars Løkke Rasmussen, Denmark’s foreign minister, said there was no timetable for when Ukraine might receive the aircraft.

The decision marks the first approval by the US to re-export its fighter jets from third countries to Ukraine.

China’s securities regulator has announced a package of reforms to “boost capital market investor confidence”, as underwhelming economic growth drags on the country’s stocks and bond markets.

The China Securities Regulatory Commission said it would consider extending trading hours for both stock and bond markets, maintain a “reasonable pace” for new IPOs and refinancing of debt, call on state-run and large listed firms to step up mergers and acquisitions, and cut handling fees imposed on brokerage transactions to encourage more trading activity.

China’s stock market has badly lagged global peers in 2023, with the benchmark CSI 300 index down more than 2 per cent this year against a rise of almost 14 per cent for the S&P 500.

Big share price moves in Europe today include Dutch payments group Adyen, Sweden-based games developer Embracer, and Polish supermarket group Dino:

• Adyen: Shares in the Netherlands-based payment group fell more than 6 per cent in early trading after an earnings miss on Thursday that wiped nearly 40 per cent off its share price.

  

• Embracer: The games developer rose 4 per cent after weaker than expected results on Thursday, but the company maintained its full-year outlook.

• Dino: Shares in the Polish supermarket chain fell more than 6 per cent after warning that rising prices would hit sales this year, despite reporting continued growth in sales and profits on Friday.

Hungary’s leader has vowed to push on with the battle to tame what is Europe’s highest inflation rate until it reaches 5 per cent next year and economic growth rebounds.

Inflation fell below an annual 20 per cent for the first time in nearly a year in July, at 17.6 per cent, while growth remained negative in what is Hungary’s longest recession in decades. 

Prime minister Viktor Orbán has long blamed foreign companies for soaring prices and has used price caps and mandatory price reductions in what he called “using force against price speculator multinationals”.

“They have hiked prices more than justifiable,” Orbán told public radio on Friday. “We need to show force, this can’t continue.”

Shares in Adyen were volatile on Friday, a day after an earnings miss disappointed investors in the Dutch-listed payments company and wiped almost €20bn off its market cap.

Hiring costs dented first-half earnings, with remuneration soaring 80 per cent, as did competition in the US, where aggressive pricing from local providers such as San Francisco-based Stripe and PayPal’s Braintree is winning over online merchants. 

Adyen ended the day down 39 per cent, valued at less than €30bn, below the valuation of private rivals such as Stripe and London-headquartered Checkout.com. 

Despite the hit, chief financial officer Ethan Tandowsky said the company would continue with its hiring plans for the year, bucking an industry-wide trend of lay-offs and cost-cutting. 

Japan’s Topix posted its sharpest weekly fall in five months on Friday, as global fears over increased bond yields and China’s stagnant economy sapped interest in the country’s equities.

The Topix fell 0.7 per cent on Friday, taking its weekly losses to 2.9 per cent, its worst performance since mid-March.

Japan’s economy this week posted annualised growth of 6 per cent for the second quarter, its highest level in two years and above consensus forecasts. The country’s equities have performed strongly as new stock exchange guidance and a slower pivot away from decades of ultra-loose monetary policy have boosted valuations.

But rising global bond yields and China’s persistently gloomy economic data dented that momentum this week.

British retail sales fell much more than expected in July as an unusually wet month kept shoppers from the high street, according to official statistics.

The quantity of goods bought in Great Britain fell 1.2 per cent between June and July, following an expansion in the previous three months, according to data published on Friday by the Office for National Statistics.

This was a much larger contraction than the 0.5 per cent fall that was forecast by economists polled by Reuters.

Food stores sales volumes fell by 2.6 per cent in July, with supermarkets reporting that the wet weather reduced clothing sales, although food sales also fell back. Retailers indicated that the rising cost of living and food prices continued to affect sales volumes.

Chinese tech stocks declined on Friday, following weak earnings and pessimism over the country’s economic prospects.

The Hang Seng tech index, which tracks the biggest Chinese tech companies listed in Hong Kong, fell 2.6 per cent, with drops of 9.4 per cent and 7.4 per cent for health tech groups JD Health International and Alibaba Health Information, respectively.

Lenovo, the world’s biggest manufacturer of personal computers, lost 3.9 per cent, while electric vehicle maker Xpeng shed 6 per cent. 

The moves followed the release of a disappointing series of earnings across the sector. Enthusiasm for Chinese equities has also been sapped by weak economic data from the country.

Taipei mayor Chiang Wan-an is to visit Shanghai for a bilateral city conference, as Taiwan and China gradually resume some exchanges after an almost complete three-year break in cross-Strait travel because of the pandemic.

Chiang, a member of the Kuomintang, Taiwan’s largest opposition party that advocates closer ties with China, will participate in the Taipei-Shanghai City Forum this year, his office said on Friday.

First held in 2010, the forum was suspended by the pandemic. Its resumption comes at a sensitive time, with China continuing its military intimidation campaign around the island and debate over cross-Strait relations heating up in Taiwan before next January’s presidential elections.

Country ratings: Moody’s is set to release its updated ratings for Switzerland and Moldova on Friday, while Fitch and S&P are due to update their ratings for the Netherlands and Estonia, respectively.

Kingspan: The Ireland-based construction materials company is to release first-half results.

Women’s World Cup final: Spain and England will meet in the 2023 Fifa Women’s World Cup final on Sunday at Stadium Australia in Sydney. Kick-off is at 11am British summer time.

Asian equities edged lower on Friday morning, as investors assessed the possibility of further interest rate increases by the Federal Reserve.

Hong Kong’s Hang Seng index shed 0.1 per cent, Japan’s Topix fell 0.4 per cent and South Korea’s Kospi slid 0.3 per cent. The mainland Chinese benchmark CSI 300 was flat. 

Minutes from the Fed’s last meeting showed that officials were divided over the need for future rate increases, with some seeing “significant upside risks to inflation”. The US Labor Department on Thursday reported a decline in the number of applications for unemployment benefits for the week ending August 12, adding to the case for tight monetary policy.

Bitcoin fell by nearly 8 per cent during an hour of frenzied trading on Thursday afternoon in the US, extending a day of losses that reversed most of the cryptocurrency’s gains since June.

The price of a token briefly fell to as low as $25,409, according to data from CoinMarketCap, before staging a partial recovery.

The whipsaw price action left the digital asset changing hands for 15 per cent less than the $31,814 high registered in July, echoing recent declines in stocks, bonds and other financial assets.

Read more about Bitcoin’s tumble here.

Falling energy prices nudged Japan’s consumer price inflation rate lower in July, confirming the predictions of central bankers that inflation would slow heading into the second half of the year.

The rate of core inflation, which excludes volatile fresh food prices, was 3.1 per cent, down from 3.3 per cent in June and exceeding the Bank of Japan’s 2 per cent target for a 16th straight month.

Underlying “core-core” inflation accelerated to 4.3 per cent from June’s 4.2 per cent as hotel charges and other service prices rose.

At the BoJ’s latest meeting, one committee member said that the year-on-year rate of CPI inflation was likely to decelerate as the effect of high import prices last year began to subside.

Summits: US president Joe Biden hosts Fumio Kishida and Yoon Suk Yeol, his Japanese and South Korean counterparts, at Camp David on Friday. Biden is set to announce a landmark trilateral agreement that will help Washington and its Asian allies boost deterrence against North Korea and China.

Economic data: Malaysia publishes second-quarter GDP figures on Friday. Economists expect the data to show growth slowing in the quarter that ended in June. Japan, meanwhile, releases consumer price index figures for July.

Markets: Stocks futures declined in Japan and Hong Kong on Friday. A rise in US sovereign bond yields, which neared their highest levels since 2007 on Thursday, weighed on the country’s equities, with the Nasdaq Composite dropping 1.2 per cent and the S&P 500 ending 0.8 per cent lower.

Singapore: Prime Minister Lee Hsien Loong is to give a National Day Rally speech on Sunday, some 10 days after the country’s National Day holiday on August 8. The speech is considered among the most significant political addresses of the year in the island-state.

Troubled property group China Evergrande has filed for bankruptcy protection in a New York federal court using the so-called Chapter 15 process for foreign companies seeking recognition of their restructuring in the US.

According to the petition, Evergrande is also pursuing a parallel “scheme of arrangement” in the Cayman Islands, as well as a restructuring proceeding pending before the High Court of Hong Kong.

The petition was signed by Jimmy Fong, who listed himself as a “foreign representative” of China Evergrande Group. A meeting of “scheme creditors” is set for August 23 at the Hong Kong office of Sidley Austin, the US-based law firm representing Evergrande.

Shares in CVS Health fell more than 8.1 per cent at the close on Thursday after a decision was made by the insurer to drop its Caremark unit as its main pharmacy benefit manager (PBM).

The fall was the largest in a single day for shares in the company — one of California’s largest health insurers — since October last year.

Health plan provider Blue Shield of California said it would work with other companies, including Amazon and the Mark Cuban Cost Plus Drug Company, to supply medicines to its 4.8mn customers.

The insurer said the US drug purchasing system, which is dominated by PBMs — essentially drug middlemen — is “broken” and that it expected to save $500mn in annual drug costs with its new model.

The US government has escalated a trade dispute with Mexico over its ban on genetically modified corn, reflecting the political power of US corn belt states ahead of the 2024 presidential election.

Washington requested a dispute resolution panel on Thursday, which would make a binding decision under the US-Mexico-Canada trade pact. The trade dispute is also reputational, with the US contending that genetically modified corn is not harmful to humans.

Mexican president Andrés Manuel López Obrador’s administration has said the measures to limit genetically modified corn are to protect the population’s health. The US claims the rules violate the trilateral trade agreement and are not based on scientific evidence.

A Citadel credit fund has agreed to provide most of the pricey financing to bankrupt trucking company Yellow, having recently acquired an existing $500mn loan to the group previously held by Apollo Global Management.

Yellow, which filed for bankruptcy protection earlier this month, has secured a $142.5mn bankruptcy loan and struck a deal to sell its real estate for $1.3bn, its lawyers told federal bankruptcy court on Thursday.

That deal will have the Citadel fund provide $100mn of so-called debtor-in-possession financing, while Yellow’s largest stockholder, MFN partners, will provide the remaining $42.5mn.

Estes Express Lines has bid $1.3bn for Yellow’s terminals, which would cover all the group’s existing secured debt.