Argentina called in the IMF, after a run on the peso prompted the central bank to raise its benchmark interest rate to 40% and spend $5bn of reserves in an effort to prop up the currency. President Mauricio Macri went on television to explain that he had turned to the IMF to avoid the type of economic crises that have beset Argentina in the past. Mr Macri has been praised for his reforming zeal, but calling on the fund, which is widely blamed in Argentina for the country’s financial crisis in 2001, is politically risky. See article.
The multimedia revolution
In another sign of the convergence between the wireless and cable industries, Vodafone offered to buy a chunk of the assets in Europe held by Liberty Global. The transaction, valued at €18.4bn ($21.8bn), sees Vodafone taking over Unitymedia in Germany, as well as Liberty’s holdings in the Czech Republic, Hungary and Romania.
After several weeks of courtship, Shire accepted Takeda’s takeover bid of £46bn ($62bn). If approved by shareholders the deal will create one of the world’s biggest drug companies. It would also represent the largest foreign takeover by a Japanese company.
Volkswagen’s board was reportedly considering whether to seek damages from Martin Winterkorn in relation to the emissions-cheating scandal that surfaced in 2015. Mr Winterkorn resigned as CEO when the scandal broke. He was charged recently by America’s Justice Department with conspiracy, which may muddy the carmaker’s argument that senior management knew nothing about the tampering. Mr Winterkorn has repeatedly denied any wrongdoing.
Royal Bank of Scotland said that it had reached a settlement in principle with the Justice Department over the sale and underwriting of residential mortgage-backed securities in 2005-07. Because $3.5bn of the $4.9bn fine is covered by provisions already made, RBS—of which the British government still owns more than 70%—should avoid sliding into a loss this year.
Take off and landing
The share price of Air France-KLM tumbled by 10%, after its chief executive quit amid a protracted pay dispute with unions. The company was formed by the merger in 2004 of the French and Dutch national carriers. Pilots and staff at Air France have carried out a series of strikes; they have rejected the latest proposal on wages. The French government, the biggest shareholder in Air France-KLM, criticised the unions, pointing out that KLM is more competitive. Bruno Le Maire, the finance minister, warned that the state would not “mop up the losses of Air France” by bailing it out. See article.
Under pressure to show that they are doing more to police their platforms, Google banned all political advertisements about Ireland’s forthcoming referendum on abortion from its websites, a day after Facebook said it would block ads about the referendum from non-Irish sources.
In China, Wu Xiaohui, who transformed Anbang from a small insurer into a global conglomerate, was sentenced to 18 years in prison for fraud and abuse of power. The government took control of Anbang earlier this year, saying its rapid expansion was a threat to financial stability.
Glencore and the Qatar Investment Authority scrapped a plan to sell their joint stake in Rosneft, Russia’s state oil company, to CEFC, a private Chinese conglomerate whose boss has apparently fallen foul of the authorities. The pair dissolved their venture. QIA now holds an equity stake of 18.9% in Rosneft; Glencore retains 0.6%.
In its biggest acquisition so far, Walmart agreed to pay $16bn for a 77% stake in Flipkart, India’s leading online retailer. The country’s e-commerce sector is expanding rapidly; Flipkart’s net sales grew by more than 50% in the year ending March 31st. That may be one reason why Amazon was said to be interested in bidding for Flipkart, only to be thwarted by its arch-rival. See article.
One of those selling its stake in Flipkart was SoftBank, which made an investment through its Vision Fund and earned a tidy return on its trade. The Japanese tech giant reported an operating profit of ¥155bn ($1.4bn) for the latest quarter. That was up by 60% from the same period in 2017, in large part because of income from the fund. Sprint, an American wireless operator owned by SoftBank, made its first annual net profit in 11 years. See article.
A shot in the arm
Nestlé struck a $7.2bn deal for the rights to sell packaged coffee and other products under the Starbucks label. Products like packaged coffee beans and pods account for just 8% of sales at Starbucks. It intends to use the proceeds from the deal to accelerate its share buy-back programme.