Company news in brief

27 October 2020 | Business

Fiat, PSA to win approval for merger

Fiat Chrysler and PSA are set to win EU approval for their US$38 billion merger to create the world's No.4 carmaker, people close to the matter said, as they strive to meet the industry's dual challenges of funding cleaner vehicles and the global pandemic.

The green light from the European Commission would formalise the creation of Stellantis, a carmaking group that could tap hefty profits from selling Ram pickup trucks and Jeep SUVs to US drivers to fund the expensive development of zero-emission vehicles for sale in Europe and China.

The all-share merger announced late last year would unite brands such as Fiat, Jeep, Dodge, Ram and Maserati with the likes of Peugeot, Opel and DS - while targeting annual cost cuts of 5 billion euro (US$6 billion) without closing factories.

To allay EU antitrust concerns, PSA has offered to strengthen Japan's Toyota Motor Corp, with which it has a van joint venture, by ramping up production and selling it vans at close to cost price, the people said.

The companies will also allow their dealers in certain cities to repair rival brands.

Following feedback from rivals and customers, the carmakers only had to tweak the wording of their concessions, with no changes in the substance, the people said. – Nampa/Reuters

Lufthansa to ground more planes

Deutsche Lufthansa is preparing to ground more planes than planned and cut working hours during the winter as a surge in coronavirus infections is putting people off travelling.

Lufthansa and its subsidiaries Eurowings, Swiss, Austrian and Brussels Airlines will ground 125 more aircraft during the winter than originally planned, chief executive Carsten Spohr said in a letter to staff seen by Reuters.

"It is unavoidable to ramp down operations during the winter of 2020/21 even further and to put as many areas as possible in 'hibernation' from mid-December," he said.

Most of the group's administrative staff will be put on a government-sponsored reduced hours scheme, he added.

Lufthansa said this month said it will likely only offer up to 25% of the last year's capacity in the fourth quarter, as it reported a third-quarter operating loss of 1.26 billion euro. - Nampa/Reuters

SAP goes all in on cloud

SAP said yesterday it was going all in on its shift to cloud computing as it abandoned medium-term profitability targets and cautioned that its business would take longer than expected to recover from the coronavirus pandemic.

Investors reacted by dumping shares in Europe's most valuable tech firm, which opened nearly 20% lower in Frankfurt to wipe US$35 billion off its market value - their biggest one-day drop in 24 years.

The strategic pivot by chief executive Christian Klein means investors are once again being asked to wait for the promise of fatter margins at the German business software group to become a reality.

The latest shift means effectively that profit margins will languish over the next three years. Headwinds will only turn to tailwinds after that, chief financial officer Luka Mucic told reporters.

Cloud revenue - from subscription-based services hosted at remote data centres - is now expected to triple to 22 billion euro (US$26 billion) by 2025. That will eclipse traditional licence sales that have for decades been SAP's cash cow. – Nampa/Reuters

Bayer to acquire Asklepios Bio

Bayer agreed to acquire unlisted US biotech firm Asklepios BioPharmaceutical Inc for as much as US$4 billion in a bet on gene therapy with the help of modified viruses.

Germany's Bayer will pay US$2 billion upfront and up to an additional US$2 billion in milestone payments contingent on development achievements, it said yesterday.

The North Carolina-based takeover target, also known as AskBio, is trying to use the harmless adeno-associated virus as a delivery device to bring genetic repair kits against a range of diseases into the body.

Drugs and farming pesticides maker Bayer needs to upgrade its drug development pipeline amid a weaker outlook for agricultural sales and as it seeks to finalise an US$11 billion settlement over claims its Roundup weedkiller causes cancer.

Among AskBio's most advanced projects are early tests on volunteers of prospective treatments against Pompe disease – a rare genetic disease causing build-up of a sugar molecule inside cells - as well as against Parkinson's disease and congestive heart failure. – Nampa/Reuters

Europcar drops 2020 outlook

French car rental company Europcar - one of many in the transport sector to have been hit by the impact of the Covid-19 crisis - dropped its 2020 financial outlook yesterday as it posted a slump in its third-quarter results.

Europcar's quarterly sales fell 46.7% from a year earlier to 537.2 million euro (US$635.8 million), and it posted a net loss of 9.7 million euro.

Europcar's net debt stood at 1.322 billion euro.

Travel companies around the world have been hit by governments imposing travel restrictions to try and tackle the spread of the coronavirus.

Company cost cutting efforts will save close to 1 billion euros in 2020, said Europcar CEO Caroline Parot.

"However, in a volatile and highly uncertain business environment, as the Covid-19 outbreak develops again at an unpredictable pace, we consider that we can no longer provide a full year 2020 guidance," she added. – Nampa/Reuters

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