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Bayer confirms merger talks with Monsanto

A merger of the world's biggest producers of seeds and pesticides may soon be in the making. Missouri-based Monsanto confirmed reports that it received a bid from Germany's biggest drugs and chemicals firm Bayer. US seed and pesticide giant Monsanto said Wednesday it had received a proposal from Bayer which was "unsolicited, non-binding," but nevertheless reviewed by the company for "due diligence, regulatory approvals and other conditions." While the US company was assessing the offer, it said there was "no assurance" that any transaction would be "entered into or consummated." Bayer released its own statement on Thursday, briefly confirming that its executives had met with counterparts in their acquisition target to "privately discuss" a merger. Neither statement specified a price tag for the deal. But a bid to acquire Monsanto, which has a market capitalization of $42 billion (37.4 billion euros), is likely to be worth more than ChemChina's February deal to take over Swiss agrichemicals giant Syngenta for $43 billion. Monsanto itself tried to buy Syngenta last year. The scale of a Bayer-Monsanto merger could face resistance from antitrust regulators. Agricultural suppliers like Monsanto have been hit by low commodity prices, causing farmers to cut down on supply orders. The end of the first quarter saw Monsanto cut its earnings forecast for 2016.

A merger of the world’s biggest producers of seeds and pesticides may soon be in the making. Missouri-based Monsanto confirmed reports that it received a bid from Germany’s biggest drugs and chemicals firm Bayer. US seed and pesticide giant Monsanto said Wednesday it had received a proposal from Bayer which was “unsolicited, non-binding,” but nevertheless reviewed by the company for ... Read More »

Another year of cheap oil, IEA says

The International Energy Agency (IEA) says overcapacity means another year of cheap oil. But it warns low oil prices are leading to underinvestment in developing new capacity, which may cause a spike in prices by 2021. IEA released its "Medium-Term Oil Outlook Report" in Paris, France, and Houston, Texas on Monday, looking ahead at the next five years of oil demand, production and prices. It projected that oil prices would remain low until at least sometime in 2017, given that large stocks of oil will be feeding into an already saturated market. "Today's oil market conditions do not suggest that prices can recover sharply in the immediate future - unless, of course, there is a major geopolitical event," IEA said. "Only in 2017 will we finally see oil supply and demand aligned, but the enormous stocks being accumulated will act as a dampener on the pace of recovery in oil prices when the market, having balanced, then starts to draw down those stocks." In other words, while oil prices should gradually start rising once demand catches up to current production capacity, the availability of resources that can be easily and quickly tapped - like the oil stored in massive strategic reserve bunkers in the US - will slow the price rise. A few years further on, however, prices may begin to rise much more rapidly, because the current period of very low prices is discouraging investment in the development of new oil supplies. As a result, once demand begins to outstrip supply after a few years, a scramble for available reserves may result, driving a spike in prices. Only Saudi Arabia and Iran had spare production capacity available now; other countries weren't investing enough even to keep current production levels going medium-term, let alone meet demand growth, the report said. "The risk of a sharp oil price rise towards the later part of our forecast - around 2021 - arising from insufficient investment is as potentially destabilising as the sharp oil price fall has proved to be," IEA warned. Oil supply continues to grow, but less quickly The report projects that four million barrels a day (mbd) will be added to global oil supply between 2015 and 2021, an increment less than half as large as the total output growth of 11 mbd over the period 2009-2015, a result of upstream investment drying up in response to the supply glut that has driven down prices over the past two years. Global oil exploration and production capital expenditures ("capex") are expected to fall 17 percent in 2016 compared to 2015, following a drop of 24 percent in 2015 compared to 2014. It would be the first time since 1986 that upstream investment has fallen for two consecutive years. US production is expected to reach an all-time high of 14.2 mbd by the end of the forecast period, though it will fall slightly in the short term. On the demand side, IEA expects demand growth averaging 1.2 mbd through 2021, reaching 101.6 mbd by that year. India's consumption is expected to rise rapidly as more motor-cars hit the roads with rising prosperity on the subcontinent. Growth in Chinese demand, conversely, is expected to cool somewhat. On the whole, Asia's share of total global oil demand will continue to increase.

The International Energy Agency (IEA) says overcapacity means another year of cheap oil. But it warns low oil prices are leading to underinvestment in developing new capacity, which may cause a spike in prices by 2021. IEA released its “Medium-Term Oil Outlook Report” in Paris, France, and Houston, Texas on Monday, looking ahead at the next five years of oil ... Read More »

Tesla posts 11th straight loss, revenue up

Despite rising sales, Tesla Motors has posted its 11th consecutive quarterly loss. The electric carmaker announced it would release a lower-priced Model 3 sedan in late 2017. The Palo Alto-based electric car manufacturer reported a fourth quarter loss of $320 million (283.6 million euros) as revenue rose 27 percent to $1.2 billion, bringing yearly revenue to $4 billion with a loss of $889 million last year. Tesla's stock, which has been battered by 40 percent this year, rose 9 percent in after-hours trading to $157 despite the poor earnings. The boost came from the announcement that its lower-priced Model 3 sedan would be unveiled in March and have a scheduled production start at the end of 2017. The $35,000 sedan is about half the price of the Model S, a luxury vehicle, that has seen sales rise 76 percent in the fourth quarter to 17,272. Last year the company delivered 50,000 of the Model S, a jump of 60 percent from 2014. Tesla's shares had fallen in recent days as investors voiced concern over delays of the Model S. A shareholder letter said the company is seeing "growing worldwide demand for Tesla vehicles, supported by record production" and expects to deliver 80,000 to 90,000 Model S and Model X vehicles this year. Tesla's new Model X SUV suffered difficulties ramping up production, but the company said it would deliver 1,000 SUVs per week by the second quarter. The price tag is $130,000. The company is also making investments in battery technology and vehicle production. "Achieving these results in 2016 should leave us well positioned for 2017, when we plan to launch Model 3 and take another significant step towards our mission of accelerating the world's transition to sustainable transportation," the company said in a letter.

Despite rising sales, Tesla Motors has posted its 11th consecutive quarterly loss. The electric carmaker announced it would release a lower-priced Model 3 sedan in late 2017. The Palo Alto-based electric car manufacturer reported a fourth quarter loss of $320 million (283.6 million euros) as revenue rose 27 percent to $1.2 billion, bringing yearly revenue to $4 billion with a ... Read More »

Anglo American to cut staff by nearly two-thirds

One of the world's leading miners has said it will cut tens of thousands of jobs as part of a radical overhaul. The announcement comes as the industry is struggling with weak demand and painfully low commodity prices. Shares in the British mining giant took a beating on Tuesday after the company announced it would cut its workforce by nearly two-thirds, affecting some 85,000 out of its 135,000-strong staff, as part of a desperate attempt to cope with tumbling commodity prices. "We will be radically restructuring our portfolio, so the net result is expected to be a reduction to around 50,000 employees," a spokesperson told the AFP news agency. Anglo has already cut several thousand jobs in recent year, with its staff standing at 162,000 in 2013. Weak demand, in particular from the world's second biggest economy, China , has already sapped Anglo's stock price by 70 percent so far this year. Tuesday's announcement shaved off another 12 percent, pushing shares down to a new record low, with investors worrying that the restructuring plan might stop the bleeding temporarily but won't heal the wound in the long run. Pledging to take "bolder action," CEO Mark Cutifani also said he would whittle down the firm's portfolio from some 55 mines and smelters to around 20, focusing mainly on its diamond, platinum and copper businesses, which offer better long-term potential. Going forward, the company will consist of just three division: De Beers for diamonds, Industrial Metal for platinum and base metals, and Bulk Commodities for coal and iron ore. "Assets in nickel, coal and iron ore will have to compete and demonstrate their ability to drive down the cost curve, with the ability to deliver cash through the cycle. If not, they won't be in the portfolio, it's as simple as that," Cutifani told investors in the British capital. 'Outlook remains dim' The comment came on the same day as spot iron ore fell to a decade low of less than $40 (36.7 euros) a ton, while futures prices suggested more weakness for the steelmaking commodity already down by nearly half this year. "With few exceptions, the commodity price outlook remains dim, forcing miners to keep up their guard," consultants PwC said in a report on Tuesday. "As the old saying goes, survival will be of the fittest, and for miners also the leanest." To that end, the miner said it planned to sell several coal assets in Australia and South Africa, adding that it had secured more than $2 billion in sales so far. In addition, it would further slash investments through 2016 by about $1 billion. In a blow to shareholders, Anglo said it would suspend dividend payments until the end of next year in order to save money. The London-based miner, which is currently the world's fifth-biggest by market value, has been hit harder by the ongoing commodity crisis than many of its rivals, with higher-cost iron ore operations weighing heavier on its bottom line. By selling off the most costly, it hopes to not only save money, but also to save some of its parting employees' jobs in the process. Commenting on the layoffs, Anglo's spokesperson stressed that because many of the mines will be sold and not closed, "the 85,000 jobs don't (all) disappear as many will be employed by new owners." According to a company graph, the miner plans to shrink its workforce to 99,000 next year and 92,000 in 2017 followed by another sharp reduction.

One of the world’s leading miners has said it will cut tens of thousands of jobs as part of a radical overhaul. The announcement comes as the industry is struggling with weak demand and painfully low commodity prices. Shares in the British mining giant took a beating on Tuesday after the company announced it would cut its workforce by nearly ... Read More »

German manufacturing weakened by lackluster China

Foreign orders at German manufacturers dropped in September, as demand from China continues to be tepid. Manufacturing in Asia's powerhouse also dropped for a third straight month. Orders from abroad fell by 18 percent in September, compared to the same time the year before, according to Germany's VDMA manufacturing association. "During the course of the year, business in the mechanical engineering and machine tools sector has once again deteriorated," VDMA Chief Economist Ralph Wiechers said. The weakness in the Chinese economy was impacting on other markets, Wiechers said. The weaker orders from abroad were partially offset by orders at home and elsewhere in Europe and the US. It meant that, overall, orders in the first nine months of the year only fell by 1 percent. "That's down to hard work and shows how competitive our manufacturers are," VDMA economist Olaf Wortmann said. Meanwhile, China's manufacturing sector contracted in October for a third straight month, an official survey showed on Sunday, while a private factory survey on Monday also showed activity fell for an eighth consecutive month in October. Despite China's lackluster performance, the Asian powerhouse remains the No. 1 market for Germany's manufacturers and will continue to do so for the forseeable future, according to the VDMA.

Foreign orders at German manufacturers dropped in September, as demand from China continues to be tepid. Manufacturing in Asia’s powerhouse also dropped for a third straight month. Orders from abroad fell by 18 percent in September, compared to the same time the year before, according to Germany’s VDMA manufacturing association. “During the course of the year, business in the mechanical ... Read More »

Majority of VW’s rigged cars in Europe

German carmaker Volkswagen has said the overwhelming majority of its roughly 11 million cars with built-in defeat devices were sold across Europe. The company again apologized for the "wrongdoing of individuals." A Volkswagen spokesman on Monday reported that 8 million of the company's vehicles running in the EU were fitted with software capable of thwarting diesel-engine emission tests. In a letter co-signed by the current VW chief lobbyist Thomas Steg and cited by the German business daily "Handelsblatt," the carmaker said 1.2, 1.6 and 2.0-liter engines were affected. The authors of the letter addressed to national parliamentarians once again apologized for the behavior of "some individuals" and promised to fully clear up the scandal. No time to waste VW has been under mounting pressure to get to grips with the biggest business crisis in its 78-year history as revelations about its large-scale emissions cheating scandal have wiped out a third of the firm's stock price and rocked the auto industry as a whole. Up until now, VW had said it would have to refit up to 11 million diesel cars globally, including 2.8 million in Germany . Newly appointed Chief Executive Matthias Müller is to address employees at a staff meeting in Wolfsburg Tuesday. One day later, he's scheduled to brief the supervisory board on what measures have been taken so far to find the culprits and win back the trust of customers.

German carmaker Volkswagen has said the overwhelming majority of its roughly 11 million cars with built-in defeat devices were sold across Europe. The company again apologized for the “wrongdoing of individuals.” A Volkswagen spokesman on Monday reported that 8 million of the company’s vehicles running in the EU were fitted with software capable of thwarting diesel-engine emission tests. In a ... Read More »

BP to pay record fine over oil spill

British energy giant BP will pay a record fine to settle claims for damages stemming from the 2010 Gulf of Mexico oil spill. The agreement was reached with the Department of Justice and five US states. The deal announced Monday foresees BP paying a record $20.8 billion (18.6 billion euros) in fines arising from the 2010 Deepwater Horizon oil spill, which followed an explosion on an offshore rig in the Gulf of Mexico killing 11 workers. Beaches were blackened and the region's fishing and tourism industries were crippled in a tragedy that rocked the whole nation. The final settlement with the US Department of Justice and some US states was significantly higher than a previously announced deal in which BP was set to pay $18.7 billion to resolve claims from government entities. Costly affair Negotiators made it clear that Monday's deal resolved all civil claims against BP, ending five years of legal fighting over the nearly 134-million-gallon (500-million-liter) spill. Among other requirements, the British company will be forced to pay $5.5 billion in Clean Water Act penalties and nearly 45 billion to five US Gulf states - Alabama, Florida, Louisiana, Mississippi and Texas. BP had earlier already settled with people and businesses harmed by the 2010 disaster. That alone cost the firm close on $6 billion in payouts.

British energy giant BP will pay a record fine to settle claims for damages stemming from the 2010 Gulf of Mexico oil spill. The agreement was reached with the Department of Justice and five US states. The deal announced Monday foresees BP paying a record $20.8 billion (18.6 billion euros) in fines arising from the 2010 Deepwater Horizon oil spill, ... Read More »

TPP trade negotiators reach landmark deal

Pacific ministers have reached a deal on the biggest trade liberalization pact in a generation. News agencies reported the accord would set standards for 12 nations and reduce tariffs for a wide range of products. Officials cited by Reuters said the Trans-Pacific Partnership (TTP) would affect 40 percent of the world economy and had the potential to reshape industries. Should national lawmakers approve the deal reached Monday, it would influence everything from the price of cheese to the cost of cancer treatment in the nations concerned. The TPP accord had been controversial because of the secret negotiations that had shaped it over the past five years and the perceived threat to an array of interest groups from Mexican carmakers to Canadian dairy farmers. Stumbling stone removed The complex deal is to bring about tariff reduction schedules for hundreds of imported items from pork and beef in Japan to pickup trucks in the US. However, one issue had threatened to derail the talks until the very end, notably the length of monopolies to be awarded to the developers of new biological drugs. The US had sought 12 years of protection to encourage pharmaceutical companies to invest in expensive treatments, while Australia, New Zealand and others would have preferred a five-year period of protection. Negotiators were reported to have agreed on a compromise on minimum terms that was short of US expectations.

Pacific ministers have reached a deal on the biggest trade liberalization pact in a generation. News agencies reported the accord would set standards for 12 nations and reduce tariffs for a wide range of products. Officials cited by Reuters said the Trans-Pacific Partnership (TTP) would affect 40 percent of the world economy and had the potential to reshape industries. Should ... Read More »

Asian markets see red, China fears persist

Weak Chinese industrial data and slackening demand for commodities the world over weighed heavily on Asian markets on Tuesday. Tokyo, Hong Kong, Shanghai and Sydney were all in negative territory. Key Asian stocks slid to their lowest levels in more than three years on Tuesday after China said its key industrial companies saw profits fall nearly 9 percent in August - the fastest plunge in four years. Demand for resources is softening in the world's number two economy as China experiences a painful slowdown in its economy , and commodities prices are taking a hit. Tokyo closed more than 4 percent lower, Hong Kong slid 3.59 percent by lunch, and Shanghai was 1.9 percent lower in late trading. Glencore on shaky ground Mining giant Glencore lost 26 percent in morning trading in Hong Kong, following a nearly 30 percent drop in London a day earlier as analysts warned of impending danger if commodities prices don't pick up. "We know all their businesses, including agricultural, enegery, or mining are all in trouble," said Jackson Wong, a securities analyst at Simsen Financial Group. "They are in a very tough situation over how they are going to survive in the next few years with the slow economy in China, that's the worry that investors have." Investors take refuge in western bourses Other analysts said Asian markets are also struggling to keep capital as investors jump ship. "Disappointing industrial profits in China continue to bolster concerns about growth and many investors are taking profits from the Nikkei and sitting in cash and alternatives, or repatriating capital to western markets in a perceived flight to quality," said Martin King, co-managing director at Tyton Capital Advisors. In Japan, investors are anxious before the release of the Bank of Japan's Tankan quarterly business survey on Thursday. The Japanese economy has been battling stagnation after it contracted in the second quarter.

Weak Chinese industrial data and slackening demand for commodities the world over weighed heavily on Asian markets on Tuesday. Tokyo, Hong Kong, Shanghai and Sydney were all in negative territory. Key Asian stocks slid to their lowest levels in more than three years on Tuesday after China said its key industrial companies saw profits fall nearly 9 percent in August ... Read More »

Will VW scandal end with prison sentences?

The auto industry is no stranger to legal trouble. Though companies normally reach financial settlements with US authorities, individuals at Volkswagen could face criminal charges. Spencer Kimball reports from Chicago. The timing couldn't be worse for Volkswagen. Before the VW emissions scandal broke, the US Justice Department vowed in a memo to redouble its efforts to prosecute individuals in white collar criminal cases - and a new CEO is unlikely to change that calculation. In the aftermath of the 2008 financial crisis, federal prosecutors extracted massive financial penalties from investment banks. But only one Wall Street executive, Kareem Serageldin at Credit Suisse, was prosecuted and sentenced to time in prison. "There's recently been criticism that the government has too often been using settlements with corporations as the end of the game and not following through as much on individual prosecutions," Samuel Buell, who prosecuted corporate crime at the Justice Department, told DW. Amid this controversy, the Justice Department's Resources and Environment Division has launched an investigation into Volkswagen cheating on diesel emissions tests, according to Bloomberg and "The Wall Street Journal." "This is their first opportunity really in a high-profile case to show that they mean business by going after individuals," Peter Henning, an expert on white collar crime at Wayne State University Law School, told DW. "So, unfortunately for Volkswagen, they're a year too late." Settlements the norm All three of the world's top automakers have now been subject to criminal investigations. GM was charged with concealing faulty ignition switches linked to 124 deaths. The world's third-largest automobile company settled with the Justice Department for $900 million. No individuals were charged with a crime. Toyota faced Justice Department scrutiny for withholding information about a sudden acceleration problem linked to fatalities. The world's second largest auto company settled with the government for $1.2 billion, but still faces some 400 wrongful death and injury lawsuits. Again, no individuals were charged. Now the world's top-selling car company, Volkswagen, potentially faces criminal charges for installing software to cheat diesel emissions tests . Though the emissions scandal has not been linked to any deaths, expert Peter Henning believes individuals at the company could very well face criminal charges. "This is intentional misconduct," Henning said. "This is so blatant. This has been going on for years. This was corporate a decision." "It's a perfect storm for Volkswagen," he continued. "The firm and the individuals don't have a lot of excuses, and you have a Department of Justice looking to go after individuals." Potential criminal penalties According to Samuel Buell, there's a range of charges individuals at Volkswagen could face depending on how the facts of the case pan out. Submitting false statements is a crime, and it's also illegal to defraud the United States government. There could also be charges for defrauding consumers who bought the diesel vehicles in question. Sentencing would likely be based on the damage done to consumers and the environment measured in monetary terms. According to Buell, if the damages reach tens of millions or even hundreds of millions of dollars, individuals could face stiff prison sentences. "You could be looking at five or 10 years," said Buell, a law professor at Duke University. "It's important to know that there's no parole in our federal prison system. The sentences are real. When a judge says five or 10 years, that's basically what you get." But holding individuals accountable in the corporate context is difficult, according to Brandon Garrett, author of "Too Big to Jail: How Prosecutors Compromise with Corporations." Prosecutors have described difficulty in determining responsibility amidst complex corporate structures. "The complexity of organizations where many people work together with many levels of supervisors and consulting lawyers and other specialists can all make assigning blame a challenge if there is no 'smoking gun' type evidence," he said.

The auto industry is no stranger to legal trouble. Though companies normally reach financial settlements with US authorities, individuals at Volkswagen could face criminal charges. Spencer Kimball reports from Chicago. The timing couldn’t be worse for Volkswagen. Before the VW emissions scandal broke, the US Justice Department vowed in a memo to redouble its efforts to prosecute individuals in white ... Read More »

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