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(Bloomberg) — Information-technology services provider DXC Technology Co. is working with advisers after receiving takeover interest, according to people familiar with the matter. The stock rose more than 9% on the news. 

DXC has been approached by at least one private equity firm, the people said, asking to not be identified because the matter isn’t public. It’s unclear whether the technology company is open to a sale. 

A representative for DXC declined to comment. 

After a trading pause, DXC rose 5.6% to $28.56 at 1:36 p.m. in New York on Wednesday, giving the company a market value of about $6.6 billion. 

Technology dealmaking has held steady this year amid the broader slump in mergers and acquisitions. Part of that has been driven by private equity firms, which love the sector and are taking advantage of a market dip to go shopping. Vista Equity Partners this week offered to buy software-security firm KnowBe4 Inc., according to a statement Monday. 

DXC, which provides analytics and business-process services to insurance and aerospace companies, has been a takeover target before. French technology services provider Atos SE approached it about a combination last year before walking away after DXC described its offer as inadequate. 

(Updates trading in first and fourth paragraphs.)

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(Bloomberg) — Meta Platforms Inc. is cutting costs by at least 10% in the coming months and will rely more on employee attrition as part of the push, according to the Wall Street Journal.

The company, which owns Facebook, Instagram and WhatsApp, has avoided outright layoffs. But Meta is pushing more employees out of the company by reorganizing departments and only giving the workers a short time to find new positions, the Journal reported, citing unidentified people familiar with the situation.

The report suggests Meta has gotten more aggressive in its efforts to cut costs. Meta has already said it would slow down hiring and reprioritize key projects and initiatives. During its first-quarter earnings call, the company said annual expenses would be roughly $3 billion lower than initially projected, trimming an estimated range that had been as high as $95 billion. 

The Menlo Park, California-based company didn’t immediately respond to a request for comment.

Investors initially cheered the cost-cutting news Wednesday. The stock, which had been down as much as 1.5% earlier in the day, rose nearly 1% to session highs. But it later pared the gains and was down 0.1% as of 1:20 p.m in New York. 

Meta also has been cutting down on some long-term hardware projects, including a planned dual-camera Apple Watch competitor. The company has even delayed handing out jobs to its summer interns as a way to reduce costs. 

Despite the hiring slowdown, Meta reported it had 83,553 full-time employees as of June 30, growth of 32% over the previous year.

(Includes more background on Meta’as prior financial plans)

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(Bloomberg) — Nedbank Group Ltd., South Africa’s fourth-biggest lender by assets, has obtained a village for itself in Ubuntuland, establishing its presence in the metaverse.

The lender is partnering with Africarare, which describes itself as the first metaverse on the continent and creators of Ubuntuland, where one can buy, sell and rent property and other digital assets. 

Nedbank’s investment in the virtual-reality market is geared at discovering new marketing platforms and “creating experiences that go beyond banking,” Khensani Nobanda, the group’s executive for marketing and corporate affairs, said in an emailed statement Wednesday.

“Our entry into the metaverse is not merely about having a presence in this space, it’s about meeting the needs of our clients on platforms that resonate with them,” Nobanda said.

Nedbank’s village will contain experiences ranging from virtual gaming to a sports lounge. Other early settlers include MTN Group Ltd., World Data Lab, and M&C Saatchi Abel, Africarare said.

Villages range from 1×1, which is a single plot of land, to 24×24, equivalent to 576 plots, according to Africarare’s website. There are 204,642 plots of land available in Ubuntuland, whose currency is the $Ubuntu token that’s built on Ethereum blockchain.

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(Bloomberg) — Treasury two-year yields hovered near 4% after crossing that mark for the first time since 2007, with traders awaiting the Federal Reserve’s policy decision and its “dot plot” of economic projections that’s expected to show a push to hold rates higher for longer.

Shorter-term US rates — which are more sensitive to imminent Fed moves — outperformed those on longer maturities. The S&P 500 posted mild gains, rebounding from a two-month low. The dollar climbed alongside gold and defense companies as Russian President Vladimir Putin stepped up his war against Ukraine, renewing his warnings of a nuclear threat.

The Fed is widely expected to raise rates by 75 basis points on Wednesday for a third straight meeting, delivering the most-aggressive tightening since Paul Volcker led the central bank in the early 1980s. The decision, as well as quarterly forecasts, will be announced at 2 p.m. in Washington. Chair Jerome Powell will hold a press conference 30 minutes later.

Read: Fed to Hike and Hammer Home Hawkish Message: Decision-Day Guide

“The consensus is looking for a 75 basis points hike… and we’re in that camp,” wrote Matt Maley, chief market strategist at Miller Tabak. “The Fed would have telegraphed a 100-basis point hike in a more significant way if they were going to do something that drastic. Of course, Chairman Powell has talked a lot about Paul Volcker in the past year, so maybe he’ll want to shock the markets the way Mr. Volcker did 40 years ago. However, we still don’t expect that kind of a surprise.”

That doesn’t mean Powell will walk back some of his hawkish rhetoric as that could harm the central bank’s credibility, according to Maley, who remarked that even the Fed officials who had been “quite dovish in the past have been quite hawkish recently.”

Nicholas Colas at DataTrek Research expects the Fed’s boss to sound much like his Jackson Hole speech at the end of August: “unapologetically resolute.” While fed fund futures are pricing in a possible cut or two in rates next year, Colas noted the central bank’s new economic projections may change that scenario.

“It can do a lot more by not showing a lot of rate cuts next year or maybe even in 2024 to keep the yield curve high and relatively flat than it can by hiking rates by 100 basis points today — which can actually be counterproductive and invert the yield curve and make us all think there’s going to be a recession,” said Brian Nick, chief investment strategist at Nuveen.

Any surprise — from the size of rate hikes to a hawkish shift in policy expectations on where the Fed rate may peak — could send the stock market on one of its wildest rides in history, according to JPMorgan Chase &. Co.’s trading desk.

Read: What to Watch for at Today’s Fed Announcement

As the Fed gears up to hike rates again, some strategists think that credit markets are too cavalier about how monetary tightening will trigger corporate defaults and hurt junk bonds and leveraged loans. And the hiking already appears to be having an impact on weaker corporations, with six U.S.-based borrowers tracked by S&P Global Ratings having defaulted last month — representing a quarter of the total for 2022.

Key events this week:

• Bank of Japan monetary policy decision, Thursday
• The Bank of England interest rate decision, Thursday
• US Conference Board leading index, initial jobless claims, Thursday

Will the Nasdaq 100 Stock Index hit 10,000 or 14,000 first? This week’s MLIV Pulse survey focuses on technology. It’s brief and we don’t collect your name or any contact information. Please click here to share your views.

Some of the main moves in markets:

Stocks

• The S&P 500 rose 0.4% as of 11:21 a.m. New York time
• The Nasdaq 100 rose 0.3%
• The Dow Jones Industrial Average rose 0.4%
• The Stoxx Europe 600 rose 0.9%
• The MSCI World index fell 0.1%

Currencies

• The Bloomberg Dollar Spot Index rose 0.6%
• The euro fell 1% to $0.9871
• The British pound fell 0.5% to $1.1325
• The Japanese yen fell 0.3% to 144.14 per dollar

Bonds

• The yield on 10-year Treasuries was little changed at 3.56%
• Germany’s 10-year yield declined three basis points to 1.90%
• Britain’s 10-year yield advanced three basis points to 3.32%

Commodities

• West Texas Intermediate crude fell 1.4% to $82.77 a barrel
• Gold futures rose 0.2% to $1,675.10 an ounce

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(Bloomberg) — The Biden administration’s top antitrust enforcers asked Congress for more money to continue their ambitious enforcement strategy, telling a Senate panel that they’re “outgunned” by the legal power wielded by giant corporations.

During a Senate Judiciary Antitrust Subcommittee oversight hearing on Tuesday, Jonathan Kanter, the assistant attorney general for antitrust, said the Justice Department would litigate more mergers this year than any fiscal year on record and remains “committed to bringing difficult cases.” 

Kanter’s testimony came the day after a federal judge rejected the department’s bid to block UnitedHealth Group Inc.’s $7.8 billion acquisition of Change Healthcare Inc., dealing a blow to the division’s aggressive agenda.

“While I am proud of the work we are doing, we lack the resources to fully address these challenges,” Kanter said, pointing out that the antitrust division has 350 fewer people today than it did in 1979. 

Federal Trade Commission Chair Lina Khan said in its monopolization case against Meta Platforms Inc., the commission is “outgunned one to 10.”

Read More: UnitedHealth Wins Court Approval for Change Healthcare Deal

Khan said vigorous antitrust enforcement is critical to economic growth, adding that that when industries become more consolidated, “prices rise, wages fall, and our markets become more fragile and less resilient.” 

She said that the agency has had “significant success with at least six mergers being abandoned due to an FTC lawsuit.” 

The abandoned deals include Lockheed Martin Corp.’s proposed acquisition of Aerojet Rocketdyne Holdings Inc. and Nvidia Corp.’s deal to buy Softbank Group Corp.’s ARM. Three hospital groups also quit plans to merge as did Great Outdoors Group, the closely-held owner of Bass Pro Shops and Cabela’s, which sought to buy Sportsman’s Warehouse Holdings Inc.

 

Khan and Kanter, together with White House adviser Tim Wu, were hailed as the Holy Trinity of a new antitrust movement that advocates for a stronger government hand in addressing market concentration. Their calls to return trust-busting to its more aggressive roots breaking up the steel barons and oil tycoons of the last century have found enthusiastic support from progressives, as well as more populist Republicans who also decry the abuses of corporate power. 

This attitude has found an especially rich target in technology giants — both in legislation that seeks to restrict anticompetitive practices in the internet economy and in federal antitrust enforcement. Kanter’s Justice Department division is suing Alphabet Inc.’s Google and investigating Apple Inc., while Khan’s FTC is suing Meta and investigating Amazon.com Inc.

Such cases, however, are challenging after decades of what progressives view as lax enforcement and conservative rulings that built up case law favoring the view that consolidation can benefit consumers with lower prices. Khan and Kanter have indicated that they are prepared to bring aggressive cases — even if they are hard to win — to force companies to reconsider mergers and acquisitions that they’ll have to defend in court. 

This year alone, the Justice Department has gone to trial seeking to block four deals, an unusually high number of cases for antitrust prosecutors to be pursuing at the same time. Decisions in three of the cases remain outstanding, and the antitrust division heads to court next week in a fifth suit against American Airlines Group Inc. and JetBlue Airways Corp. over a joint venture between the airlines.

The UnitedHealth merger challenge wasn’t the Justice Department’s only trial loss this year. In June, five chicken industry executives, including the former Pilgrim’s Pride Corp. chief executive officer, were found not guilty of price-fixing after an unprecedented two mistrials. Following the June trial loss, prosecutors dismissed charges against most other executives, Koch Foods Inc. and Claxton Poultry Farms Inc. 

Kanter defended his division’s strategy, saying “too much is at stake” in the US economy. 

“Part of the job that we have before us is to litigate cases and to take risks when it’s appropriate and necessary to defend the American people,” Kanter said. “We are not going to back down from bringing meritorious cases and seeing them to conclusions.”

The FTC and Justice Department are now rewriting federal guidelines on mergers with an eye toward persuading courts to block more deals.

Republican senators criticized Khan for what they described as the politicization of the FTC. Mike Lee of Utah, the top Republican on the subcommittee, needled her for being willing to “sacrifice actual enforcement for flashy headlines.”

“Getting good press isn’t enough,” Lee said. “What little we have seen from the FTC is legally questionable and ill considered.”

Republican FTC commissioners Noah Phillips and Christine Wilson submitted a statement disagreeing with parts of the testimony approved by the three Democratic commissioners. Phillips and Wilson said the majority misrepresented the agency’s work under Khan and complained about an “unfortunate departure from the agency’s tradition of working towards bipartisan consensus.”

Amy Klobuchar, the chair of the Senate’s antitrust subcommittee, praised Khan and Kanter. She also reinforced the need for new legislation, such as her American Innovation and Choice Online Act, to give the FTC and DOJ new rules and authority to prevent the largest US technology companies from abusing their market dominance. 

“We have many opportunities to create some common sense rules of the road to make sure entrepreneurs and small businesses can compete on a level playing field, and also to give those that appear before us today more tools to do their job in a modern economy” Klobuchar, a Minnesota Democrat, said at the hearing.

However, momentum is slowing for Klobuchar’s bill, which has advanced further than any US legislative effort to address the market power of some of the world’s richest companies. The Senate only has a handful of weeks and several competing priorities before leaving Washington for November’s elections.

(Updates with Kanter quotes beginning in the 14th paragraph)

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(Bloomberg) — Nikola Corp. founder Trevor Milton broke his own company’s social media rules, sharing potentially nonpublic information on platforms like Twitter and Instagram, a jury in Milton’s criminal fraud trial was told.

Milton, accused of lying to investors about the company’s progress, flouted policies on the treatment of confidential information including financial and product matters, Nikola Social Media and Digital Marketing Manager Stephanie Amzallag testified Wednesday in Milton’s trial on securities and wire fraud charges.

Amzallag told the jury she tried to follow what Milton was posting to his personal accounts as well, because he would also share information that wasn’t known within the company, as she worked to keep up with the voluble founder. She said she didn’t have the technical background to verify the accuracy of some of his statements.

Social media use was a mainstay of Milton’s tenure at the company, from which he resigned in September 2020 after an excoriating short seller’s report that month. Before stepping down, he issued a long series of Instagram posts berating the author and other critics of the company, and in one video appealed to investors to exercise their warrants. He was often combative on Twitter with those who questioned his statements and the company’s potential, before deleting his social media accounts that Sept. 23.

Read More: Nikola Founder Milton Faces Charges He Lied to Support Stock 

Milton is accused of duping investors by making inoperable products look fully functional and of lying about the company’s technology and partnerships. The defense argues he was just following the company’s marketing plan and never said anything he didn’t believe to be true.

The case is US v. Milton, 21-cr-478, US District Court, Southern District of New York (Manhattan).

Read More

• Nikola Saw ‘Massive’ Badger Losses But Backed Milton Anyway 
• Nikola CEO Says He Learned Truck Had No Power After His Hire 
• Nikola Cannibalized a Ford for Electric Pickup, Jury Told 

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(Bloomberg) — Opto Investments, the newly launched private capital platform led by investment veteran Mark Machin and Palantir Technologies Inc. co-founder Joe Lonsdale, has raised $145 million in a Series A funding round, according to a statement reviewed by Bloomberg News.

Opto is valued at $475 million after the round, said people familiar with the matter, who asked not to be identified because it was private.

The financing was led by Tiger Global Management LLC with participation from venture capital firms including 8VC, Fin Capital and HOF Capital, among others.

Machin, who last year stepped down from his post as head of the Canada Pension Plan Investment Board after almost a decade with the fund, will lead Opto as chief executive officer. He said this year’s unraveling of public equities markets creates an opportunity for launching Opto, which intends to give registered investment advisers access to high-end private funds. 

“I don’t think there’s ever been a more important time for investors to have exposure to private markets and alternatives because the days of easily riding cheap index returns are probably over for quite a while,” Machin said in an interview. “We think that the access to alternatives for the average, independent RIA is still broken and that’s something that we want to fix.”

Machin met tech investor Lonsdale years ago during a “social weekend” in Quebec City. After keeping in touch since then, Machin was approached by Lonsdale about an idea for a company and it “tickled” his interest. 

“And so I dived in,” Machin said. “I became co-founder, invested a bunch of money and said, ‘Look, I’ll roll up my sleeves and be the CEO.’”

Opto’s leadership ranks include veterans spanning the investment and private capital sectors from firms such as BlackRock Inc. and a16z.

(Corrects name of Fin Capital in third graph.)

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(Bloomberg) — Warner Music Group Corp. named YouTube’s Robert Kyncl as its chief executive officer, three months after announcing Steve Cooper would step down from the helm of the world’s third-largest record label.

Kyncl, who had already announced plans to leave YouTube, will become co-CEO of Warner Music in January and will take over the full role when Cooper steps aside on Feb. 1, according to a statement Wednesday. 

While Warner had discussed the role with several candidates, Kyncl emerged as the leading contender in part because of his technology background, Bloomberg reported on Sept. 18. Kyncl has spent the bulk of his career at YouTube, where he led creative and commercial partnerships and helped launch a subscription service, and Netflix Inc., where he was part of the team that introduced original streaming programming. 

Now Kyncl will be on the other side of the table, trying to get the best deal for artists and Warner in negotiations with streaming services and finding opportunities to build on the industry’s digital growth. Warner Music’s assets include Atlantic Records, Warner Records and Warner Chappell Music. Top artists include Ed Sheeran, Bruno Mars and Dua Lipa.

According to people familiar with the matter, Warner’s board also spoke during its CEO search with Jody Gerson, the head of rival Universal Music Group’s publishing company; Max Lousada, the head of Warner’s recorded music division; and Scott Greenstein, a senior executive at Sirius XM.

Warner Chairman Michael Lynton, who previously ran Sony Group’s entertainment businesses, led the search for a replacement with help from fellow board member Ceci Kurzman. Len Blavatnik, the billionaire who owns a controlling stake in Warner Music, also vetted candidates.

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(Bloomberg) — India is wooing semiconductor and display makers to the country by increasing financial incentives for setting up manufacturing units under a $10 billion plan.

Prime Minister Narendra Modi’s administration will bear half the cost of setting up all semiconductor manufacturing units, it said in a statement on Wednesday. Previously, New Delhi said it would offer fiscal support ranging from 30% to 50% of a project’s cost depending on the type of chip manufactured.

India, the world’s second-biggest mobile phone maker, is eyeing chip sovereignty as it tries to cut back on expensive imports and become a global supplier like neighboring China.

The country also removed a cap of 120 billion rupees ($1.5 billion) on 50% of the project cost for companies setting up display fabrication factories. It increased financial support for companies setting up chip assembly units to 50% of capital expenditure from 30%.

A joint venture of Taiwan’s Hon Hai Precision Industry Co., also known as Foxconn, and metals company  Vedanta Ltd.  will set up a factory in Modi’s home state of Gujarat, Vedanta said earlier this month. The total investment in the project, which includes semiconductor fabrication, assembly, and testing, as well as display production, is set to reach more than $19.4 billion, according to the company.

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(Bloomberg) — The Paramount Group has produced and sold the first military aircraft made in South Africa since the 1980s when state-owned arms maker Denel SOC Ltd. unveiled the Rooivalk, or red falcon, attack helicopter.

Africa’s biggest privately owned defense and aerospace company said it’s won orders for the Mwari, a reconnaissance and precision-strike aircraft, and the first delivery will take place this week after an 11-year development period. Nine aircraft will be supplied to two air forces, the company said, saying it can’t yet disclose their identity.

South Africa built up an arms and aerospace industry during the apartheid era of Whites-only rule when it was subject to international sanctions and sought to bolster its defenses against both perceived foreign threats and an internal insurrection. That led to the development of everything from the Rooivalk to tanks and assault rifles. 

“We had this kind of unusual skill set, which had come about because of the mistake of history that was the apartheid-era aerospace industry.” Ivor Ichikowitz, Paramount’s founder, said in an interview. “And the skills set was inherent in people that were in their late fifties. And we wanted to develop a project that would give us the ability to train the next generation of aerospace engineers.”

Paramount is aiming to sell the Mwari, a word in Zimbabwe’s Shona language that means “the all knowing, all-seeing deity,” across the world where it can be used for counter-insurgency purposes as well as for other applications including maritime surveillance and anti-poaching missions. 

“We’re targeting any country in the world that has to deal with an asymmetrical threat,” Ichikowitz said in a reference to countries combating terrorists or rebels. “We’re targeting any country in the world that is fighting against an enemy with a $30,000 land Rover. And they’re using a $150,000 stinger missile” to eliminate that.

Sales of the aircraft are primarily aimed at emerging market nations that would prioritize affordability. It’s cost, excluding add-ons such as advanced avionics systems is about $10 million and it can be operated for $1,500 an hour of flying time. 

The two-pilot aircraft can carry as much as a ton of precision-guided arms and with a lighter load has a range of about 960 kilometers (596 miles) and a speed of around 435 kiometers-per-hour (270 miles-per-hour). It has an interchangeable pod that allows reconnaissance and other equipment to be swapped out within two hours so that the aircraft can be used for different purposes. 

It’s competitors largely consist of re-purposed crop-sprayers, small passenger planes and training aircraft such as Embraer SA’s Super Tucano as well as unmanned drones.

“The first sales have had been in Africa to a large extent because that’s where we see the biggest operational need,” Ichikowitz said. “If you look at what’s going on in Africa right now, we have multiple environments where there are asymmetrical threats that that need a low-cost, highly efficient platform.”

Governments in Mozambique in the south, Somalia in the east and across the Sahel region of West Africa are fighting Islamist militants, a number of African countries such as South Africa have lengthy coastlines that need patrolling and southern African nations are trying to halt the poaching of rhinos by sophisticated syndicates that operate in remote areas of the countries.

(Updates with speed in 7th paragraph)

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