Bloomberg

(Bloomberg) — Volvo AB plans to build a “large-scale” battery plant in Sweden to meet an expected surge in demand for electric trucks and buses.

The Swedish manufacturer, which currently sources cells from Samsung SDI Co., said Wednesday it started a process to obtain approvals to set up its own production in the municipality of Mariestad. It didn’t disclose how much the factory would cost.

The world’s second-biggest truckmaker plans to gradually increase capacity and reach large-scale series production by 2030. Volvo reiterated its target that at least 35% of its products should be electric by the same year.

“This ramp-up will require large volumes of high-performing batteries,” Chief Executive Officer Martin Lundstedt said in a statement. Producing cells in-house is a “logical next step.”

Volvo’s announcement underscores its ambition to lead on electric trucks and the batteries they require, while the market for heavy-duty battery rigs is still in its infancy. Last year, 346 of the vehicles were registered in Europe.

Volvo gained 0.3% as of 11:22 a.m. in Stockholm. The shares have lost 11% this year.

Read More: ‘Beauty Contest’ With Batteries Will Decide Future of Trucking

The company has been hedging its bets developing vehicles that run on batteries, fuel cells and combustion engines burning biofuel, synthetic fuel and even hydrogen. Volvo, Traton SE and Daimler Truck Holding AG are planning to spend 500 million euros ($509 million) to install at least 1,700 charging points in Europe for for heavy-duty rigs and buses.

Volvo said its batteries would be designed specifically for commercial-vehicle applications, such as trucks, buses and construction equipment. The plant will require “thousands” of employees, a spokesperson said, declining to disclose further details.

(Updates with shares in sixth paragraph.)

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(Bloomberg) — PayPal Holdings Inc. jumped after saying activist investor Elliott Investment Management is now one of its largest shareholders and recent cost-cutting moves will result in savings of $900 million this year. 

Such savings will swell to $1.3 billion next year, the payments giant said Tuesday in a statement announcing second-quarter earnings. PayPal also announced that its board authorized a new $15 billion share-repurchase program. The stock rose as much as 11% in premarket trading in New York Wednesday.

“We are also still sharpening our pencils to identify additional areas of productivity improvements across our servicing, marketing and engineering functions as well as opportunities to rationalize our real estate footprint and shift our hiring to lower-cost geographies,” Chief Executive Officer Dan Schulman said in a conference call with analysts.

Schulman has been vocal about his plans to improve PayPal’s operating leverage — or the ability to grow revenue faster than expenses. Still, expenses soared 18% to $6.04 billion in the period. While that was in line with the average of analyst estimates compiled by Bloomberg, revenue climbed just 9%. 

Elliott said it took a $2 billion stake, making it one of the company’s largest investors. The firms have entered into an information-sharing agreement and Jesse Cohn, a managing partner for Elliott, said in the statement that he looks forward to working with Schulman and PayPal’s board.

“Elliott strongly believes in the value proposition at PayPal,” Cohn said. “PayPal has an unmatched and industry-leading footprint across its payments businesses and a right to win over the near- and long-term.”

PayPal, which closed at $89.63 on Tuesday, has slumped 52% this year, steeper than the 18% decline of the S&P 500 Information Technology Index. 

“Tough love from Elliott Management helped steer PayPal in the right direction,” Dan Dolev, an analyst at Mizuho, said in a note to clients. “PayPal’s cost basis was way too high, and it needed to return capital to shareholders.”

PayPal has been in the midst of a series of management changes, and it announced Tuesday that Blake Jorgensen will take over as chief financial officer after John Rainey left to join Walmart Inc. earlier this year. The company said it is also conducting an external search for a new chief product officer following the departure of Mark Britto later this year.

Jorgensen joins PayPal from Electronics Arts Inc., where he was both chief operating officer and CFO. He is also a former CFO of Levi Strauss & Co. and Yahoo! Inc.

Payments Volume

PayPal has faced pressures in recent quarters from supply-chain disruptions and once-in-a-generation levels of inflation that hindered e-commerce spending. And EBay Inc., PayPal’s former parent company, has been rapidly moving payments away from its platform. Payments volume climbed 9% to $339.8 billion, missing the $344.3 billion average of analyst estimates compiled by Bloomberg and the smallest increase in at least two years.  

PayPal said earlier this year it was pivoting away from a previous strategy of trying to add millions of new users. Instead, it is seeking to encourage existing customers to use its app more frequently.  

The firm showed progress on that front: Transactions per active account climbed 12% to 48.7 in the quarter. It continues to expect to add roughly 10 million new users this year. 

The company now expects total payments volume for the year to climb by 16%, compared with an earlier range of 15% to 17%, according to the statement. PayPal boosted its forecast for adjusted earnings per share for the year to a range of $3.87 to $3.97, compared with earlier guidance of $3.81 to $3.93.

“We are advancing our priorities and sustainably improving our cost structure,” interim CFO Gabrielle Rabinovitch said in the statement. “We are focused on creating value for our shareholders and strengthening our position as a leading global digital payments platform.”

New Strategy

PayPal is weighing a sale of its loan portfolio after it ended the quarter with $6.2 billion in gross receivables, Rabinovitch said. The move would follow the 2018 sale of about $6.8 billion in loans and receivables to Synchrony Financial at face value. 

“To optimize the use of our balance sheet and remain maximally capital efficient, we’re assessing opportunities for additional strategic credit externalization and we’ll update you on our progress as we move through the back half of the year,” Rabinovitch said. 

Last year, PayPal said it was considering adding stock-trading capabilities to its app. The company has since abandoned that push as part of its focus on reducing costs and keeping headcount in check, Schulman said. Instead, he said PayPal will deepen its investment in its online checkout button, and revamp the Venmo app. It plans to allow teenagers to sign up for Venmo. 

PayPal and Elliott have largely been aligned in their discussions about how to turn around the company, Schulman said. 

“Our discussions are focused on operational improvements, revenue-generating investments and capital allocation,” Schulman said. “We’ve been working on a number of initiatives such as improved profitability and return of capital and we appreciate Jesse’s collaboration and input on these important topics.”

(Updates with premarket trading in seventh paragraph.)

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(Bloomberg) — It’s safe to say that Coinbase has had a rough couple of months. The threat of federal regulation of some of its tokens has been looming for more than a year, but it’s really started heating up over the last few months. In late July, things got even worse. A former Coinbase product manager, his brother, and a friend were arrested by federal prosecutors on an insider-trading allegation. And the cherry on top? The fact that the Securities and Exchange Commission alleges Coinbase has been running an illegal securities exchange. To help us understand what’s at stake for Coinbase, and for all digita-currency users, Bloomberg Businessweek Columnist & tech reporter Max Chafkin joins this episode.

Follow us on Twitter @crypto, and subscribe to the Bloomberg Crypto Newsletter at https://bloom.bg/cryptonewsletter

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(Bloomberg) — Avast Plc soared to a record high after the UK waved through its takeover by NortonLifeLock Inc., closing an in-depth probe that had cast doubt on the viability of the deal.

The Competition and Markets Authority removed the final obstacle for the $8.6 billion takeover, saying in a statement Wednesday that it won’t harm competition in the cybersecurity market. It had referred the deal for an in-depth probe in March and set a Sept. 8 deadline for a final decision to be made.

Avast shares jumped as much as 43% in London trading, the most on record. The CMA’s decision, which came a month earlier than expected, took the market by surprise — particularly as the UK competition authority’s tone had previously cast doubt on whether the proposed merger would go through.

“The decision could have gone either way. The CMA has been blocking so many mergers recently, but has decided this is one to wave through in the end,” said Tom Smith, an antitrust lawyer at law firm Geradin Partners.

The CMA has provisionally found that a combined NortonLifeLock and Avast would still face “significant competition” from their main rival McAfee and a range of suppliers with a smaller market position in the UK. The agency also pointed to the increasingly important alternatives offered to consumers by Microsoft Corp.’s security applications.

“Yesterday, we were almost in the position of a deal-break as a CMA statement last week was not really clear on how the talks were going,” said Gregory Lafitte, an analyst at Tradition. “We expected to get an update and to see potential remedies at the end of August, but surprisingly today the headline has been totally positive and without any doubt.”

The merger comes as high-profile ransomware attacks on large companies and infrastructure have increased demand for software guards against hackers. Arizona-based NortonLifeLock is buying Avast in a deal valued between $8.1 billion and $8.6 billion in August 2021.

The transaction will dramatically expand user numbers for NortonLifeLock, which was known as Symantec Corp. before selling its enterprise-security business to Broadcom Inc. in 2019 for $10.7 billion. Prague-based Avast attracts millions of customers to a free, baseline product and tries to turn them into paying users with more advanced software.

“We welcome the CMA’s provisional findings this morning, which we see as a long-overdue reflection of the underlying realties of the cybersecurity software landscape,” said Josh Rosen, analyst at United First Partners.

(Updates with more details throughout, adds analyst quote in fourth paragraph.)

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(Bloomberg) — Ecom Express Ltd., a logistics services provider to Indian e-commerce companies, is seeking to raise fresh funds at a $1 billion valuation, according to people familiar with the development.

The Warburg Pincus-backed company is working with an adviser to raise at least $100 million, the people said, asking not to be identified as the information is private. Ecom is also considering strategic options including a merger with another logistics provider, they said. It could also weigh an initial public offering, one of the people said.

Deliberations are ongoing and details of the fundraising could change, the people said. A representative for Ecom Express didn’t immediately respond to a request for comment.

Started in 2012 by four entrepreneurs, Ecom Express is a logistics company serving businesses in India with more than 2,932 facility centers across 29 states, according to its website. Partners Group Holding AG acquired a significant stake in the company in 2020, becoming an equal partner to Warburg Pincus. Its backers also include the UK’s CDC Group, now known as British International Investment Plc.

Logistics companies are riding a wave of investor interest after the coronavirus pandemic helped accelerate the growth of online shopping. Atlanta-based Terra Worldwide Logistics is exploring a sale that could value it at about $1 billion, Bloomberg News has reported, while Taiwan’s Morrison Express Corp. is considering the sale of a majority stake at about a $1 billion valuation, people familiar with the matter have said.

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(Bloomberg) — Telecel Group said it’s in talks with Ghanaian authorities to get approvals for a deal to buy Vodafone Group Plc’s operations in the West African country.

The company said it has signed a sales agreement with Vodafone for its operations in Ghana, as the British telecommunications giant looks to refocus on key markets. It has not received approvals for the deal yet, it said.

“Telecel and Vodafone have been in touch with Ghana’s Ministry for Communications, Bank of Ghana, and the National Communications Authority, to finalize all the regulatory requirements related to this transaction,” Telecel said in a statement on Wednesday.

Read More: Vodafone Agrees to Sell Stake in Ghana Operations to Telecel

Telecel will fund the acquisition with its partners, and the potential sale of Vodafone Ghana’s towers aren’t being considered as part of the the deal funding, it said.

The company plans to spend about $500 million in the first three years to expand and refinance Vodafone’s network across the country.

Vodafone entered Ghana in 2008 when it paid the west African county’s government $900 million for 70% of Ghana Telecommunications Co. The government retains a 30% holding in the business.

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(Bloomberg) — Nomura Holdings Inc. is reviewing costs at its retail business after earnings from the brokerage’s usually profitable division trailed its smaller rival Daiwa Securities Group Inc. for a second straight quarter.

Chief Financial Officer Takumi Kitamura is “taking a closer look into the cost structure” of the unit with retail head Go Sugiyama, he said at an earnings briefing on Wednesday after Japan’s largest brokerage announced that pre-tax profit from the segment slumped 74% to 4.9 billion yen ($36.8 million) from a year earlier.

“Transformation could take some time,” Kitamura said, citing digitalized marketing and other ongoing efforts to boost revenue at the retail division.

The results lag Daiwa’s ordinary profit of 6.3 billion yen from retail for the three months ended June. It’s the second time Daiwa’s figure has been higher than Nomura’s since at least the April to June quarter of 2011, based on publicly available comparable data.

Nomura’s retail unit has for years played the role of a shock absorber for overseas mishaps, and on average, the business — which has thousands of staff offering individual clients individual advice and other services — has generated more than a quarter of Nomura’s annual revenue over the past 10 years.

In its earning statement, Nomura said clients stayed on the sidelines due to market uncertainty, which resulted in lower flow revenue. Sales of Japanese stocks were also slower, although global stock investment trusts saw fund inflows.

Analysts have said Nomura needs to boost the competitiveness of its retail business and shift more aggressively into wealth management to make it more resilient to market turbulence.

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(Bloomberg) — Hackers targeted the Solana ecosystem early Wednesday with thousands of wallets affected in the latest hit to the cryptocurrency market after bridge protocol Nomad was attacked at the start of the week.

While the total value of the assets stolen was unclear, four Solana wallet addresses drained approximately $8 million from victims, according to security firm PeckShield. More than 7,000 wallets appear to have been affected, with the security incident draining them of their SOL tokens and USDC stablecoins, Binance Chief Executive Officer Changpeng “CZ” Zhao said on Twitter. 

Solana’s token SOL fell 7.3% to $38.4 in early trading on Wednesday, its lowest price in a week. Bitcoin was little changed around $23,000.

“Much remains unknown at this point — except that hardware wallets are not impacted,” Solana spokesman Austin Federa said.  

Crypto projects are proving a rich vein for hackers and the industry has suffered numerous attacks this year. Solana’s woes come days after Nomad — a bridge protocol for transferring crypto tokens across different blockchains — lost close to $200 million in a security exploit on Monday. More than $1 billion has already been stolen from bridges in 2022, according to a June report by forensics firm Elliptic.

While there’s speculation the incident was a supply-chain attack, the nature of the exploit remains unclear, Federa said. Supply-chain hacks occur when an outside party or provider with access to the victim’s systems and data is infiltrated.  

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(Bloomberg) — BMW AG cut its delivery outlook due to ongoing supply-chain snarls and cautioned that demand is showing signs of retreating from above-average levels as inflation and higher interest rates hit consumers. 

The carmaker sees vehicle orders normalizing toward the end of the year, particularly in Europe, it said Wednesday, as pent-up demand from the ongoing semiconductor shortage levels off. BMW kept unchanged a forecast on automaking returns at between 7% to 9%. 

The shares slumped as much as 5.6% in early Frankfurt trading, the most since March 10.

BMW is the first carmaker “to signal caution on the demand,” Bernstein analyst Daniel Roeska said an a note. “This implies weakening sentiment today, even as production ramps up across the sector.”

So far, demand for cars has remained high even as the global economic outlook worsens and record inflation hits consumers’ pockets. Manufacturers including Mercedes-Benz AG  have raised their outlooks for the year while warning that economic risks are building.  

“We see an increasing economic headwind coming up in addition to the ongoing supply shortages,” BMW Chief Executive Officer Oliver Zipse said in a statement. 

BMW sees strong vehicle pricing and a strong lineup offsetting lower deliveries this year, it said.  

Second-quarter group earnings before interest and tax declined to 3.43 billion euros ($3.5 billion), compared with an average analysts’ estimate of 3.2 billion euros, according to data compiled by Bloomberg. 

(Updates with shares in third, analyst comment in fourth paragraph)

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(Bloomberg) — Just Eat Takeaway.com NV wrote down the value of its US-based Grubhub unit by 3 billion euros ($3.1 billion) amid plunging stock market valuations and rising interest rates, a sign of the difficulty facing the business after it was acquired for about $7.3 billion last year. 

The Amsterdam-based company also reported that orders slowed in the first half of the year after customers returned to restaurants and shops following Covid-19 lockdowns, the company said in a statement on Wednesday.

Just Eat struggled in the first half of the year, announcing plans to eliminate staff in France and scale back growth plans. Delivery companies industry wide have been grappling with slowing growth. Rival Deliveroo Plc cut its estimates for order growth this year and Gopuff said in July that it was closing warehouses and cutting jobs. 

Still, the cutbacks helped the company make progress toward reaching profitability goals. 

“Our path to profitability is accelerating,” Chief Executive Officer Jitse Groen said in the statement. He added that the company expects to generate adjusted earnings across the entire business in 2023, with its three largest geographies reaching that threshold in the past quarter.

Key Insights

• Total orders on Just Eat’s platform decreased 6.8% from the same period a year ago to 509.4 million. That compares to 547 million orders forecast by analysts surveyed by Bloomberg.
• Sales rose to 2.78 billion euros, compared to analysts’ 2.85 billion-euro target.
• First-half losses on adjusted earnings before interest, taxes, depreciation and amortization narrowed to 134 million euros.
• Just Eat is exploring a partnership or sale for Grubhub, which it bought in an all-stock deal in 2021, and looking for a bidder for its 33% stake in iFood.
• The company maintained its guidance for the year. It had previously pared its expectations for 2022 for gross transaction value to rise by mid-single digits percentage points year-on-year.
• The company also nominated its chief operating officer Jorg Gerbig for reappointment following the results of an investigation. The company announced in May that the COO would step down while a complaint about his behavior at a company event was probed.
• Chairman Adriaan Nuhn also didn’t seek re-election this year after shareholder proxy services criticized the board’s lack of gender diversity and governance.
• On Tuesday, the company launched a pilot in Berlin offering 20-minute delivery of grocery and convenience goods from a small urban warehouse known as a “dark store.”

Market Context

• Shares rose 1.9% to 19.15 euros at 9:16 a.m. in Amsterdam trading.
• The stock has declined 61% this year.
• Amazon.com Inc. announced a partnership with Just Eat’s Grubhub business last month where it will offer a delivery subscription to Prime users. As part of the deal, Amazon has the option to take a stake of as much as 15% of Just Eat’s US-based business.
• The Amazon deal “wasn’t done at the same valuation that the merger took place at last year and, therefore, it’s a logical consequence of the market environment” that the company would have to record an impairment on Grubhub, Groen told reporters in a media briefing Wednesday.

Get More

• Statement
• Just Eat Jumps on Amazon Deal to Take Stake in Grubhub Unit
• Just Eat Moves to Eliminate 350 Delivery Jobs in France
• Just Eat COO Under Misconduct Investigation, Chairman Exits
• Just Eat’s 2Q Ebitda Gain Boosts Confidence on 2023 Goal: React

 

(Updates with additional context throughout)

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