Company News
July 3, 2024
The End of The Dream
BASF Pulls Plug on Potential Chile Investments Amid Lithium Rout
Wilfried Eckl-Dorna and James Attwood, Bloomberg News
(Bloomberg) — German chemicals giant BASF SE has abandoned plans to invest in lithium mining assets in Chile as a slowdown in electric-vehicle adoption worldwide drags down battery metal prices.
BASF withdrew from initial talks with Wealth Minerals Ltd., the Vancouver-based firm that has exploration projects in Chile, the German company said in an email to Bloomberg Tuesday.
A potential arrangement had included possible funding and offtake if Wealth obtained production contracts in Chile. BASF also was exploring the possibility of building a plant in Chile to turn lithium into the cathode that goes into electric-vehicle batteries.
“No collaboration between BASF and Wealth Materials materialized in the end,” BASF wrote. The company didn’t give a reason for ending the talks or mention the proposed cathode plant.
The withdrawal follows BASF’s announcement last week that it scrapped plans for a $2.6 billion nickel-cobalt refinery in Indonesia. Slowing EV sales growth has pushed down prices of key inputs, with lithium at three-year lows after surging to a record in late 2022. BASF now plans to bolster raw-materials supply for European operations via a new battery recycling plant in Germany, due to start operations later this year.
While the German company’s involvement in Chile was at a very early stage, it’s withdrawal is a blow to European authorities’ push for companies to secure deals with key battery metals suppliers.
It’s also a setback for Wealth as it grapples with a strategy being implemented in Chile to open new areas to lithium extraction. One of the company’s projects is in an area deemed of strategic importance, meaning it would have to take on a state-owned company as a majority partner.
Wealth Chief Executive Officer Henk van Alphen declined to comment on BASF’s exit. He said implementation of the government’s lithium strategy has been slow though progress is being made. Authorities next week are scheduled to announce details of firms interested in new contracts in nonstrategic salt flats.
July 2, 2024
Big Layoffs at C.H. Robinson
C.H. Robinson slashes over 50% of US sales team, sources say
Brokerage disputes number of workers recently laid off
· Monday, July 01, 2024
Truck brokerage giant C.H. Robinson Worldwide laid off around 80 members of its remaining 150 sales representatives in the U.S. on Thursday, according to sources familiar with the cuts.
The source said the sales division of the publicly traded brokerage has slashed U.S. sales jobs by around 89% over the past six years as it turned its focus from its people to embracing technology.
“We once had about 650 sales reps in the U.S. divisions, but that number dropped as C.H. Robinson’s focus switched from training and retaining talented people to its focus on technology,” the source, who asked to remain anonymous for fear of retaliation, told FreightWaves.
He estimates the current number of C.H. Robinson’s sales reps, whose jobs are solely to sell the brokerage’s services, as around 70 nationwide after Thursday’s job cuts. He clarified that some legacy brokerages count business development and account management positions that may overlap with the sales division as part of their total sales headcount. C.H. Robinson doesn’t.
In a statement, a spokesperson for Eden, Minnesota-based C.H. Robinson (NASDAQ: CHRW) disputed the number of sales representatives affected by the recent cuts but declined to provide a breakdown of the number of sales positions C.H. Robinson eliminated in the U.S. last week.
While the source said he was only aware of the job cuts in the U.S., a company spokesperson said C.H. Robinson doesn’t break down the number of laid off workers by country as the brokerage also has offices in Canada and Mexico.
In a statement provided to FreightWaves, the company said that “less than 2% of NAST [North American Surface Transportation] roles were impacted in June as a part of a restructuring to ignite growth and provide greater opportunity for our sales employees.”
“We are getting fit, fast and focused as a part of our enterprise strategy and new operating model geared at delivering exceptional and high-value service to customers and carriers,” the company said.
Despite rumors that major changes were coming to the largest freight brokerage, the source said few expected that more than half of the U.S. sales group would be gutted.
“You can’t cut your sales team, which is the heart of your organization, and think that’s going to get you better results in the long run,” the source told FreightWaves. “I think if the leadership knew what these salespeople brought to the table and how hard it is to train a salesperson, I think they would regret what they did Thursday, because it’s going to take C.H. Robinson a decade to recover from this decision.”
Another source, who asked to remain anonymous for fear of retaliation, formerly worked at C.H. Robinson. He said most of the sales reps who were let go worked with the brokerage’s smaller accounts but that management told them they weren’t being terminated for performance issues as most were meeting or exceeding sales goals.
“It’s just sad that C.H. Robinson is prioritizing technology over people,” the source told FreightWaves.
Tech takes center stage?
A C.H. Robinson employee said the brokerage used to value and invest in its people over technology until Bob Biesterfeld, the former president and CEO of the freight brokerage, announced the company was investing $1 billion in technology in 2019 in an effort to protect its market share. FreightWaves reported that Biesterfield stepped down from his executive position and resigned from C.H. Robinson’s Board in early January 2023.
On Feb. 3, 2022, FreightWaves reported that C.H. Robinson delayed the launch of Project Infinity a day before its Q4 2021 earnings report because of ongoing computer glitches as it tested updates to its Navisphere platform that forced carriers to book freight online instead of dealing with their long-term carrier representatives.
Since 2022, the company has slashed more than 2,400 employees across all its divisions worldwide, according to C.H. Robinson’s quarterly earnings reports. As of March 31, the company had nearly 15,000 employees, down from nearly 17,400 employees it had two years earlier.
Read related article: C.H. Robinson lays off 300 employees
More about layoffs
An employee, who did not want to be named for fear of retaliation, said C.H. Robinson management individually called several members from a sales team Thursday, informing them they no longer had positions with the brokerage.
The source said some had worked for the company for more than 15 years and were considered top performers among their group. He said he heard that some may have been offered different roles, including business development jobs within the brokerage, but didn’t know how many. The source acknowledged that some in the group had been struggling lately with meeting their goals because of the tight freight environment.
Read related article here: Over the past decade, C.H. Robinson lost its moat to innovation and competition
However, C.H. Robinson said it’s still hiring for new sales roles.
“As we continue to adapt to an ever-changing freight market, we are actively hiring for a range of new sales roles, portfolio executives and sales development team members. A winning business model is critical to ensuring growth and opportunities for our employees and the company over the long term,” the brokerage said of its hiring plans.
Following the layoffs, a source said most of the terminated sales reps’ business was divided among the company’s account managers, who also perform dual roles, including some sales functions, but added he worries about their being able to handle the extra workload on top of their own customers when the freight market improves.
“C.H. Robinson gave the freight community a gift when they fired these extremely talented and knowledgeable sales representatives,” the source said. “These good people that know the business will make an impact working for our competitors, for sure.”
July 2, 2024
FTC To Sue To Block Tempur Sealy Acquisition
FTC preparing lawsuit to block Tempur Sealy’s $4B acquisition of Mattress Firm
Jul. 02, 2024 7:51 AM ETTempur Sealy International, Inc. (TPX) StockBy: Joshua Fineman, SA News Editor
The Federal Trade Commission is poised to sue to block mattress maker Tempur Sealy’s (NYSE:TPX) $4 billion planned purchase of retailer Mattress Firm. Tempur Sealy ticked lower by 0.5% in premarket trading.
The regulator is concerned that combining the largest manufacturer and retailer would lead to higher prices and that Tempur Sealy (TPX) may discriminate against rival suppliers, according to a Politico Pro report late Monday, which cited three people familiar with the matter.
A lawsuit could be filed as soon as Tuesday, according to the report.
The Politico Pro piece comes after CTFN reported last Tuesday that the companies met with the FTC last week in a last effort to try to convince the regulator to not block the combination.
CTFN also reported on Thursday that the Tempur Sealy/Mattress Firm deal was expected to be the subject of closed door meeting at the FTC on Monday. Tempur Sealy (TPX), which agreed to buy Mattress Firm in a $4 billion deal in May 2023, had agreed to sell off some of its retail stores to try to appease the FTC, according to the earlier CTFN item.
June 24, 2024
Adnoc and Covestro Negotiations Heating Up
Adnoc Said Prepared to Boost Covestro Bid to Nearly €12 Billion
Eyk Henning and Dinesh Nair, Bloomberg News
Officials arrive for a tour of the Ruwais refinery and petrochemical complex, operated by Abu Dhabi National Oil Co. (ADNOC), in Al Ruwais, United Arab Emirates, on Monday, May 14, 2018. Adnoc is seeking to create world’s largest integrated refinery and petrochemical complex at Ruwais. Photographer: Christophe Viseux/Bloomberg , Bloomberg
(Bloomberg) — Covestro AG said it’s entering concrete negotiations with suitor Abu Dhabi National Oil Co. on a potential takeover that could value the German chemical company at about €11.7 billion ($12.5 billion).
The Middle Eastern energy giant indicated to Covestro it’s considering a potential offer of €62 per share, subject to confirmatory due diligence, according to a statement Monday that confirmed an earlier Bloomberg News report. The German company said that level is the “starting point” for the negotiations over an investment agreement.
Covestro agreed to exchange information with Adnoc to help it firm up the bid. Adnoc said in a separate statement that the potential bid of €62 per share is its final offer, indicating it won’t be raising any further after already bumping several times over the course of a year from its first proposal of €55 per share.
A final deal would represent Adnoc’s biggest-ever acquisition. Backed by tens of billions of dollars of oil money, the UAE state company has been scouring the world for deals. Chemicals is a big part of that push as the company sees demand for products that are used to make goods such as plastics continuing to rise over the coming decades even as the energy transition is likely to slow oil demand.
Arne Rautenberg, a portfolio manager at Union Investment who owns Covestro shares, said the potential offer of €62 per share is a “reasonable basis” for entering into concrete negotiations.
“From an investor’s perspective, however, there is still room for improvement,” Rautenberg said. “Covestro is in a better position in negotiations today than it was a year ago. The chemical industry is recovering globally, and so are the profit prospects for manufacturers.”
Bloomberg News reported earlier Monday that Covestro’s supervisory board was discussing its next move after Adnoc sent a formal letter of its intention to sweeten its bid to €62 per share, from €60 apiece, if in-depth due diligence goes well.
Shares of Covestro jumped as much as 7.3% in German trading Monday, hitting the highest intraday level since February 2022. They were up 6% to €54.34 at 3:35 p.m. in Frankfurt.
In recent days, Adnoc received the green light from senior government officials to boost its offer under the condition that it successfully conducts in-depth due diligence, people with knowledge of the matter said.
“We welcome Covestro AG’s decision to commence confirmatory due diligence on the basis of our final offer,” Adnoc said in an emailed statement. “Adnoc is a value-adding, responsible, long-term partner and growth-orientated investor, and we look forward to jointly working with Covestro to swiftly progress due diligence for this important transaction.”
Willingness to Raise
Adnoc had already verbally indicated its willingness to increase its latest bid of €60 per share, worth about €11.3 billion in total, Bloomberg News reported earlier this month. However, Covestro executives were seeking more formal, written assurances from the potential buyer before moving forward, some of the people said.
Covestro said Monday it intends to proceed with the deal negotiations in a timely manner.
“The discussions so far have shown that Covestro and Adnoc can generally reach a common understanding regarding core aspects of a possible transaction including support for Covestro’s further growth strategy,” Covestro said in the statement.
The Leverkusen-based plastics company and Adnoc have been in talks for a year now over a potential transaction that would be the largest acquisition of a European firm by a Middle Eastern buyer. Adnoc first informed Covestro’s management about its takeover interest mid-last year and subsequently improved its initial, non-binding offer of €55 per share to €57 and then to €60 per share, Bloomberg News has reported.
Adnoc has been pushing ahead with other deals in recent weeks. Last month it picked up stakes in gas projects in the US and Mozambique, and has ambitions to expand in chemicals and trading operations globally. It’s also increasing oil production capacity at home.
Other bids to buy Brazilian chemical company Braskem SA collapsed while plans to take out an Israeli company were suspended followed the war in the Gaza Strip. Talks with Austria’s OMV AG about combining their units to create a €30 billion giant has been on hold ahead of Austrian elections later this year. These had given rise to speculation that Adnoc’s dealmaking had lost momentum.
Klaus Froehlich, the former Morgan Stanley banker spearheading most of Adnoc’s international expansion plans, defended Adnoc’s position in an interview last month, saying the company was still pushing ahead with deals.
He added that said Covestro was “a great platform with a fantastic management team,” saying his company is a “firm believer in the future of the chemicals industry.”
–With assistance from Anthony Di Paola, Vinicy Chan and Crystal Tse.
June 17, 2024
Adnoc Covestro Update
Covestro close to granting Adnoc in-depth due diligence – report
Tue, 11th Jun 2024 12:15
(Sharecast News) – Covestro is reportedly close to granting Abu Dhabi National Oil Co. access to in-depth due diligence in expectation of an improved takeover bid, signalling fresh impetus for the talks between both parties after a year of negotiations.
Bloomberg cited people familiar with the matter as saying the German company plans to hold a supervisory board meeting on Wednesday to discuss the issue. It was understood that both firms made progress in recent weeks hashing out key aspects of a combination.
Adnoc has signalled it may slightly sweeten its latest non-binding offer of €60 per share – equivalent to €11.3bn ($12bn) – should the due diligence go well, sources told Bloomberg.
It was understood that the in-depth due diligence, if granted, will likely take place this month and any potential bump would only come in July. Covestro was said to be hoping that it may lead Adnoc to sweeten its bid by around €1 or €2 per share.
Such a step would break an impasse after Adnoc’s most recent bid failed to win over some parts of Covestro’s supervisory board, which refused to give the Abu Dhabi-based energy giant access to core parts of the data room, people familiar with the matter said late last year.
Bloomberg reported earlier this year that to work around the deadlock, Covestro responded to hundreds of questions about its operations Adnoc had asked for. But with the lack of tangible progress to getting a deal done, Covestro’s share price has declined since, increasing pressure on the firm’s management.
A representative for Adnoc declined to comment to Bloomberg while a spokesperson for Covestro said the company is in ongoing discussions with Adnoc “in accordance with our constructive and open-minded manner and in the interests of our company, our shareholders interests of our company, our shareholders and all other stakeholders”.
“As usual, the progress and outcome and the outcome of such discussions will depend on the ability of both parties to agree to agree on issues where they have differing views,” the spokesperson said. “We will continue to report on the outcome of our discussions.”
Earlier on Tuesday, markets blog Betaville said in an “uncooked alert” that Adnoc may have rekindled takeover talks with Covestro. It said there was speculation that Adnoc had recently been tapping up lenders for a debt financing package.
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