Nexi and SIA merger talks gain traction ahead of valuation review: sources

LONDON/MILAN (Reuters) – Italian payments firms Nexi (NEXII.MI) and SIA are exchanging confidential information as they explore a possible tie-up to create an Italian powerhouse in the sector, three sources familiar with the matter said.

Discussions may accelerate in June when the companies will review SIA’s valuation ahead of a possible deal, one of the sources said.

“This will be a make or break moment,” the source said, cautioning that establishing a fair value for SIA may prove a key hurdle.

Nexi and SIA declined to comment. Nexi’s boss Paolo Bertoluzzo said on May 12 that discussions with SIA were ongoing.

Nexi is working with Bank of America and Mediobanca on the deal, and SIA with JPMorgan and Rothschild, two of the sources said.

Milan-based SIA provides payment services for the banking sector and counts top bank UniCredit (CRDI.MI) among its clients.

SIA’s relationship with UniCredit is weighing on its valuation, as a key contract between the two can be ended after 2021, the first source said.

UniCredit may turn to alternative providers or renegotiate the contract’s terms, another source said earlier this month.

“There needs to be more clarity on what will happen with UniCredit,” the first source said.

SIA may still pursue a stock market listing if the discussions fall through, two of the sources said.

Shares in Nexi closed up 7.7% after Bloomberg first reported the talks.

Jefferies analysts said a tie-up could generate annual cost synergies of more than 100 million euros ($109.5 million).

SIA is controlled by Italian state lender CDP through investment vehicle FSIA Investimenti, which owns a 57.42% stake.

CDP also owns 25.69% of SIA via its holding company CDP Equity and is expected to be a key shareholder in any combined entity, banking sources said.

Nexi is majority owned by buyout funds Bain Capital, Clessidra and Advent through their Mercury UK vehicle.

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Goldman Sachs to buy boutique wealth management custodian Folio

NEW YORK (Reuters) – Goldman Sachs Group Inc (GS.N) plans to buy a boutique wealth management custodian and technology company called Folio Financial Inc for an undisclosed amount of money, according to a letter that Folio sent to its customers on Thursday and was viewed by Reuters.

Folio would be the second wealth management company Goldman has acquired in two years, following United Capital in 2019, and it fulfills Chief Executive David Solomon’s goals to build out the bank’s other businesses.

A Goldman Sachs spokesman confirmed plans for the acquisition and the contents of the letter but declined to comment further. Both companies declined to comment on the price of the acquisition, saying it was not material information for investors. Typically, companies are required to disclose to investors the price paid for acquisitions on deals worth more than $500 million.

Based in McLean, Virginia, Folio has roughly 160 employees and $11 billion in assets under custody for registered investment advisers, or RIAs. RIAs are independent, often smaller wealth management firms that sell investment products from a number of financial services providers, rather than from one bank or fund company.

Wealth management firms are required to custody, or keep, clients’ money at a third-party financial institutions to make sure it is safe, and they pay that third party a fee.

Goldman has made investment products and funds for RIAs, as well as operated several RIAs in its asset management business for years. The Folio acquisition will build out the services Goldman already provides, and give it access to Folio’s technology, as well as the ability to earn fees from being the custodian of assets for other firms.

By joining Goldman, Folio said it gains a global audience to market its investment technology to, a long-term goal of the firm, Folio Chief Executive Steven Wallman wrote in the letter to customers.

The execution, clearing and custody business would be incorporated into Goldman’s global markets division. Folio also has a few RIA firms, which will join Goldman’s consumer and investment management division.

Several of Folio’s RIAs focus on environmental, social and governance (ESG) investing strategies, an area of investment expertise that Goldman has been building out in recent years.

The deal, which was in the works since mid-2019, is subject to regulatory approval. The companies hope to finalize it by the end of the third quarter, according to the letter.

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US announces multi-million dollar contract to ramp up mask production

The Pentagon – the Department of Defence headquarters – announced the news yesterday. The contract, which is with manufacturer 3M, is understood to be worth $126 million.

However, it won’t come into force until October of this year, according to Pentagon spokesperson Lt. Col. Mike Andrews.

The increased production capacity will ensure that the supply chain of the N95 masks is sustainable, and will help resupply the US national stockpile, the DoD said.

A Pentagon statement reads: “This increased production/industrial capacity will continue to ensure a sustainable supply chain of N95 masks and resupply the Strategic National Stockpile in response to the increased national demand caused by the Covid-19 pandemic.”

In order to carry out the planned production boost, 3M will have to expand its manufacturing facility in Aberdeen in South Dakota.

The DoD also said that “3M has already placed orders for raw material and two new N95 manufacturing lines.”

The increased production will mean that the firm will make at least 312 million N95 masks annually “within the next twelve months”.

But it isn’t the first time this year that 3M has been awarded a contract to produce millions of N95 masks.

The recent contract comes after the US DoD announced on April 11 that it would spend $133 million in contracts for N95 masks.

3M is understood to have received the largest share of that amount at the time at $76 million, according to Bloomberg.

That announcement, made under the Defense Production Act – also outlined that three companies, 3M, Honeywell International, and Halyard would between them produce a total of 39 million masks over three months.

Based on that, the most recent contract with 3M is presumably separate.

N95 masks are an item of personal protective equipment (PPE) that are used to protect the wearer from airborne particles and liquid.

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Although the US Centers for Disease Control and Prevention (CDC) recommends that members of the public should wear simple cloth face coverings in public, they advise against the use of N95 masks in the general public.

This is to ensure that there are enough of the N95 masks for medical staff and care workers.

The recent contract with 3M will see the firm producing 26 million masks per month, but although this sounds like a lot, the manufacturer recommends that they are designed for one-time use.

The CDC states: “Those are critical supplies that must continue to be reserved for health care workers and other medical first responders, as recommended by current CDC guidance.”

But regarding cloth face masks, the CDC states that it “recommends wearing cloth face coverings in public settings where other social distancing measures are difficult to maintain (e.g., grocery stores and pharmacies) especially in areas of significant community-based transmission.”

The CDC issued the guidance in light of evidence suggesting that people can spread the virus before they have symptoms.

But it stresses that masks should not be used as a substitute for other social distancing measures, emphasising that 6-feet social distancing “remains important” for slowing the spread of Covid-19.

Cloth face masks could be fashioned from household items or common materials at low cost, the CDC suggests.

Meanwhile in the UK, cabinet minister Michael Gove said that 149 million masks had been sent out in England by May 2, the BBC reports.

Though it is unclear how many of these are N95 or equivalent, as opposed to loose-fitting surgical masks.

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Venezuela prison riot leaves more than 40 dead

More than 40 people were reportedly killed after rioting broke out at a prison in Venezuela.

Inmates at Los Llanos jail, near western Guanare city, were angry at a lack of food and water, according to the Venezuelan Prison Observatory.

The organisation called for an investigation, casting doubt on the official version that the prisoners had attempted a jail-break.

Prison staff including the governor were wounded in the incident.

The Prisons Minister Iris Varela told a Venezuelan newspaper that there had been an incident at the jail but did not give a death toll. The incident was described as an escape attempt in that report.

Riots in the unsanitary and overcrowded prisons of Latin America have been increasing as governments introduce containment measures to help slow the coronavirus outbreak.

Quarantine measures may mean that inmates cannot receive food brought by relatives, on which they may depend.

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The observatory, a prison watchdog, said 46 inmates had died and the local hospital’s emergency department was overwhelmed with the number of wounded.

Opposition National Assembly member Maria Beatriz Martinez, tweeting from outside the prison (in Spanish), described the incident as a “massacre” and said relatives understood their loved ones would be buried in mass graves. They were demanding the bodies be returned to them, they said.

As well as the coronavirus pandemic, Venezuela is engulfed in a political crisis with two rival politicians claiming to be the country’s legitimate leader.

Under President Nicolás Maduro the economy has collapsed and shortages of basic commodities have become widespread. Millions of people have fled to neighbouring countries.

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French life will not be normal after May 11, Macron says

PARIS (Reuters) – President Emmanuel Macron warned on Friday that ending the national lockdown on May 11 would be only a first step for France to pull out of the coronavirus crisis, for which his handling faces mounting criticism.

Traditional Labour Day protests that usually draw thousands of demonstrators to the streets were cancelled this year due to the virus outbreak that has killed over 24,500 people across France.

“May 11 will not be the passage to normal life. There will be a recovery that will need to be organised,” Macron said in a speech at the presidential palace after a meeting with horticulturists. “There will be several phases and May 11 will be one of them.”

Unions organised online activities, asked people to bang pans and put out banners on balconies to mark labour day. Police disbanded a small protest in central Paris.

It was in stark contrast to this time last year when tens of thousands of labour union and “yellow vest” protesters were on the streets across France demonstrating against Macron’s policies. The protests were marred when dozens of masked and hooded anarchists clashed with riot police.

Macron, in a message on his Twitter account, lauded the traditional parades and French workers, urging unity and solidarity during these tough times.

“There is a strong desire to once again find the joyful, although sometimes bickering May 1, which makes our nation. My dear compatriots, we will find them, those happy May 1sts!”

But highlighting the rocky path ahead, union officials and far-right opposition leader Marine Le Pen were quick to underscore their concerns amid the crisis.

“Even if today we are confined, our demands are not,” Yves Veyrier, head of the Force Ouvriere union, told France Inter radio.

Le Pen pressed ahead with her party’s annual May 1 tradition of honouring mediaeval heroine Joan of Arc by laying a wreath at the golden statue of the 15th century warrior in central Paris, despite the lockdown.

“I’ve never said I had doubts about the confinement. I just said that complete confinement was the solution when we failed to prevent the epidemic,” Le Pen, wearing a mask, told reporters.

“A successful end to the lockdown is with tests for everybody, masks for everybody and I’m against schools opening before September.”

While trust in the government has fallen in recent polls, Le Pen’s repeated criticism of the government since the onset of the crisis appeared to have backfired. In an Elabe poll for Les Echos, her rating fell 3 points to 23% in April.

ENDING THE LOCKDOWN

From May 11, schools will gradually reopen and businesses will be free to resume operations after the country’s 67 million population has been in confinement since mid-March.

The government has said it is prepared to slow or delay the unwinding of the lockdown if the virus infection rate spikes markedly higher, with administrative departments divided into ‘red’ and ‘green’ zones.

Northeastern France, including the Paris region, has been especially hard hit, while swathes of the west and south of the country have barely been impacted, raising a dilemma for the government over how to ease the lockdown ahead of the busy summer tourism season.

While indicators in terms of intensive care cases and hospitalizations have been on a downward trend for more than two weeks, there are still warning signs.

Speaking to reporters on Friday, Jerome Salomon, head of the public health authority, said the disease’s reproduction rate, known as the RO, had risen in France over recent days to between 0.6-0.7 on average from 0.5.

“This is because of a progressive return to activity,” he said.

The number is one of several indicators authorities are watching. Public health experts say an R number of 1 or above would make it impossible to loosen lockdowns.

Opposition lawmakers and some experts have questioned the practicalities of schools reopening, broad use of public transport and tough measures that will continue to impact areas less affected by the virus.

Question marks have also been raised about the government’s ability to reach its target of 700,000 COVID-19 tests by May 11, their implementation and the possible isolation of people who test positive for the illness.

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Turkey to minimise troop movements to lower coronavirus risks

Defence ministry says the movement of staff and troops in Syria to be minimised in response to the coronavirus outbreak.

Turkey has said it would minimise its troop movements in operation zones in neighbouring Syria as part of the measures to fight the coronavirus pandemic, as the Turkish death toll and infections continue to rise.

The country’s death toll from the COVID-19 disease has risen by 73 to 574 in the last 24 hours, with new confirmed cases jumping by 3,135 to total 27,069, Health Minister Fahrettin Koca said on Sunday.

Turkey has the ninth-highest number of confirmed cases, according to a tally by United States-based Johns Hopkins University. It has curbed much social movement, mostly sealed its borders and shuttered businesses in measures against the new coronavirus.

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In the latest step, the defence ministry said it had set up a new unit to battle the spread of the disease.

Troops deployed in Syria would now enter and exit operation areas only with the permission of the head of the army, the ministry said. “Thus, the movement of staff and troops is minimised, unless it is mandatory,” it added.

Turkey’s military backs Syrian rebels in the northwestern Idlib region where it ramped up a deployment earlier this year. Fighting has calmed since Ankara agreed upon a ceasefire with Moscow, which backs Syrian government forces, last month.

In Idlib, where about a million people have been displaced by the conflict since December, doctors fear the worst if the coronavirus hits, given hospitals lie in ruins and camps overflow with people devastated by nine years of war.

Medical training

Turkey’s defence ministry said doctors had been sent to operation areas in part to conduct training related to the severe respiratory disease. The Turkish military also oversees Syrian border regions to the east of Idlib.

Meanwhile in Turkey, the outbreak has surged in the last few weeks, with new cases climbing daily.

The government recently issued a mandatory confinement order for most Turks under 20, on top of the existing order for over-65s. 

Public and private sector employees, as well as seasonal agricultural workers aged between 18 and 20, were exempted from the new rule.

It also ordered mandatory mask use in crowded public places, shops and workplaces.

On Sunday, the government said residents could apply online for five free masks per week delivered via the post, in the latest series of nationwide measures.

Prior to the latest measures, the Turkish authorities closed schools, suspended international flights and banned mass prayers and gatherings to stem the spread of the virus in the country of approximately 83 million people.

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Italy's Generali not worried about takeovers thanks to core shareholders, strong capital

MILAN (Reuters) – Italy’s top insurer, Assicurazioni Generali (GASI.MI), said on Saturday it was confident of being able to rebuff a potential takeover bid, thanks to a “solid” group of core domestic shareholders and a strong capital and financial position.

In answers to investors posted on its website ahead of next week’s annual general meeting, the insurer said it was “very solid from an operational and financial point of view as well as in terms of capital and governance”.

Generali’s smaller market capitalisation has fuelled speculation in the past that it could become an acquisition target for larger rivals such as France’s AXA (AXAF.PA) or Switzerland’s Zurich Insurance (ZURN.S).

Sources told Reuters last month that a parliamentary committee on security was looking into the ownership structure of Italy’s top financial groups with a focus on possible changes at UniCredit (CRDI.MI) and Generali.

By driving down Italian stock prices, the coronavirus pandemic has heightened concerns that top financial institutions could fall into foreign hands, prompting the government to broaden special powers it has over sectors deemed strategic – to include banks and insurers.

Generali, whose biggest shareholder is Milanese financial group Mediobanca (MDBI.MI), is 28.5% owned by a group of Italian investors including eyewear billionaire Leonardo Del Vecchio.

Del Vecchio is also the top shareholder in Mediobanca.

Generali reiterated that there was no reason to doubt the group’s stability, even if the final impact of the COVID-19 crisis was still uncertain.

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Johnson & Johnson abandons deal for Takeda's TachoSil surgical patch

WASHINGTON (Reuters) – Johnson & Johnson (JNJ.N) said on Friday it abandoned plans to buy Takeda Pharmaceutical’s surgical patch product TachoSil, citing regulatory issues.

Takeda (4502.T), Japan’s biggest drugmaker, announced the sale of TachoSil, a surgical patch to control bleeding, to Johnson & Johnson’s subsidiary Ethicon for $400 million last May.

“Ethicon and Takeda have mutually decided to terminate the TachoSil transaction, agreeing that it was the right decision given the regulators’ concerns,” a representative for Johnson & Johnson said in a statement.

The chairman of the Federal Trade Commission, Joseph Simons, said earlier on Friday there were potential regulatory issues about the deal because Johnson & Johnson sells Evarrest, the only other U.S.-approved fibrin sealant patch designed to stop bleeding during surgery.

“Staff had significant concerns about the likely anticompetitive effects and had recommended that the Commission block the transaction. Now that the deal has been abandoned, patients and surgeons will continue to benefit from competition,” Simons said in an email statement.

In late March, European Union antitrust regulators had expressed concern about the deal and opened a full investigation, saying that high development costs meant rivals would find it difficult to enter the market.

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