Exclusive: Buyout firm Sycamore Partners in talks to buy J.C. Penney – sources


NEW YORK (Reuters) – Private equity firm Sycamore Partners is in preliminary talks to acquire J.C. Penney Co Inc (JCP.N) out of bankruptcy should the U.S. department store chain’s negotiations with its creditors fail, three people familiar with the matter said on Friday.

FILE PHOTO: Shoppers enter and leave the J.C. Penney department store in North Riverside, Illinois, U.S., November 17, 2017. REUTERS/Kamil Krzaczynski/File Photo

J.C. Penney, which employs roughly 85,000 people, filed for bankruptcy protection in May after the coronavirus pandemic forced it to temporarily close its more than 800 stores across the United States, compounding financial woes that stemmed from years of dwindling sales.

Sycamore is weighing acquiring J.C. Penney outright or making an investment in the troubled retailer, the sources said.

There is no certainty that the talks between Sycamore and J.C. Penney will result in a deal, which would require a bankruptcy judge’s approval, the sources said.

J.C. Penney is also in touch with some of its landlords, including Brookfield Asset Management Inc (BAMa.TO) and Simon Property Group (SPG.N), about possible transactions, the sources said. Under one scenario being explored, Sycamore, Brookfield and Simon would join forces on a bid for J.C. Penney, two of the sources said. Wells Fargo & Co (WFC.N) is also involved in the discussions, one of the sources said.

J.C. Penney shares surged 47% after Reuters reported on the talks, ending the day up 55% to close at 32 cents.

The sources requested anonymity because the discussions are confidential. Sycamore and J.C. Penney declined to comment. Brookfield had no immediate comment while Simon and Wells Fargo did not immediately respond to requests for comment.

J.C. Penney is in discussions about handing over control to its lenders in exchange for reducing its nearly $5 billion of debt. This hinges on a slew of investment firms that hold the company’s senior debt and have provided the company’s bankruptcy financing agreeing to J.C. Penney’s business plan by July 14.

If the Plano, Texas-based company does not persuade enough lenders to approve its plan by the following day, July 15, the terms of its bankruptcy loan require J.C. Penney to abandon its reorganization efforts and pursue a sale.

It is unclear how much Sycamore is willing to pay for J.C. Penney, which is in the process of permanently closing stores and cutting jobs.

Sycamore, a New York private equity firm that specializes in retail and consumer investments, has in the past taken control of high-profile businesses such as office supplies chain Staples, women’s clothing retailer Talbots and department-store operator Belk.

Last month, Sycamore walked away from a $525 million deal to buy a majority stake in L Brands Inc’s (LB.N) Victoria’s Secret, as the pandemic hammered sales at the lingerie chain.

Brookfield and Simon operate malls across the United States. Brookfield in May said it would devote $5 billion to non-controlling investments designed to revitalize retailers struggling in the wake of the coronavirus outbreak.

During a court hearing on Thursday, U.S. Bankruptcy Judge David Jones approved fresh financing from senior lenders to aid J.C. Penney’s operations while it navigates Chapter 11 protection, and expressed concern the 118-year old chain needed to restructure quickly to survive.

In July, the lenders will “decide whether the dream lives or the dream dies,” said Cathy Hershcopf, a creditors’ lawyer, during the hearing.

David Kurtz, a Lazard Ltd (LAZ.N) banker representing J.C. Penney, said during the hearing that “four major institutions” had signed confidentiality agreements to discuss working with the company and its lenders on the retailer’s restructuring. He did not name them.

Sycamore, Brookfield, Simon and Wells Fargo are the four unnamed parties, one of the sources said.

Under a plan being discussed with its creditors, J.C. Penney would be split into two companies. One would be a real estate investment trust that would hold some of the company’s property and lease it back to J.C. Penney. The other would operate J.C. Penney’s retail business.

Joshua Sussberg, a Kirkland & Ellis LLP lawyer representing J.C. Penney, said during Thursday’s court hearing that the company needed to persuade lenders negotiating to take control of the restructured business to keep it alive and that he planned to hold them accountable for how the case ended.

FILE PHOTO: A J.C. Penney Company Inc. store is pictured at a mall in Langhorne, Pennsylvania, U.S. November 17, 2018. REUTERS/Suzanne Barlyn/File Photo

Even in less-fraught times, many retailers, including Barneys New York Inc and Toys ‘R’ Us, have failed to reorganize under bankruptcy protection and gone out of business for good.

J.C. Penney on Thursday said it plans to permanently close 154 stores, and may shut more. It has so far reopened nearly 500 stores that were closed due to the pandemic, and plans to bring additional locations online in coming weeks. Still, concerns remain that customers might be slow to return amid health concerns and job losses not seen since the Great Depression.

J.C. Penney is also seeking permission from landlords to skip rent payments for June, July and August, Sussberg said last week.

Reporting by Mike Spector and Jessica DiNapoli in New York; Editing by Daniel Wallis



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Exclusive: Buyout firm Sycamore Partners in talks to buy J.C. Penney


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© Reuters. FILE PHOTO: Shoppers enter and leave the J.C. Penney department store in North Riverside

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By Mike Spector and Jessica DiNapoli

NEW YORK (Reuters) – Private equity firm Sycamore Partners is in preliminary talks to acquire J.C. Penney Co Inc (N:) out of bankruptcy should the U.S. department store chain’s negotiations with its creditors fail, three people familiar with the matter said on Friday.

J.C. Penney, which employs roughly 85,000 people, filed for bankruptcy protection in May after the coronavirus pandemic forced it to temporarily close its more than 800 stores across the United States, compounding financial woes that stemmed from years of dwindling sales.

Sycamore is weighing acquiring J.C. Penney outright or making an investment in the troubled retailer, the sources said.

There is no certainty that the talks between Sycamore and J.C. Penney will result in a deal, which would require a bankruptcy judge’s approval, the sources said.

J.C. Penney is also in touch with some of its landlords, including Brookfield Asset Management Inc (TO:) and Simon Property Group (N:), about possible transactions, the sources said. Under one scenario being explored, Sycamore, Brookfield and Simon would join forces on a bid for J.C. Penney, two of the sources said. Wells Fargo & Co (N:) is also involved in the discussions, one of the sources said.

J.C. Penney shares surged 47% after Reuters reported on the talks, ending the day up 55% to close at 32 cents.

The sources requested anonymity because the discussions are confidential. Sycamore and J.C. Penney declined to comment. Brookfield had no immediate comment while Simon and Wells Fargo did not immediately respond to requests for comment.

J.C. Penney is in discussions about handing over control to its lenders in exchange for reducing its nearly $5 billion of debt. This hinges on a slew of investment firms that hold the company’s senior debt and have provided the company’s bankruptcy financing agreeing to J.C. Penney’s business plan by July 14.

If the Plano, Texas-based company does not persuade enough lenders to approve its plan by the following day, July 15, the terms of its bankruptcy loan require J.C. Penney to abandon its reorganization efforts and pursue a sale.

It is unclear how much Sycamore is willing to pay for J.C. Penney, which is in the process of permanently closing stores and cutting jobs.

Sycamore, a New York private equity firm that specializes in retail and consumer investments, has in the past taken control of high-profile businesses such as office supplies chain Staples, women’s clothing retailer Talbots and department-store operator Belk.

Last month, Sycamore walked away from a $525 million deal to buy a majority stake in L Brands Inc’s (N:) Victoria’s Secret, as the pandemic hammered sales at the lingerie chain.

Brookfield and Simon operate malls across the United States. Brookfield in May said it would devote $5 billion to non-controlling investments designed to revitalize retailers struggling in the wake of the coronavirus outbreak.

During a court hearing on Thursday, U.S. Bankruptcy Judge David Jones approved fresh financing from senior lenders to aid J.C. Penney’s operations while it navigates Chapter 11 protection, and expressed concern the 118-year old chain needed to restructure quickly to survive.

In July, the lenders will “decide whether the dream lives or the dream dies,” said Cathy Hershcopf, a creditors’ lawyer, during the hearing.

David Kurtz, a Lazard Ltd (N:) banker representing J.C. Penney, said during the hearing that “four major institutions” had signed confidentiality agreements to discuss working with the company and its lenders on the retailer’s restructuring. He did not name them.

Sycamore, Brookfield, Simon and Wells Fargo are the four unnamed parties, one of the sources said.

Under a plan being discussed with its creditors, J.C. Penney would be split into two companies. One would be a real estate investment trust that would hold some of the company’s property and lease it back to J.C. Penney. The other would operate J.C. Penney’s retail business.

Joshua Sussberg, a Kirkland & Ellis LLP lawyer representing J.C. Penney, said during Thursday’s court hearing that the company needed to persuade lenders negotiating to take control of the restructured business to keep it alive and that he planned to hold them accountable for how the case ended.

Even in less-fraught times, many retailers, including Barneys New York Inc and Toys ‘R’ Us, have failed to reorganize under bankruptcy protection and gone out of business for good.

J.C. Penney on Thursday said it plans to permanently close 154 stores, and may shut more. It has so far reopened nearly 500 stores that were closed due to the pandemic, and plans to bring additional locations online in coming weeks. Still, concerns remain that customers might be slow to return amid health concerns and job losses not seen since the Great Depression.

J.C. Penney is also seeking permission from landlords to skip rent payments for June, July and August, Sussberg said last week.



Cable Pares Gains After U.K. Dismisses Report of Compromise on Brexit Talks By Investing.com



© Reuters.

By Yasin Ebrahim

Investing.com – The pound eased from one-month highs against the dollar on Tuesday, after failing to break a key technical trading level after the U.K. dismissed reports that Prime Minister Boris Johnson was ready to compromise on key sticking points that have stifled progress in post-Brexit talks.

rose 0.34% to $1.2541, but had jumped as high as $1.2575, testing its 100-day moving average, a key technical level at around $1.2573.

The U.K. has expressed a desire to take control over access to its waters and fish when the transition period ends, rather stick with the EU’s Common Fisheries Policy, which set fishing quotas among EU member states.  

The Prime Minister’s official spokesman reportedly said that reports suggesting the U.K. is ready to compromise on fisheries and level playing field rules was “wishful thinking by the EU.”

“We have always been clear there is no question of splitting the difference on level playing field and fish,” he added. 

The remarks added to growing concerns over a lack of progress on negotiations so far, ahead of the fourth round of post-Brexit talks, which get underway today before both sides take a break to assess progress.

With the clock running down on the end of June deadline for U.K. to request an extension on trade talks of up to two years, many have warned the path ahead for sterling will likely be fraught with challenges amid a weaker economic backdrop.

Data on Tuesday showed a sharp fall in U.K. mortgage approvals in April, and house prices suffering the steepest monthly decline in 11 years.

“There are significant headwinds to demand in prospect–higher unemployment, falling wages and significant economic uncertainty,” HSBC said.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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South Korea to resume WTO complaint over Japan’s export curbs after talks stall By Reuters



© Reuters. FILE PHOTO: An industrial port is pictured in Tokyo

By Hyunjoo Jin

SEOUL (Reuters) – South Korea said on Tuesday it would recommence proceedings against Japan at the World Trade Organization over export controls on some high-tech materials, adding that talks to resolve the dispute had so far failed to make progress.

Seoul plans, however, to continue dialogue with Tokyo which it accuses of not showing sufficient commitment to resolving problems, while proceeding with the WTO complaint.

“Our government has reached the conclusion that it is difficult to see this situation progressing through normal dialogue, which had been the condition for us suspending procedures to settle this through the WTO,” South Korea’s deputy minister for trade & investment, Na Seung-sik, told reporters.

“Through the WTO complaint, we will prove the illegality and unfairness of Japan’s export controls and raise international awareness,” he added.

Bilateral relations deteriorated after South Korea’s Supreme Court in 2018 ordered two Japanese companies to compensate wartime workers in a ruling that Tokyo said violated international law. Japan says the issue of compensation was settled under a 1965 treaty.

Following the ruling, the Japanese government said in July last year it would stop preferential treatment for shipments to South Korea of three materials whose production it dominates and which are used by firms such as Samsung Electronics (OTC:) Co Ltd.

Curbs on two of the materials – hydrogen fluoride, used as an etching gas in the chipmaking process and fluorinated polyimides, used in smartphone displays – remain in place and exporters need to gain permission for each shipment, which takes around 90 days.

A Japan trade ministry official said Tokyo will decide on its next course of action after seeing details of South Korea’s announcement.

Although the curbs have led to a sense of crisis within Korea Inc about its dependence on some Japanese goods, South Korea has not seen major disruptions to imports of those materials due to the efforts of South Korean firms, Na said without elaborating.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Exclusive: Argentine debt talks could reach a breakthrough in days


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© Reuters. Pedestrians walk past the facade of the Buenos Aires Stock Exchange, in Buenos Aires

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By Hugh Bronstein

BUENOS AIRES (Reuters) – Argentina’s talks with creditors over restructuring around $65 billion in foreign debt could reach a breakthrough “in a matter of days,” a source close to the negotiations and familiar with the government’s thinking told Reuters on Friday.

“There has been notable progress and a comprehensive deal is certainly possible in a matter of days, not months,” the person said, asking not to be named as the talks were private.

The crisis-prone country missed payments on about $500 million in already delayed bond coupons on Friday, creditors and a ratings agency said, marking Argentina’s ninth sovereign default.

The South American grains producer is at a critical point in bondholder talks that are key to avoiding a messy default like the one in 2001 that locked the country out of the international bond market for 15 years and tossed millions of middle-class Argentines into poverty.

“The negotiations continue on a course that we consider positive, with increasing mutual understanding. There is still an important distance to cover, but, more importantly, all sides remain at the table to find a solution,” the Economy Ministry said in a statement.

Argentina, already in recession before the economy got further drubbed by a coronavirus lockdown that began in March, has pushed the deadline for a deal to June 2 amid signs the two sides may be edging closer to an accord.

“The language in the sovereign’s press statement was notably softer than previously, which we have noted with appreciation,” said a source at one of the investment firms involved in the talks.

“However, the ball is in their court and we are still waiting to see a meaningful level of engagement on the remaining issues outstanding. I think a deal is possible in days but I am not betting on it,” said the investor, who asked not to be named.

Early on Friday, a group representing BlackRock (NYSE:), Ashmore and other investors acknowledged the government’s willingness to work with bondholders but said “over the last month, Argentina has had virtually no substantive engagement with its creditors.”

Explainer on Argentina’s debt conundrum:

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Britain, EU dig in their heels in trade talks By Reuters


© Reuters. A pound coins are placed on broken glass and British flag in this illustration picture taken

BRUSSELS (Reuters) – Talks between Britain and the European Union on their new trade relationship made little progress this week, sources with the bloc said on Friday, with persistent differences on key areas weighing on chances for a deal by the end of the year.

That is when Britain is due to leave its status-quo transition period after exiting the EU earlier this year and both sides are now locked in talks on new cooperation rules from 2021 from trade to fisheries to security.

“Both sides agreed to disagree,” said one diplomat following Brexit in the EU hub Brussels as the penultimate round of scheduled negotiations wrapped up on Friday before a key deadline at the end of June.

That is when both sides are to assess progress so far and agree on any extension of talks, which London has refused to do.

Unless prolonged, the EU says any talks would need to wrap up around October to allow enough time for ratification of any new deal by the bloc’s parliament and the 27 national capitals.

EU sources said fundamental disagreements persisted on the level playing field guarantees of fair competition, fisheries and oversight role of the bloc’s top court, among other issues.

The bloc is pushing for a much closer relationship with Britain than the one envisaged by London, where Prime Minister Boris Johnson was a leading face of the Brexit campaign.

London said on Thursday Britain would not give up its rights as an independent state by bending to EU demands in talks on a future relationship.

Britain rejects many of the strings the bloc wants to attach to continued close cooperation and there has been no breakthrough on the main sticking points this week, the EU sources said ahead of a news conference by the bloc’s Brexit negotiator, Michel Barnier, later on Friday.

Britain would risk crashing out of its current elaborate EU links if no new agreement is reached or extra time granted, which would be the most damaging scenario for businesses on both sides of the English Channel.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



China, U.S. hold trade talks on implementation of signed phase one deal


(Reuters) – Chinese Vice Premier Liu He, U.S. Treasury Secretary Steven Mnuchin and United States Trade Representative Robert Lighthizer held a phone call late on Thursday in which they spoke about U.S.-China trade, the U.S. government said in a statement.

The talk included the phase one agreement between the two countries signed earlier this year, the statement by the U.S. Treasury Department and Trade Representative’s office after the call said.

The two sides agreed there was “good progress” made to meet the phase one agreement and that they expect to meet the obligations under the deal, it said.

The talks come as tensions have flared up between Washington and Beijing in recent days over the origins of the coronavirus.

Reporting by Kanishka Singh in Bengaluru; Editing by Muralikumar Anantharaman



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Telefonica confirms talks to merge Britain’s O2 and Virgin Media By Reuters


© Reuters. FILE PHOTO: A man walking past an O2 phone store in Manchester

MADRID (Reuters) – Spain’s Telefonica SA (MC:) confirmed on Monday it has opened talks with billionaire John Malone’s Liberty Global Plc (O:) over a possible merger of the two companies’ businesses in Britain.

The talks to merge Telefonica’s British mobile operator O2 and Liberty’s Virgin Media network company have just started, the Spanish company said.

“The process started between both parties is in the negotiation phase, with no guarantee, at this point, of its precise terms or its probability of success,” Telefonica said in a filing to the Spanish market regulator.

Two sources familiar with the matter told Reuters on Friday that talks were ongoing.

In a two-paragraph statement on Monday, Telefonica said it would keep markets informed if a “satisfactory agreement” were reached.

Telefonica’s UK business, which includes O2, generated 7.11 billion euros in revenue in 2019, around 14.7% of the group’s total, and had 34.5 mobile connections on its network.

Virgin Media competes with UK pay-TV market leader Sky, owned by Comcast (O:), in pay-TV, and with BT (L:), Sky, TalkTalk and others in broadband.

It had 6 million cable customers and 3.3 million mobile customers as of the end of 2019.

Telefonica, due to report quarterly earnings on Thursday, has been weighing options for the mobile business since 2016 when a previous 10.3 billion pound ($12.8 billion) O2 takeover bid from Three UK, controlled by CK Hutchison Holdings (HK:), was blocked by European antitrust regulators.

A combination of O2 and Virgin Media would reshape Britain’s telecoms industry, leaving Hutchison and Vodafone (L:) without their own fixed-line consumer networks and raising the pressure on BT.

A deal between Telefonica and Liberty would end uncertainty around the fate of one Britain’s biggest mobile operators after it was repeatedly touted as a possible candidate for a sale or a stock listing in recent years.

It would also offer Telefonica a way to partially cash out from O2 while retaining a presence in Britain, which the company sees as one of its core markets along with Spain, Germany and Brazil.

The Spanish company has said last year it plans to raise 2 billion euros ($2.2 billion) in extra revenue by hiving off parts of its Latin American businesses and focusing on its core markets.

 

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Bayer more stringent in glyphosate settlement talks due to downturn


FRANKFURT (Reuters) – Bayer said the economic downturn and the need to preserve cash means it is taking a tougher stance in talks to settle claims its glyphosate-based weedkillers cause cancer, even as its earnings rose.

The logo of Bayer AG is pictured at the facade of the historic headquarters of the German pharmaceutical and chemical maker in Leverkusen, Germany, April 27, 2020. REUTERS/Wolfgang Rattay

The pandemic has significantly slowed the mediation process, the German drugs and pesticides company said in a statement on Monday.

“The company will consider a deal only if it is financially reasonable and puts in place a mechanism to resolve potential future claims efficiently,” Chief Executive Werner Baumann said.

“This applies now more than ever,” he added, citing a looming recession and considerable liquidity challenges as a result of the coronavirus pandemic.

The number of U.S. plaintiffs blaming its glyphosate-based weedkillers for their cancer reached 52,500, up from 48,600 in February, the company added.

Bayer denies claims that Roundup – or its active ingredient glyphosate – cause cancer, saying decades of independent studies have shown it to be safe for human use.

The company said first-quarter adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) rose 10.2% to 4.39 billion euros ($4.76 billion), surpassing average analyst expectations of 4.17 billion, according to Refinitiv data.

Bayer, which is due to hold its annual shareholder meeting in a virtual format on Tuesday, warned that it was unable to assess the impact of the pandemic on results this year.

The first-quarter beat was driven by a 14% gain in earnings at the agriculture division from higher sales of crop chemicals and corn seeds. Earnings were further underpinned by a 19% increase in revenue from stroke prevention drug Xarelto.

Bayer also pointed to the stockpiling of drugs as consumers purchased over-the-counter products and patients sought additional prescriptions as a safety net as the coronavirus spread.

Operating cash flow, however, fell to an outflow of 189 million euros, down from an inflow of 1 billion a year earlier, as it brought forward the settlement of agriculture payables and receivables were paid later.

“Despite this good performance, we have a question mark regarding cash-flows,” said Bryan Garnier analyst Jean-Jacques Le Fur, also voicing concern about customers’ creditworthiness in the farming sector.

Bayer’s shares were up 3% at 61.36 euros by 0925 GMT, beating a 2% gain in the wider German market.

Additional reporting by Patricia Weiss; editing by Thomas Seythal, Emma Thomasson, Kirsten Donovan



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Argentina to exit Mercosur trade talks to focus on problems at home By Reuters



By Hernan Nessi

BUENOS AIRES (Reuters) – Argentina has decided to withdraw from ongoing trade negotiations with South American trade bloc Mercosur as it turns its focus on the growing economic crisis at home, the bloc said in a statement late on Friday.

The decision marks yet another setback for the four nation common market, which has recently been hobbled by political squabbling and government changeovers. The bloc also includes Uruguay, Paraguay and Brazil.

Only potential new trade deals will be affected. Argentina’s Foreign Ministry said separately it would continue to work with Mercosur to push forward trade agreements with the European Union and the European Free Trade Association (EFTA), which have already been agreed in principle.

Argentina said it had previously communicated concerns to the bloc over fast-tracking new free trade agreements with South Korea, Singapore, Lebanon, Canada and India, among others.

“Argentina made it clear that international uncertainty and the state of our economy suggest halting progress on those negotiations,” Argentina’s foreign ministry said in a Friday statement.

Paraguay’s Foreign Ministry, which currently holds the presidency of Mercosur, said Argentina had taken the decision to focus “on internal economic policy, aggravated by the COVID-19 (Coronavirus) pandemic.”

“They abandoned ship,” Pedro Miguel Costa e Silva, a Brazilian diplomat who leads regional and bilateral negotiations in the Americas, told Reuters.

Costa e Silva said it was “no surprise” given that Argentina recently changed governments, with center-left President Alberto Fernandez replacing center-right Mauricio Macri in December.

The Mercosur bloc said in the statement it was evaluating next moves to ensure Argentina’s decision would not disrupt ongoing trade negotiations.

Costa e Silva said a mechanism would be developed to ensure the other three countries in the bloc could move forward in negotiations in potential new trade deals.

It would not be the first time such an arrangement is being made. Venezuela, currently suspended from Mercosur for never fulfilling membership requirements, decided to stay out of the bloc’s trade talks with the European Union in 2012.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.