Business

By Tom Hals

WILMINGTON, Del. (Reuters) – Twitter Inc sued Elon Musk on Tuesday for violating his $44 billion deal to buy the social media platform and asked a Delaware court to order the world’s richest person to complete the merger at the agreed $54.20 per Twitter share.

“Musk apparently believes that he – unlike every other party subject to Delaware contract law – is free to change his mind, trash the company, disrupt its operations, destroy stockholder value, and walk away,” said the complaint.

The lawsuit sets in motion what promises to be one of the biggest legal showdowns in Wall Street history, involving one of the business world’s most colorful entrepreneurs in a case that will turn on staid contract language.

On Friday, Musk said he was terminating the deal because Twitter violated the agreement by failing to respond to requests for information regarding fake or spam accounts on the platform, which is fundamental to its business performance.

Musk, who is the chief executive officer of electric vehicle maker Tesla Inc, did not immediately respond to a request for comment.

The lawsuit accused Musk of “a long list” of violations of the merger agreement that “have cast a pall over Twitter and its business.” It said for the first time that employee attrition has been “on the upswing” since the deal was announced.

Twitter also accused Musk of “secretly” accumulating shares in the company between January and March without properly disclosing his substantial purchases to regulators, and “instead kept amassing Twitter stock with the market none the wiser.”

Shares of the social media platform closed at $34.06 on Tuesday, up 4.3%, but sharply below the levels above $50 where it traded when the deal was accepted by Twitter’s board in late April. The stock added another 1% after the bell.

GRAPHIC: Elon Musk vs Twitter (https://fingfx.thomsonreuters.com/gfx/mkt/jnvwedynqvw/Pasted%20image%201657659742658.png)

Musk said he was terminating the merger because of the lack of information about spam accounts and inaccurate representations that he said amounted to a “material adverse event.” He also said executive departures amounted to a failure to conduct business in the ordinary course – although Twitter said it removed that language from the merger contract during negotiations.

Twitter also said it did not share more information with Musk regarding spam accounts because it feared he would build a competing platform after abandoning the acquisition.

Twitter called the reasons cited by Musk a “pretext” that lacked merit and said his decision to walk away had more to do with a decline in the stock market, particularly for tech stocks.

Tesla’s stock, the main source of Musk’s fortune, has lost around 30% of its value since the deal was announced and closed on Tuesday at $699.21.

Legal experts have said that from the information that is public Twitter would appear to have the upper hand.

“In its complaint Twitter is taking a strong position that Musk had a case of buyer’s remorse – and that, and not bots, is the reason for his decision to walk away from the deal,” said Brian Quinn, a professor at Boston College Law School. “The facts Twitter presents here make an extremely strong argument in favor of Twitter getting this deal closed.”

Musk is among Twitter’s most-followed accounts and the lawsuit included images of several of his tweets, including a poop emoji, that the company said violated the merger’s “non-disparagement” clause.

Musk tweeted the emoji on May 16 in response to a pair of tweets by Parag Agrawal, Twitter’s chief executive officer, explaining the company’s efforts to fight spam accounts.

It also included an image of a text message Musk sent Agrawal after Twitter sought on June 28 reassurances about Musk’s financing for the deal.

“Your lawyers are using these conversations to cause trouble,” Musk texted to Agrawal. “That needs to stop.”

Twitter noted that after Musk said he was terminating the deal, he sent tweets on Monday that Twitter said suggested his requests about spam were part of a plan to force spam data into the public sphere.

“For Musk, it would seem, Twitter, the interests of its stockholders, the transaction Musk agreed to, and the court process to enforce it all constitute an elaborate joke,” the lawsuit said.

(Reporting by Tom Hals in Wilmington, Delaware; Editing by Chris Reese, Noeleen Walder and Matthew Lewis)

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(Geely changes name of model to RD6 from R6 previously)

SHANGHAI (Reuters) -Chinese automaker Zhejiang Geely Holding on Tuesday unveiled a new electric pickup truck, targeting growing demand from city residents as coronavirus curbs fuel an interest in outdoor activities like camping.

The Volvo owner also launched a new brand, RADAR, at an online event on Tuesday where it showcased its first pickup product, which it called RD6. An earlier statement had referred to the new truck as R6.

It did not disclose the vehicle’s selling price but said it would have a driving range of more than 600 km (370 miles) per charge.

“In an optimistic estimation, the annual sales of pickup trucks can reach 3 million units in China by 2030,” CEO of RADAR Ling Shiquan told Reuters in an interview.

“More people are pursing a healthy lifestyle with more outdoor activities while the governments are also relaxing restrictions for pickups in cities. Those changes are supporting the growth of pickup trucks,” Ling added.

Pickups are considered a niche segment in China where they are mostly used by farmers. They are still banned from most urban roads despite trials since 2016 allowing entry to select areas in several cities and urging from Beijing to speed up the removal of red tape.

Such vehicles contributed around 2% of China’s auto sales last year, with growth outpacing that of other segments including sedans and sports utility vehicles.

Interest in the vehicles is growing among the country’s urban residents who are taking up outdoor pursuits as COVID-19 measures discourage gatherings and severely hit domestic and international travel.

Nonetheless, sales of pickups fell 10.3% in the first five months of this year, against a 13% fall in passenger vehicles more broadly, data from the China Passenger Car Association (CPCA) showed, with the industry also hit by COVID restrictions.

Ling said Geely aims to start offering the RD6 to Chinese consumers in the fourth quarter while the company is also studying the Southeast Asian market for potential expansion opportunities.

Geely may also seek to bring the trucks to the United States, the world’s largest pickup market, to compete with the existing players such as Ford, Tesla and Rivian, Ling said.

China’s pickup market is currently dominated by Hebei-based Great Wall Motor, while foreign players include Ford’s F-150 Raptor and a $9,000 pickup truck launched by General Motors with its local joint venture last year.

Geely previously rolled out a pickup with a combustion engine priced from 119,900 yuan ($17,815.75) two years ago.

($1 = 6.7300 Chinese yuan renminbi)

(Reporting by Zhang Yan, Brenda Goh; Editing by Kirsten Donovan)

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MINNEAPOLIS (AP) — A Minnesota farmer is accused of making $46 million by passing off chemically treated corn and soybeans as organically grown.

James Clayton Wolf was charged July 7 in federal court with felony wire fraud. Prosecutors say Wolf falsely labeled crops grown on his rural Cottonwood County farm as organic and that he defrauded grain buyers and undermined the nation’s organic labeling system.

Organic crops are grown from non-GMO seeds and without chemicals or fertilizers. They generate higher prices at market than non-organic crops.

Organic crop certification is controlled by the federal National Organic Program, run by the U.S. Department of Agriculture.

The grand jury’s indictment says Wolf’s organic farming certification was revoked in 2020. However, according to the document, Wolf continued selling non-GMO grain falsely labeled as organic through an “associate,” the Star Tribune reported.

Wolf’s attorney is Paul Engh.

“Mr. Wolf is a 65-year-old career farmer, who has never been in trouble,” said Engh. “He’s led a good life and now seeks his vindication.”

Wolf is scheduled to appear before a magistrate on July 22.

Wire fraud is a felony punishable by up to 20 years in prison, according to federal sentencing guidelines. U.S. Attorney Andrew Luger’s office said the indictment is the result of collaboration between the FBI and the inspector general’s office for the USDA.

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By Karen Brettell and Sujata Rao

NEW YORK (Reuters) – The euro rebounded on Tuesday after earlier sliding to a 20-year low and effectively reaching parity against the U.S. dollar as investors worried that an energy crisis in the region will tip the economy into recession.

The single currency reached $1.00005 against the greenback, the lowest since Dec. 2002, after data showed that German investor sentiment plunged below levels at the outset of the coronavirus pandemic in July due to energy concerns, supply bottlenecks and rate hikes from the European Central Bank.

“For all intents and purposes, it effectively reached parity,” said Mazen Issa, senior FX strategist at TD Securities in New York.

“It seems like it’s a very gloomy outlook for the euro…. a sub-parity paradigm is very much in the cards,” Issa said, adding that the single currency could drop to the $0.85-$0.90 area against the greenback.

GRAPHIC: Germany ZEW survey https://fingfx.thomsonreuters.com/gfx/mkt/lbvgnegwwpq/Pasted%20image%201657621170966.png

The dollar is benefiting from expectations that the Federal Reserve has more room to hike rates than peers, which are facing more challenging growth outlooks.

Concerns that Europe could fall into a recession have increased since the biggest single pipeline carrying Russian gas to Germany, the Nord Stream 1 pipeline, began annual maintenance on Monday. Governments, markets and companies are worried the shutdown might be extended because of the war in Ukraine.

The single currency was last $1.0050, after bouncing from the $1 level, which some analysts attributed to technical factors relating to options activity and short-covering.

Neil Jones, head of currency sales at Mizuho, said markets had been ‘short’ on the euro in anticipation of a break below parity, but “we didn’t get it and now these shorts are buying back into the early New York market.”

GRAPHIC: Euro-dollar parity https://fingfx.thomsonreuters.com/gfx/mkt/lgvdwzkoapo/Pasted%20image%201657613096884.png

A possible catalyst that could push the euro back lower could be highly anticipated inflation data on Wednesday, which is expected to show that U.S. consumer prices rose by an annual rate of 8.8% in June.

“We may have to wait for U.S. CPI…or a clearer picture for European energy markets once planned maintenance in Nord Stream comes close to finalising for euro-dollar to break the (parity) threshold,” said Simon Harvey, head of FX at Monex Europe.

Meanwhile the Australian dollar rebounded from a two-year low, after being hurt by global growth concerns as China implements new COVID-19 curbs.

The Aussie was last up 0.22% at $0.6752, after earlier falling to $0.6712, the lowest since June 2020.

The U.S. dollar fell 0.55% against the Japanese yen to 137.33, after hitting 137.73 on Monday, the strongest level in 24 years.

In the cryptocurrency market bitcoin dipped 0.46% to $19,858.

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Currency bid prices at 10:40AM (1440 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Dollar index 108.0600 108.1600 -0.08% 12.959% +108.5600 +107.9600

Euro/Dollar $1.0050 $1.0041 +0.09% -11.60% +$1.0070 +$1.0001

Dollar/Yen 136.6450 137.4150 -0.55% +18.72% +137.5300 +136.4700

Euro/Yen 137.33 137.93 -0.44% +5.38% +138.0700 +137.0300

Dollar/Swiss 0.9814 0.9834 -0.19% +7.60% +0.9858 +0.9813

Sterling/Dollar $1.1870 $1.1894 -0.23% -12.25% +$1.1909 +$1.1808

Dollar/Canadian 1.3021 1.3006 +0.11% +2.97% +1.3050 +1.2997

Aussie/Dollar $0.6752 $0.6737 +0.22% -7.12% +$0.6760 +$0.6712

Euro/Swiss 0.9863 0.9869 -0.06% -4.88% +0.9898 +0.9837

Euro/Sterling 0.8465 0.8440 +0.30% +0.77% +0.8484 +0.8434

NZ $0.6127 $0.6114 +0.16% -10.53% +$0.6137 +$0.6103

Dollar/Dollar

Dollar/Norway 10.2150 10.1930 +0.31% +16.06% +10.2675 +10.2070

Euro/Norway 10.2724 10.2409 +0.31% +2.59% +10.2892 +10.2403

Dollar/Sweden 10.5671 10.6317 -0.55% +17.18% +10.6843 +10.5425

Euro/Sweden 10.6207 10.6793 -0.55% +3.78% +10.6926 +10.6044

(Additional reporting by Saikat Chatterjee in London, Editing by Angus MacSwan)

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(Reuters) -Australian buy-now-pay-later (BNPL) firm Zip Co Ltd dropped its plan to buyout U.S. rival Sezzle Inc, the companies said on Tuesday, adding to the list of fallen deals as rising interest rates hurt consumer finance firms.

As part of terminating the deal, which is effective immediately, Sezzle would receive $11 million from Zip, the companies added in a joint statement.

BNPL firms have seen their market value rapidly shrink over the past months as interest rate hikes to tame supercharged inflation fuelled concerns about a slowdown in consumer finance.

This has led to Australia’s Latitude Group pull back its buyout offer for Humm’s BNPL business, and fellow BNPL firm Openpay to pause its operations on the U.S. market.

Zip cited “current macroeconomic and market conditions” as a reason for pulling away from the deal, after saying in June “the acquisition of Sezzle remains on track”.

The Australian BNPL firm added that it continued to expect to deliver group profitability during FY2024.

“We remain dedicated to driving toward profitability and free cash flow and believe this (deal termination) is the best outcome for our shareholders,” said Charlie Youakim, chief executive officer of Sezzle.

Sezzle, which was valued at A$491 million ($330.34 million) by Zip while announcing the buyout in February, lost nearly 82% of its value to A84.9 million, as of Monday’s close.

($1 = 1.4863 Australian dollars)

(Reporting by Indranil Sarkar in Bengaluru; Editing by Rashmi Aich)

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(Reuters) -Perrigo Company said on Monday its unit HRA Pharma has asked the U.S. Food and Drug Administration (FDA) to approve a daily birth control pill for over-the-counter (OTC) sale, the first such request for this type of contraception. The application from the HRA comes on the back of the U.S. Supreme Court’s decision in June to overturn the 1973 Roe v. Wade case that legalized abortion nationwide.

The contraceptive is currently a prescription drug sold under brand Opill.

HRA Pharma expects the regulator to hold an advisory committee meeting and approve the application in the first half of 2023, a period of about 10 months is typical for such approval requests, said Frédérique Welgryn, HRA Pharma’s chief strategic operations and innovation officer.

“The timing is a bit coincidental. We have been working on that application for the last seven years,” Welgryn said.

The FDA declined to comment on the submission.

Meanwhile, Iffath Abbasi Hoskins, president of the American College of Obstetricians and Gynecologists, said the submission was a positive.

“We know that birth control is not a solution to abortion bans, as people need abortion care for many reasons,” Hoskins said, but added that the pill could still help more people to “control their own reproductive futures”.

Currently, the only contraception drugs available for women without a prescription are emergency oral pills that can be taken within three days after having unprotected sex.

Abortion rights activists have stepped up calls to make mifepristone, which in combination with misoprostol induces an abortion up to 10 weeks into a pregnancy, available OTC.

The non-estrogen Opill has been used with prescription since it was FDA-approved in 1973. Perrigo said scientific evidence has shown progestin-only pills, such as Opill, are effective at preventing pregnancy and safe for most women to use.

(Reporting by Leroy Leo in Bengaluru; Editing by Krishna Chandra Eluri and Shinjini Ganguli)

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SYDNEY (Reuters) – A measure of Australian consumer sentiment slid for an eighth straight month to match pandemic lows in July as the surging cost of living and rising interest rates darkened the national mood.

The Westpac-Melbourne Institute index of consumer sentiment released on Tuesday slid 3.0% in July from June, when it dropped 4.5%. The index was down 23% from July last year at 83.8, meaning pessimists far outnumbered optimists.

Westpac chief economist Bill Evans noted sentiment had now tumbled almost 20% since December, the sort of extended slide usually associated with global shocks or recessions.

A separate weekly survey from ANZ showed a drop of 2.5% in its confidence index as consumers feared inflation could hit 6% in the months ahead. Figures for the June quarter due later this month are likely to show inflation is already around 6%.

The gloom partly reflected the Reserve Bank of Australia’s (RBA) decision last week to raise interest rates by another 50 basis points to 1.35%, warning that more would be needed to restrain runaway inflation.

Analysts at ANZ noted that confidence among mortgage holders has fallen 25% since April, while confidence for renters was down just 4%.

“The cash rate has increased at a faster pace than we have seen in any cycle since 1994 and this is clearly unsettling for consumers also facing a sharp rise in the cost of living,” said Westpac’s Evans.

The rise in borrowing costs adds to pressures from higher petrol prices, housing and food, and saw Westpac’s measure of family finances compared with a year ago fall 2.8%.

The outlook for finances over the next 12 months did edge up 0.1%, but that followed a 7.6% dive in June and a measure of whether it was a good time to buy a major household item slipped 0.9%.

The measure of the economic outlook for the next 12 months dropped 4.2%, while the outlook for the next five years fell 6.7%.

(Reporting by Wayne Cole; Editing by Sam Holmes)

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BERLIN (Reuters) -Mercedes-Benz sales fell sharply in the second quarter, hampered by supply problems and coronavirus-related lockdowns in China, the German carmaker said on Monday.

The automaker delivered 490,000 passenger cars from April to June, down 16% from the same period last year, it said.

For the first half of 2022, its Cars division saw a 16% decrease in sales, for a total of 998,000 deliveries.

Second-quarter sales slumped the most in China, the most important single market, falling 25% to 163,700 vehicles, the carmaker said.

Sales in the Asia region fell 20%, due mainly to lockdown measures, while sales in Europe were down 10% and North America saw a dip of 3% in the quarter.

However, Mercedes-Benz is sticking with its 2022 forecast for a slight increase in sales compared with 2021, said a spokesperson. Despite concerns about rising inflation, “customer demand remains high”, sales director Britta Seeger said.

Luxury models in particular, such as the Maybach and electric cars in the EQ model series, are especially popular, Seeger said in a statement.

The smaller Mercedes-Benz Vans business remained just under last year’s level with 100,000 units sold worldwide in the second quarter, according to the carmaker.

(Reporting by Ilona WissenbachWriting by Miranda MurrayEditing by David Goodman and Mark Potter)

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(Reuters) – U.S. stock index futures fell on Monday, bracing for the start of the earnings season which could see profits come under pressure at a time of growing fears of an economic downturn due to aggressive interest rate hikes.

After a dismal first half of the year, U.S. stocks started July on an upbeat note, however, market participants fear that upcoming quarterly results could trigger another selloff, with earnings potentially falling short of estimates.

Trading was choppy last week, but investors took some relief from easing commodity prices and the U.S. Federal Reserve hinting at a more tempered program of rate hikes amid growing concerns of a global recession.

All the three benchmark indexes ended the week higher on Friday, while the Nasdaq posted a gain for the fifth straight session.

The market is now largely pricing in a 75-basis-point rate hike later in July, however concerns about the pace of future rate hikes have grown after a stronger-than-expected jobs report on Friday.

The report, which signaled a still strong labor market helped alleviate some fears about an immediate recession, but added to worries about more aggressive monetary policy tightening by the Fed to stamp out soaring inflation.

Big banks such as JPMorgan Chase & Co, Citigroup Inc and Morgan Stanley are due to post earnings later this week, and their results will be parsed for any signs of slowing economic growth. The banks’ shares fell between 0.7% and 1.1% in premarket trading.

Investor focus will also be on U.S. consumer prices data later this week to gauge the state of inflation and how aggressively the Fed could respond.

At 06:51 a.m. ET, Dow e-minis were down 110 points, or 0.35%, S&P 500 e-minis were down 19.25 points, or 0.49%, and Nasdaq 100 e-minis were down 80.75 points, or 0.66%.

Shares of Twitter Inc slid 6.6% after Elon Musk, chief executive of Tesla, said on Friday he was terminating his deal to buy the social media company.

U.S. casino operators Las Vegas Sands, Wynn Resorts and Melco Resorts fell between 4.6% and 5.7% after Macau shut all its casinos for the first time in more than two years in a bid to contain the spread of COVID-19.

(Reporting by Amruta Khandekar in Bengaluru; Editing by Shounak Dasgupta)

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(Reuters) – Elon Musk on Monday mocked Twitter Inc’s threat to sue him following his move to abandon the $44 billion takeover deal, tweeting the social media firm would need to disclose more information on bots and spam accounts.

The series of tweets on Monday was Tesla Inc chief’s first public response since he made public his intention to ditch the offer on Friday because Twitter had breached multiple provisions of the merger agreement. (https://bit.ly/3uCUPvd)

“Twitter’s board must contemplate the potential harm to its employee and shareholder base of any additional internal data exposed in litigation,” Benchmark analyst Mark Zgutowicz said.

Twitter shares fell about 5% to $34.85 in premarket trading on Monday. The stock closed at $36.81 on Friday, a 32% discount to Musk’s $54.20 bid, as it faces a double whammy of a slump in the broader equity market and investor skepticism over the deal.

GRAPHIC: Twitter shares reaction to Musk’s $44 billion bid https://graphics.reuters.com/TWITTER-SHARES/gkvlgygawpb/Pasted%20image%201657533508374.png

Twitter is planning to sue Musk as early as this week and force him to complete the acquisition, people familiar with the matter told Reuters.

Legal experts say the 16-year-old social media company has a strong legal case against Musk, but could opt for a renegotiation or settlement instead of a long court fight.

“We believe that Elon Musk’s intentions to terminate the merger are more based on the recent market sell-off than… Twitter’s ‘failure’ to comply with his requests,” Jefferies analyst Brent Thill wrote in a note.

“In the absence of a deal, we would not be surprised to see the stock find a floor at $23.5.”

The contract calls for Musk to pay Twitter a $1 billion break-up fee if he cannot complete the deal for reasons such as the acquisition financing falling through or regulators blocking the deal. The fee would not be applicable, however, if Musk terminates the deal on his own.

(Reporting by Medha Singh and Akash Sriram in Bengaluru; Editing by Anil D’Silva)

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