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Qualcomm, SSW Partners to buy Veoneer in $4.5 billion deal

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Chipmaker Qualcomm Inc and SSW Partners have reached an agreement to buy Swedish automotive technology group Veoneer for $4.5 billion, Veoneer said on Monday.

Veoneer’s expertise in making advanced driver assistance systems (ADAS) made it an attractive takeover target for both Qualcomm and Canada‘s Magna.

Qualcomm in August offered to buy Veoneer at an 18.4% premium to a July bid worth around $3.8 billion by Magna that had already been accepted by Veoneer’s board.

Qualcomm’s bid came after it signed a collaboration deal with Veoneer to develop a software and chip platform for driver-assistance systems called Arriver in January 2021.

Qualcomm and SWW Partners, a newly-founded investment firm based in New York, will buy Veoneer for $37 per share in cash, Veoneer’s statement said.

The unusual deal structure allows SSW Partners to buy all outstanding shares of Veoneer, after which it will lead a process to look for a strategic buyer for Veoneer’s Tier-1 supplier businesses, including the restraint control systems (RCS) and active safety businesses, while selling the Arriver business to Qualcomm.

“This transaction structure facilitates the long-term success of all Veoneer’s businesses,” Veoneer said.

Magna had a similar interest in buying Veoneer, as it tries to compete with ADAS makers such as Aptiv, Bosch and Continental.

Veoneer said it had terminated its prior acquisition agreement with Magna. In a separate statement, Magna said Veoneer will pay a termination fee of $110 million to Magna.

Stockholm-listed shares in Veoneer, which was spun off in 2018 from air bag and seatbelt maker Autoliv, rose 4.33% to trade at 313.4 crowns ($35.91) at close.

(1 Swedish crown = $0.115)

 

(Reporting by Anna Ringstrom and Helena Soderpalm and Krystal Hu in New York; Editing by Ed Osmond and Christian Schmollinger)

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Chipotle sales surge as customers devour pricier meals

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Chipotle Mexican Grill Inc beat estimates for quarterly same-store sales on Thursday, as customers returned to eating inside restaurants and paid more than ever for a new meat – smoked brisket – and other menu items.

The burrito and bowl chain has raised regular menu prices twice and its delivery prices three times since August 2020. Prices are now about 10% higher – which includes a total 17% hike in items for delivery – to offset rising beef, freight and labor costs.

CEO Brian Niccol told Reuters that customers can still get a lot of value out of a  Chipotle meal, noting that its chicken burrito is still priced under $8 in many places.

“Because we’ve got such a strong value proposition, we like to take things in phases to make sure that the pricing we’re taking is balanced with the growth that we’re experiencing and that the cost is really not a transitory cost but a new, permanent cost,” he said.

Overall, fast-food chains have raised menu prices by 6.7% over the last 12 months, and other restaurants by 5.2%, the U.S. Bureau of Labor Statistics reported on Oct. 13.

Some of Chipotle’s price hikes will roll off this quarter and customers have not resisted paying more for their quesadillas, Niccol said.

More customers are also coming to Chipotle restaurants as seating areas reopen, and the chain is still on track to build 200 new locations this year, he said.

Chipotle’s limited-time smoked brisket, which launched in September, costs $10.25 on average as an entree in restaurants, its most expensive new meat ever.

The fast-casual chain posted a 15.1% surge in comparable sales for the quarter ended Sept. 30, compared with analysts’ average estimate of 13.4% growth, according to Refinitiv data.

The company also forecast sales growth in the low to mid double-digits range in the current quarter, compared with estimates of 14% growth.

Americans who were cooking more in their kitchens during the pandemic-induced, work-from-home situation are now grabbing burritos and bowls on the way to work and social gatherings, and are trying new dishes.

Sales from digital orders – as opposed to those placed in person – grew 8.6% and accounted for 42.8% of sales.

Chipotle also said its board increased its share repurchase authorization by $100 million, with $209.8 million available to buy back shares as of Sept. 30.

(Reporting by Hilary Russ in New York and Praveen Paramasivam in Bengaluru; Editing by Aditya Soni, Jonathan Oatis and Daniel Wallis)

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World Bank sees ‘significant’ inflation risk from high energy prices

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 Energy Prices are expected to inch up in 2022 after surging more than 80% in 2021, fueling significant near-term risks to global inflation in many developing countries, the World Bank said in its latest Commodity Markets Outlook on Thursday.

The multilateral development bank said energy prices should start to decline in the second half of 2022 as supply constraints ease, with non-energy prices such as agriculture and metals also expected to ease after strong gains in 2021.

“The surge in energy prices poses significant near-term risks to global inflation and, if sustained, could also weigh on growth in energy-importing countries,” said Ayhan Kose, chief economist and director of the World Bank’s Prospects Group, which produces the Outlook report.

“The sharp rebound in commodity prices is turning out to be more pronounced than previously projected. Recent volatility in prices may complicate policy choices as countries recover from last year’s global recession.”

The International Monetary Fund, in a separate blog https://blogs.imf.org/2021/10/21/surging-energy-prices-may-not-ease-until-next-year, said it expected energy prices to revert to “more normal levels” early next year when heating demand ebbs and supplies adjust. But it warned that uncertainty remained high and small demand shocks could trigger fresh price spikes.

The World Bank noted that some commodity prices rose to or exceeded levels in 2021 not seen since a spike a decade earlier.

Natural gas and coal prices, for instance, reached record highs amid supply constraints and rebounding demand for electricity, although they are expected to decline in 2022 as demand eases and supply improves, the bank said.

It warned that further price spikes could occur in the near-term given current low inventories and persistent supply bottlenecks. Other risk factors included extreme weather events, the uneven COVID-19 recovery and the threat of more outbreaks, along with supply-chain disruptions and environmental policies.

Higher food prices were also driving up food-price inflation and raising questions about food security in several developing countries, it said.

The bank projected crude oil prices would reach $74/bbl in 2022, buoyed by strengthening demand from a projected $70/bbl in 2021, before easing to $65/bbl in 2023.

The use of crude oil as a substitute for natural gas presented a major upside risk to the demand outlook, although higher energy prices may start to weigh on global growth.

The bank forecast a 5% drop in metals prices in 2022 after a 48% increase in 2021. It said agricultural prices were expected to decline modestly next year after jumping 22% this year.

It warned that changing weather patterns due to climate change also posed a growing risk to energy markets, potentially affecting both demand and supply.

It said countries could benefit by accelerating installation of renewable energy sources and by cutting their dependency on fossil fuels.

(Reporting by Andrea Shalal; editing by Diane Craft)

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U.S. FAA seeks new minimum rest periods for flight attendants between shifts

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The Federal Aviation Administration (FAA) is proposing to require flight attendants receive at least 10 hours of rest time between shifts after Congress had directed the action in 2018, according to a document released on Thursday.

Airlines for America, a trade group representing major carriers including American Airlines, Delta Air Lines, United Airlines and others, had previously estimated the rule would cost its members $786 million over 10 years for the 66% of U.S. flight attendants its members employ, resulting from things like unpaid idle time away from home and schedule disruptions.

Aviation unions told the FAA the majority of U.S. flight attendants typically do receive 10 hours of rest from airlines but urged the rule’s quick adoption for safety and security reasons.

Under existing rules, flight attendants get at least 9 hours of rest time but it can be as little as 8 hours in certain circumstances.

“Flight attendants serve hundreds of millions of passengers on close to 10 million flights annually in the United States,” the FAA said, adding that they “perform safety and security functions while on duty in addition to serving customers.”

It cited reports about the “potential for fatigue to be associated with poor performance of safety and security related tasks,” including in 2017, when a flight attendant reported almost causing the gate agent to deploy an emergency exit slide, which was attributed to fatigue and other issues.

The FAA estimated the regulation could prompt the industry to hire another 1,042 flight attendants and cost $118 million annually. If hiring assumptions were cut in half, it said, that would cut estimated costs by over 30%.

After the FAA published an advance notice of the planned rules in 2019, Delta announce it would mandate the 10-hour rest requirement by February 2020.

FAA Administrator Steve Dickson is testifying at a U.S. House Transportation subcommittee hearing on Thursday.

House Transportation Committee chairman Peter DeFazio said on Wednesday that it was “unacceptable” to delay the FAA adopting the flight attendant rest rule and mandating secondary flight deck barriers to better protect the cockpits on all newly manufactured airliners.

Attorneys at the FAA “need a little poke” to move faster on rules when ordered by Congress, DeFazio said on Thursday at the hearing. “Do not screw around with it for three years… you just do it.”

Sara Nelson, president of the Association of Flight Attendants representing 50,000 workers at 17 airlines, said the rule was critical.

“Flight attendant fatigue is real. COVID has only exacerbated the safety gap with long duty days, short night, and combative conditions on planes,” she said. “Congress mandated 10 hours irreducible rest in October 2018, but the prior administration put the rule on a process to kill it.”

During the pandemic, flight attendants have dealt with records numbers of disruptive, occasionally violent passenger incidents, with the FAA citing 4,837 unruly passenger reports, including 3,511 for refusing to wear a mask since Jan. 1.

The FAA proposes to make the new flight attendant rest rules final 30 days after it publishes its final rules.

(Reporting by David Shepardson; editing by Jason Neely and Bill Berkrot)

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