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US Markets

Equity Futures Fall as Trump's Latest Iran Deadline Looms

The benchmark US stock measures were trending lower before the opening bell Tuesday ahead of President Donald Trump's deadline for Iran to reopen the key Strait of Hormuz.The S&P 500 was down 0.4% and the Nasdaq lost 0.6% in premarket activity, while the Dow Jones Industrial Average lost 0.3%. The indexes finished the previous trading session higher, with the Nasdaq and the S&P 500 posting a fourth straight increase.Trump's latest deadline for Iran to reopen the Strait of Hormuz or face destructive attacks is set to expire at 8 pm ET, with no immediate signs of a diplomatic breakthrough to end the war."We're giving them till tomorrow, 8 o'clock Eastern time, and after that, they're going to have no bridges," Trump told reporters at the White House Monday, according to NBC News. "They're going to have no power plants."Iran has rejected a proposal conveyed by intermediaries for a temporary ceasefire, Reuters reported Tuesday, citing a senior Iranian source.On Monday, JPMorgan (JPM) Chief Executive Jamie Dimon said that supply disruptions caused by the Iran war could keep inflation and interest rates higher than expected.Separately, International Monetary Fund Managing Director Kristalina Georgieva reportedly said that "all roads now lead to higher prices and slower growth" as a consequence of the war.West Texas Intermediate crude oil was up 1.8% at $114.52 per barrel before the open Tuesday, while Brent rose 0.6% to $110.40.UnitedHealth Group (UNH) and CVS Health (CVS) rose more than 6.5% each before the open, while Humana (HUM) surged 11%, as the Centers for Medicare and Medicaid Services finalized a proposal to raise payments to Medicare insurers by 2.48% on average next year. Broadcom (AVGO) gained 3.6% after the company announced a long-term agreement to develop chips for Alphabet's (GOOG, GOOGL) Google.Tuesday's thin economic calendar has the durable goods orders report for February at 8:30 am. Chicago Fed President Austan Goolsbee is set to speak at 12:35 pm, while remarks from Fed Vice Chair Philip Jefferson are due at 5:50 pm.Levi Strauss (LEVI) is scheduled to release its latest financial results after the markets close.Gold slipped 0.6% to $4,657 per troy ounce, while bitcoin fell 1.9% to $68,296.

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US Markets

Pershing Square Seeks to Unlock Universal Music Group's Value in Proposed Cash-and-Stock Merger

Universal Music Group (UMG.AS) shares rose 11% in early Tuesday afternoon after Pershing Square Capital Management proposed a cash-and-stock acquisition, saying the former's stock underperformance since its Euronext Amsterdam listing 4.5 years ago is unrelated to the underlying music business and can be resolved through a merger.In a nonbinding proposal, the New York-based investment adviser offered 9.4 billion euros in cash, or 5.05 euros per share, to shareholders of the music company. The offer includes 0.77 new shares for each share of UMG, which brings the total cash-and-stock consideration package to 30.4 euros apiece, a 78% premium to UMG's stock price. Shareholders may elect to receive all cash, all stock, or a combination, subject to proration.Pershing Square said the cash component would reduce the UMG stock overhang and give shareholders, including the Bolloré Group (BOL.PA), "sufficient" liquidity. It also highlighted that UMG's 2.7 billion-euro Spotify stake has not been fully credited in the stock's valuation. Following the merger, Pershing Square plans to sell the Spotify stake in the market or via a block transaction, potentially distributing up to 750 million euros in proceeds to UMG artists.Regarding UMG's capital allocation plan, the acquirer proposed to scrap the current 50% of net income dividend policy at the "new UMG" and instead target a 2% increase annually, while using all free cash flow after required investments for share repurchases.New UMG expects to generate 2.3 billion euros of cash from operations in 2027, growing to more than 3.8 billion euros by 2031, with a total of 15 billion euros available for investments, acquisitions, or share buybacks over that period.If the transaction gets regulatory and shareholder approval, UMG will merge with Pershing Square SPARC to become a Nevada corporation. Closing is expected by the end of 2026, after which the combined entity will be listed on the New York Stock Exchange and be eligible for inclusion in the S&P 500 and other indices.In a letter to UMG's board, Pershing Square recalled its initial 10% investment in UMG before the 2019 Euronext listing, emphasizing that the company remains a "high-quality, capital-light royalty on the long-term growth of global music," supported by streaming penetration and price increases that could drive high-single-digit revenue growth for the next decade and likely beyond.

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