Gina Rinehart, Shanghai CRED Team Up to Acquire S. Kidman

Gina RinehartGina Rinehart, Australia’s richest woman, has joined up with Chinese real estate developer Shanghai CRED to acquire the largest land holding company in the country.

The joint deal to acquire S. Kidman & Co. was announced by the companies involved on Sunday. Its value is put at AU$365 million (US$276.8 million). The agreed deal will give Rinehart-owned Hancock Prospecting 67 percent stake in the leading cattle empire, while Shanghai CRED will control the remaining 33 percent stake.

The acquisition is to be overseen by a new joint venture called Australian Outback Beef. This was formed to tackle concerns by Australian government over takeover of local assets by foreign firms.

Importance of control over the domestic agricultural sector has been stressed by the Australian government. The country desires to preserve tax revenues in the country and to take advantage of rising demand for food across the globe. Australian Treasurer Scott Morrison has noted that the sale of Kidman’s expansive holdings to foreigners would not be in national interest.

The joint bid by Rinehart and the Chinese developer became the favorite to be considered after it emerged that Australian firm DomaCom had decided against raising fund to acquire S. Kidman. Reuters also reported that rival bidders Hunan Dakang Pasture Farming Co. Ltd (Dakang) and Australian Rural Capital Ltd (ARC) has indicated they would not launch a counter offer.

Sources had disclosed back in August that Hunan Dakang was planning a fresh offer in collaboration with Australian investors.

Kidman’s cattle rearing history goes back to more than 100 years ago. The company’s pastoral leases cover an area estimated at 101,000 square kilometers (39,000 square miles). The holding size is compared to the overall size of South Korea. The company is reported as having an average beef herd-holding capacity of around 185,000 cattle.

The heated debate over sale of important Australian agricultural assets to foreign companies had contributed to the government’s rejection, in April, of an AU$371 million ($281.3 million) bid by a group led by China’s Shanghai CRED. The joint bid, which also featured Hunan Dakang and a 20 percent Australian minority interest, was the second by the consortium to be rejected in six months.

To deal with concerns over acquisition of domestic assets by foreigners, Kidman has already reached an agreement with an Australian buyer over sale of its Anna Creek Station. The country’s government appears concerned over the proximity of the world’s largest working cattle station to its Woomera weapons testing site.

The Anna Creek Station sale would need to be completed for the Hancock-Shanghai CRED deal to be finalized, according to CNBC. Income from the sale and that of another station will go to Kidman and be retained for Australian Outback Beef.

Regulatory approval will also be needed for the Kidman deal to be finalized. But there appears to be no potential for issues in that direction given the resulting joint venture will have majority of its stake controlled by an Australian company.

Forbes says Rinehart is the richest woman in Australia, with an asset value estimated at slightly over $11 billion.

Twitter Could Seal the Deal in October

TwitterTwitter Inc appears to be in a hurry to wrap up a sale this month, with sources saying the social media giant has given interested buyers an October 27 deadline to conclude sale negotiations.

People who are familiar with the matter told Reuters that the company is seeking to conclude a sale by the time it reveals its third-quarter earnings. The move is believed to point to the interest of Chief Executive Jack Dorsey to let stakeholders have urgent clarity on the future direction of the online social networking service.

Companies which are reported to be interested in acquiring Twitter include Salesforce.com Inc, Google parent company Alphabet Inc and Walt Disney Co.

Speculation of a possible sale has been on for several months, following three successive quarters of lack of growth in Twitter’s user base. The service has been losing investors after revealing in July that it was finding it increasingly difficult in the competition for advertising dollars with rival networks, indicating third-quarter sales won’t be up to the level forecast by analysts.

The social networking site has not been able to keep up with rivals such as Instagram and Snapchat. Although it has been around for much longer than the other two services, the latter now boast larger user bases. Twitter has experienced great difficulty in growing revenue and profit despite having around 313 million in average monthly active users.

The target of closing a sale by October 27 is a rather ambitious one for the company, though. It only started considering a sale in September. Majority of merger and acquisition deals take longer length of time to be wrapped up.

Sources who spoke to Reuters said the microblogging service has started to draw up a shortlist of potential buyers, with Salesforce.com seemingly in the lead. They however said the process is unlikely to end in a sale by the set date.

Neither Twitter nor any of the companies reported to be interested in the acquisition have agreed to comment on a possible deal.

Both Google and Disney would not go ahead with a bid to acquire the social networking service, according to the technology news website Recode.

Twitter shares went on sale in November 2013 at a price of $26 per unit. The share price reached a price of more than $74 a little over a month after the initial public offering. But it has been on a decline for many months. The company’s market value slumped to an all-time low level of less than $10 billion in February.

According to Thomson Reuters StarMine, Twitter was not able to measure up to sales expectations of market analysts in the first two quarters of this year. It has not been able to generate a net profit in 11 quarters. This has caused some investors to part company with the social media platform.

Chris Sacca, a major Twitter investor, told Bloomberg TV on Tuesday that he has started selling his shares and would want the company to be acquired.

“I’ve definitely sold some Twitter shares,” he said. “I don’t own as many as I used to because I’m not an idiot, but I own more than I should because I’m an idiot.”

Salesforce could shift the focus of Twitter to customer service communications or mine its database for business intelligence, if it succeeds in acquiring the social network.

Twitter expects to receive binding acquisition offers in the next two weeks.

State Officials Demanding CFPB to Do More on Payday Loans

Payday Loan Compliance The Consumer Financial Protection Bureau (CFPB)’s 90-day comment period for its new federal payday loan regulatory framework is coming to a close. But this isn’t preventing several state officials from airing their grievances and demanding the federal consumer watchdog agency do more on the issue ahead of the deadline.

In an open letter to the CFPB released on Friday, officials from seven states and the District of Columbia averred that the new rules and regulations pertaining to payday loans don’t go far enough. They believe that the new recommendations could actually encourage high-interest lenders to return to states where they have either been restricted or been completely shut down.

According to the letter, the eight attorneys, which represent the likes of New York and Pennsylvania, are requesting that the CFPB tighten the payday loan market even further.

The state leaders concede that the CFPB does not have the authority to rein in interest rates or establish limits. But they say that without tougher CFPB rules on their side then they themselves wouldn’t be able to make a significant impact on the payday loan industry.

The attorney generals (AGs) are concerned that some unscrupulous players could take advantage of exemptions. This has been one of the primary concerns of various consumer advocacy groups and non-profit organizations. These loopholes, critics say, need to be changed immediately.

Essentially, the CFPB’s new requirements must be the “minimum standard” for other states to ape.

“It is essential to preserve the ability of individual states…to maintain their existing usury caps,” the officials said, adding that these interest rate caps could be “the single most effective way of ending the harms.”

Several states across the country have prohibited payday loans from operating. Other states have imposed caps or other kinds of restrictions on payday loan establishments. It was argued over the summer that the CFPB’s payday loan regulations could negatively impact some states’ efforts to rein in the industry or completely bypass state and local legislation. While all this is happening many lenders have just moved their business online which opens another can of worms.

But is this a matter of speaking too soon? The CFPB has stated that it will look at the comments and include them into their final federal framework. Moreover, CFPB director Richard Cordray has stated that it could very well take up to 15 months in order to adopt a complete payday loan proposal.

To date, more than half a million comments have been submitted to the CFPB. Although the CFPB will not disclose what has been said, you can imagine that it has been split right down the middle. Some will purport that the suggested rules go too far, while others will argue that they don’t go far enough.

Payday loan opponents often make the case that these short-term, high-interest loans send millions of consumers into debt, and it becomes nearly impossible to get out of the debt trap. Those on the other side contend that payday loans provide the most vulnerable access to credit, which is something they cannot have from conventional financial institutions.

Theranos to Shut Labs, Wellness Centers

Elizabeth HolmesTroubled consumer healthcare technology firm Theranos has announced plans to close all of its clinical labs and wellness centers as it beats a retreat from blood testing, shedding hundreds of jobs.

This revelation was made by Chief Executive Elizabeth Holmes in a statement posted on the company’s website on Wednesday. The move marks a retreat from the ambitions of Theranos to deliver stress-free, low-priced blood-testing directly to members of the public.

The shutdown of Theranos’ blood-testing facilities is expected to cost about 340 employees their jobs. It will affect employees in Arizona, California and Pennsylvania. The layoffs will represent more than 40 percent drop in the company’s workforce. Theranos has around 790 full-time workers on its payroll.

Holmes said the decision to close the facilities and lay off some employees came after spending several months to assess the Palo Alto, California-based company’s strengths and weaknesses. She revealed focus would now be shifted towards making products for sale to external laboratories.

“We will return our undivided attention to our miniLab platform,” the Theranos CEO said. “Our ultimate goal is to commercialize miniature automated laboratories capable of small-volume sample testing, with an emphasis on vulnerable patient populations, including oncology, pediatrics and intensive care.”

The company’s blood-testing ambitions, said to have been inspired by Holmes’ fear of blood tests during childhood, were dealt a heavy blow following revelation of findings from an investigation by a Wall Street Journal reporter last year. The probe raised doubts about the healthcare company’s technology and operations, while exposing it to sanctions from regulators.

The WSJ investigation cast doubt on the ability of a machine known as Edison, which served as the basis of Theranos’ blood-testing technology. The machine had been claimed to require only a drop of blood for blood tests to be conducted, unlike rival technologies which require tubes of blood. However, it was alleged in the investigation report that the company had in fact used standard equipment for most of its tests because results produced by Edison were not consistent.

Theranos, which was valued at $9 billion in 2014, operated labs in Newark, California and Scottsdale, Arizona. It had a network of wellness centers from where tests are sent to the labs. A number of these centers were operated in partnership with Walgreens.

The biotech startup expectedly challenged claims made in the WSJ report. But significant deficiencies were identified by the Centers for Medicare & Medicaid Services (CMS) at the Newark lab in January. This made regulators to revoke Theranos’ license to run that lab in July. A ban that would make it impossible for Holmes to operate a lab for a period of two years has also been proposed.

Theranos has appealed the regulatory sanctions, although the impact of the outcome is now unclear.

In May, the company voided results of tests carried out with Edison over a two-year period, a move considered to have been made to avoid being sanctioned.

Theranos launched its latest blood-testing device miniLab in August. The supposed Edison successor, which was revealed at a lab scientist conference, was said to be capable of running more accurate tests from only few drops of blood. It is practically a miniature laboratory with a robot running a series of sample tests that would have required use of different machines.