The railroad barons are at it again.
Canadian National Railway on Tuesday offered to buy Kansas City Southern for $33.7 billion, topping a $29 billion bid put forward last month by a rival railroad operator, Canadian Pacific.
The competing offers underline the riches expected to come from trade flows after the United States-Mexico-Canada Agreement was passed into law last year. A merger with either suitor would create a railroad line that stretches from Canada to Mexico. In the already consolidated railroad industry, few lines are left to bid on — let alone deals that will be approved by regulators.
Canadian National said in a letter to Kansas City board that the company had spent “considerable time and resources analyzing a potential combination of our two companies.” It argues its offer represents “an unparalleled opportunity to create a premier railway for the 21st century.”
The offer gives Kansas City Southern a valuation 21 percent higher than Canadian Pacific’s bid, which had been agreed on by the companies’ boards.
For Canadian National, the proposal would be a chance to stop its smaller domestic competitor from gaining significant scale. Unlike Canadian Pacific, Canadian National already has track agreements extending to the Gulf of Mexico.
The rival bid is one further challenge to Canadian Pacific’s offer, which was already facing regulatory scrutiny. The U.S. Department of Justice has urged the Surface Transportation Board — which must approve the offer — to examine the deal under tough industry guidelines put in place in 2001 and expressed concern over its use of a voting trust that would it allow it close the deal even before getting regulatory approval.
Canadian Pacific has argued that there should be no regulatory trouble, given the two railroads have no overlap and in some cases create new markets. It said its smaller size compared with other major North American railroads should exempt it from the guidelines.
As jurors in the Derek Chauvin trial consider a verdict, Minnesota’s largest employers are bracing for a reopening of last summer’s wounds.
George Floyd’s killing ignited violence and unrest last summer that forced Target to shutter a number of its stores and limit hours in others. More broadly, it set off a social reckoning across corporate America, as business leaders sought to address racial inequity both within their own walls and the community at large. In Minnesota, more than 80 companies including General Mills, Best Buy and 3M started the Minnesota Business Coalition for Racial Equity aimed at improving outcomes for the state’s Black community.
As the state gears up for the possibility of renewed unrest, a spokesman for Target said the retailer was “closely monitoring the trial and any surrounding activity,” but did not indicate any plans to close stores in advance of a verdict.
The majority of the company’s headquarters work force is already working from home, but for those employees still in its main office and stores downtown, “we’ve communicated to them about the trial, shared that we’re monitoring closely and let them know we’ll reach out if there’s any impact to our business,” the Target spokesman said.
A spokeswoman for General Mills, which sells its Cheerios and other baked goods around the world, said the company remained focused on broader issues facing the company and country.
“As a global company headquartered in Minneapolis, we understand the nation is in a long overdue conversation on systemic racism,” she said. “Further, we know we have a role to play and all of us have a lot of work to do on this count.” The company’s top priority is communicating its “support and allyship” to its employees, she said.
Minnesota’s largest company by revenue, UnitedHealth Group, is “offering training for managers to have conversations with their teams, and seminars focused on empathy and compassion,” a spokesman said. “Our priority during this period is supporting our employees who continue to be affected in different ways by this case.”
At 3M, which makes products across a broad array of industries, the company has increased resources in its employee assistance program, a spokesman said. “We continue to have, and encourage, open discussions with our colleagues to listen, understand, and act, as needed.”
The Justice Department on Tuesday indicted three former Fiat Chrysler engineers for their role in designing engine control systems that allowed some of its diesel vehicles to cheat on emissions tests.
The indictment, in the United States District Court in Detroit, was handed down by a grand jury in March and unsealed on Tuesday. Fiat Chrysler merged with Peugeot this year and is now known as Stellantis.
The engineers are Emanuele Palma, a diesel calibration manager in Auburn Hills, Mich., who had been previously charged by federal prosecutors; Sergio Pasini, the head calibration engineer who supervised Ms. Palma, who lives in Ferrera, Italy; and Gianluca Sabbioni, a technical director, from Sala Bolognese, Italy. All three worked at VM Motori, an engine company that Fiat Chrysler partly owned before it fully acquired it in 2013.
The indictment accuses the three engineers with developing software, known inside the company as “T-engine,” that could increase the use of emissions control systems when vehicles were undergoing emissions testing, and decrease them when driven by customers in real-world conditions.
Lowering the controls made the vehicles more fuel efficient, an achievement that the company highlighted when selling the cars. The software was used in three-liter diesel engines that were available on the Jeep Grand Cherokee and Ram 1500 pickup trucks. Fiat Chrysler marketed the models as “clean” diesel and “best-in-class” fuel economy.
In 2019, Fiat Chrysler agreed to settle emissions cheating allegations with the federal and state governments in a deal that was estimated to cost the company nearly $800 million.
“We continue to fully cooperate with the Department of Justice, as we have throughout this issue,” Stellantis said in a statement on Tuesday.
The software is often referred to as a “defeat device” and is similar to the system Volkswagen used to make its diesel cars appear less polluting than they actually were. Volkswagen eventually pleaded guilty to conspiracy to commit wire fraud and other charges, paid billions of dollars in settlements and fines, and was forced to buy back 600,000 diesel vehicles from U.S. drivers.
According to the indictment, the three Fiat Chrysler engineers deceived federal regulators about the purpose of the engine software. They are also accused of making false statements to federal agents who were investigating the matter.
The men and their lawyers could not immediately reached for comment.
Three rival names in the European luxury sector have established a new blockchain consortium that will allow shoppers to track the provenance of their purchases and authenticate goods.
LVMH Moët Hennessy Louis Vuitton, which first unveiled plans for a global blockchain-based system in 2019, will be joined by Prada Group and Compagnie Financière Richemont in the Aura Blockchain Consortium, a nonprofit group that will promote the use of a single blockchain solution open to all luxury brands worldwide.
Many sectors are looking at the possibility of using blockchain, the distributed ledger system that underpins Bitcoin and other cryptocurrencies. Because blockchains are unchangeable and decentralized, the data stored on them is trustworthy and secure.
In this case, each product will be given a unique digital code during the manufacturing process that will be recorded on the Aura ledger. When customers make a purchase, they will be given login details to a platform that will provide the history of the product, including its origin, components, environmental and ethical information, proof of ownership, a warranty and care instructions.
Bulgari, Cartier, Hublot, Louis Vuitton and Prada are already using the system, with “advanced conversations” being held with a number of other luxury brands, according to a statement released Tuesday. Participating luxury brands pay an annual licensing fee and a volume fee. Aura, based in Geneva, was developed in partnership with Microsoft and ConsenSys, a blockchain software technology company in New York.
“The Aura Consortium represents an unprecedented cooperation in the luxury industry,” said Cartier’s chief executive, Cyrille Vigneron, adding that he invited “the entire profession” to join the consortium.
“The luxury industry creates timeless pieces and must ensure that these rigorous standards will endure and remain in trustworthy hands,” he said.
Just as workers across the country begin to return to the office, two of the largest furniture design companies will merge.
Herman Miller agreed to acquire its rival Knoll in a cash and stock deal valued at $1.8 billion.
The merger combines two furniture giants that share a modern design element. Herman Miller, best known for its Eames chair and ottoman, and Knoll for its Barcelona chair, together hope to capture an even bigger share of the renovations occurring at home and in offices as many companies and employees look to a future of splitting their time between the two in the post-pandemic world.
“As distributed working models become the new normal for companies, businesses are reimagining the office to foster collaboration, culture and focused work, while supporting a growing remote employee base,” Andi Owen, president and chief executive of Herman Miller, said in a statement Monday. “At the same time, consumers are making significant investments in their homes.”
Based in Zeeland, Mich., Herman Miller traces its roots to 1905 when it began selling bedroom suites. During the depression, when the company was struggling to survive, its then-chief executive, Dirk Jan De Pree, met the designer Gilbert Rohde, who persuaded him to move away from traditional design and toward more modern design and the office furniture market. In 1942, Herman Miller introduced the Executive Office Group, designed by Mr. Rohde, that featured modular pieces that could be configured in different ways.
After Mr. Rohde died in 1944, Mr. De Pree worked with a range of designers, including Charles Nelson, Charles and Ray Eames and Isamu Noguchi. The Eames Executive Chair, a plush, padded, leather chair that was released in 1961 and commissioned for the ultramodern lobby of the Time Life building in New York, can be purchased today for $4,895.
Likewise, Knoll’s history in furniture dates back more than 80 years when the husband-and-wife founders, Hans and Florence Knoll, embraced the creativity of the Bauhaus School in Weimar, Germany, and later, the Cranbrook Academy of Art in Bloomfield Hills, Mich., teaming up with a variety of architects, sculptors and designers.
After the expected close of the transaction later this year, Ms. Owen will become the president and chief executive of the combined company. Andrew Cogan, Knoll’s chairman and chief executive, will depart after 30 years with the company.
The creation of the Super League, an exclusive tournament permanently featuring 15 of Europe’s top soccer clubs, has spurred debate and outrage across the continent. But the fallout from the proposal is starting to spread well beyond European soccer, the DealBook newsletter reports.
JPMorgan Chase has already faced a backlash for offering more than $4 billion in financing to help create the league. The bank’s internal reputation committee, which vets high-profile and potentially controversial assignments, signed off on the deal, but executives did not fully expect the emotional reaction from sports fans that has flooded the airwaves.
Big media and tech companies angling for the broadcast rights to the Super League may also get entangled — speculation has surrounded the likes of Amazon, Apple and Facebook as possible partners. Political leaders like Prime Minister Boris Johnson of Britain and President Emmanuel Macron of France, and even Prince William, have spoken out against the league, adding political risk to the equation. And bidders could run afoul of FIFA, the sport’s global governing body, and UEFA, its European counterpart, and potentially risk losing out on rights to the World Cup or other prominent competitions.
Amazon Prime Video said on Twitter on Tuesday that it had not been involved in discussions with the Super League. “We believe part of the drama and beauty of European football comes from the ability of any club to achieve success through their performance on the pitch,” said the streaming service, referring to the closed nature of the competition. Amazon owns the rights to stream some English Premier League matches in Britain and Champions League matches in Germany and Italy. The Champions League is the competition most threatened by the Super League.
Others in the sports world tied to the proposal may get caught in the middle. The National Basketball Association star LeBron James, for instance, is a part-owner of Liverpool, a founding member of the Super League, through his partnership with the Fenway Sports Group. But he wasn’t involved in the club’s decision to join the league, a person briefed on the matter said.
There is growing concern that athletes outside European soccer and minority owners of teams could get pulled into the global debate over the league, potentially putting them at odds with fans of the world’s most popular sport.
Lululemon said on Tuesday that it would introduce an apparel trade-in program in Texas and California in May, as clothing chains pay more attention to secondhand clothing. It will accept “gently used” Lululemon garments from customers at more than 80 stores and through the mail in exchange for gift cards to the retailer. The cards will range in value from $5 to $25, and a typical pair of leggings would fetch $10. The effort is part of a sustainability initiative called “Lululemon Like New,” and will expand to include a resale business in the same markets in June.
United Airlines said Monday that it lost nearly $1.4 billion in the first three months of the year, but added that a turnaround was close as bookings picked up. The airline said it had stopped spending more money than it collected in March from operations, investing and financing activities — losses known as its “cash burn.” United also said it expected to turn a profit sometime this year.
JPMorgan Chase’s role as the financial backer of the so-called Super League, a breakaway soccer league made up of top clubs from England, Italy and Spain, has made it a target for a storm of criticism. Soccer’s organizing bodies and domestic leagues, European heads of state, former players and supporter groups of the clubs involved were among those speaking out against the plan.
Tribune Publishing said Monday that it had ended talks to sell itself to Newslight, the company set up last month by the Maryland hotel executive Stewart W. Bainum Jr. and the Swiss billionaire Hansjörg Wyss, after Mr. Wyss withdrew from a planned offer on Friday. Tribune Publishing’s special committee, which evaluates the bids, said in a news release on Monday that the Newslight bid could no longer “reasonably be expected to lead to a ‘superior proposal’” than the nonbinding agreement the company had reached in February with Alden Global Capital.
Dogecoin, a cryptocurrency started as a joke, now has a market value that can’t be laughed at: more than $50 billion. On Tuesday, traders of Dogecoin were trying to push up the price to coincide with 4/20, or April 20, a date associated with smoking cannabis.
On Twitter, the hashtags #DogeDay and #Doge420 were trending. Dogecoin’s price, which has surged lately, fluctuated between gains and losses on Tuesday, trading at about 40 cents, according to Coindesk. A month ago, it was about 5 cents.
The ripple effects of the boom in crypto markets are being felt far and wide. Coinbase, the cryptocurrencies exchange that went public last week and is helping the industry move into the mainstream, has a market value of $66 billion. Central banks have ramped up plans to explore digital currencies to offer people an secure alternative to cryptocurrencies, which are out of their control. On Monday, the Bank of England was the latest to announce it was looking into a central bank digital currency.
On Tuesday morning, prices of cryptocurrencies and related stocks slipped. Bitcoin fell 1 percent, trading just above $55,000. Shares in Coinbase and Riot Blockchain were slightly lower in premarket trading.
Elsewhere in markets
U.S. stocks followed European and Asian stock indexes lower. The S&P 500 index dropped about 0.8 percent. The Stoxx Europe 600 index dropped 1.9 percent.
Oil prices fell, giving up earlier gains. Futures on West Texas Intermediate, the U.S. crude benchmark, dropped to $62.25 a barrel.
Shares in British American Tobacco dropped nearly 8 percent on Tuesday, the worst performance in the FTSE 100, after The Wall Street Journal reported on Monday that the Biden administration is considering making tobacco companies cut the nicotine in cigarettes so they aren’t addictive. American tobacco companies saw their shares fall on Monday
Xi Jinping, China’s top leader, called for cooperation and openness to an audience of business and financial leaders on Tuesday. He also had some warnings, presumably for the United States.
Speaking electronically to a largely virtual audience at China’s annual Boao Forum, Mr. Xi warned that the world should not allow “unilateralism pursued by certain countries to set the pace for the whole world.”
The audience included American business leaders including Tim Cook of Apple and Elon Musk of Tesla, as well as two Wall Street financiers, Ray Dalio and Stephen Schwarzman. Long a platform for China to show off its economic prowess and leadership, the Boao Forum is held annually on the southern Chinese island of Hainan. (Last year’s was canceled amid the pandemic.)
In recent years, Mr. Xi has used the forum to portray himself as an advocate of free trade and globalization, calling for openness even as many in the global business community have become increasingly vocal about growing restrictions in China’s own domestic market.
On Tuesday, he also reiterated his earlier message opposing efforts by countries to weaken their economic interdependence with China.
“Attempts to ‘erect walls’ or ‘decouple’” would “hurt others’ interests without benefiting oneself,” Mr. Xi said, in what appeared to be a reference to the United States and the Biden administration’s plans to support domestic high-tech manufacturing in the United States.
The White House held a meeting with business executives last week to discuss a global chip shortage and plan for semiconductor “supply chain resilience.” Speaking to executives from Google, Intel and Samsung, Mr. Biden said “China and the rest of the world is not waiting, and there’s no reason why Americans should wait.”
China is pursuing its own program for self-sufficiency in chip manufacturing.
Mr. Xi also pledged to continue to open the Chinese economy for foreign businesses, a promise that big Wall Street banks like Goldman Sachs and Morgan Stanley have clung to even as foreign executives complain that the broader business landscape has become more challenging.
Last year’s pandemic-induced production delays, combined with a continued shortage of computer chips and other automotive components, have tightened the supply of new models — especially popular sport utility vehicles and pickup trucks.
That means it may be challenging to find a new ride with the colors and features you want at a price you can afford, Ann Carrns reports for The New York Times. “It’s harder to get exactly what you want,” said Ivan Drury, senior manager of insights at Edmunds. “Don’t expect heavy discounts.”
So if new cars are too expensive, you can just buy a used car, right?
Yes, but deals may be elusive there as well. Fewer people bought new cars last year, so fewer used cars were traded in. And the short supply of new cars is pushing more buyers to consider used cars, raising those prices, analysts say. The average price paid for a used car is well above $20,000, Edmunds says.
On the plus side, if you have a car to trade in, its value is probably higher, especially if it’s a popular model. The average value for trade-ins, including leased cars turned in early, was about $17,000 in March, up from about $14,000 a year earlier, according to Edmunds. The average age of trade-ins was five and a half years.
Various online services, like Kelly Blue Book, TrueCar and Carvana, will supply a trade-in estimate based on your location and your car’s age, mileage and general condition, and offer more tailored appraisals if you provide details like the vehicle identification number. Some even offer to buy your car outright.
Around the world, governments are moving simultaneously to limit the power of tech companies with an urgency and breadth that no single industry had experienced before.
Their motivation varies. In the United States and Europe, it is concern that tech companies are stifling competition, spreading misinformation and eroding privacy; in Russia and elsewhere, it is to silence protest movements and tighten political control; in China, it is some of both.
Nations and tech firms have jockeyed for primacy for years, but the latest actions have pushed the industry to a tipping point that could reshape how the global internet works and change the flows of digital data, Paul Mozur, Cecilia Kang, Adam Satariano and David McCabe report for The New York Times.
“It is unprecedented to see this kind of parallel struggle globally,” said Daniel Crane, a law professor at the University of Michigan and an antitrust expert. Now, Mr. Crane said, “the same fundamental question is being asked globally: Are we comfortable with companies like Google having this much power?”
Underlying all of the disputes is a common thread: power. The 10 largest tech firms, which have become gatekeepers in commerce, finance, entertainment and communications, now have a combined market capitalization of more than $10 trillion. In gross domestic product terms, that would rank them as the world’s third-largest economy.
Governments agree that tech clout has grown too expansive, but there has been little coordination on solutions. Competing policies have led to geopolitical friction. Last month, the Biden administration said it could put tariffs on countries that imposed new taxes on American tech companies.
Tech companies are fighting back. Amazon and Facebook have created their own entities to adjudicate conflicts over speech and to police their sites. In the United States and in the European Union, the companies have spent heavily on lobbying.
In today’s On Tech newsletter, Shira Ovide looks at a health technology nonprofit organization that is turning the approach to vaccination credentials on its head.