Mergers & Acquisitions
Epicentr K closed deal on acquisition of a large agricultural holding
The Epicentr K Group of Companies owned by the Gerega family has closed a deal on the acquisition of a share in the assets in Svarog West Group, Khmelnytsky Region, by acquiring the corporate rights of Khmelnytsk-Agro LLC. The value of the deal has not been disclosed.
As the outcome of the merge of new assets, the total area of lands cultivated by Epicentr Agro agricultural enterprises has increased by roughly 40% — up to 160,000 hectares, and volume of crop production area in Khmelnytsky Region within the agricultural holding structure has reached 45%.
The range of enterprises of the acquired company includes a powerful crop production unit, a seed plant, sockbreeding and granaries. Epicentr Agro, the agricultural division of the Epicentr K Group of Companies aims to further develop these enterprises.
Sales of new cars in EU fell by half
During the first five months of 2020, sales of new passenger cars in the European Union decreased by 41.5%, according to the European Automobile Manufacturers Association.
In May, the number of cars sold was 52.3% less than for the same period last year, despite the easing of quarantine restrictions.
May sales demonstrated the greatest fall in countries that were most significantly affected by the pandemic and took the strictest measures to combat spread of the virus — Spain (— 72.7%), France (— 50.3%), Italy (— 49.6%). Sales of new passenger cars in Germany fell by 49.5%.
“Green” energy surpassed nuclear power in terms of production volume for first time ever
Following the results of 2019, power plants operating on renewable energy sources surpassed nuclear power plants in terms of energy production globally for the first time in history.
Renewable energy sources have been continuing their record growth and have satisfied most of the increased demand (41%) amid primary energy resources. The share held by RES in electricity generation was 10.4%, which for the first time exceeded that of nuclear power plants.
Cabinet of Ministers signed memorandum with green electricity producers
The Cabinet of Ministers of Ukraine signed a Memorandum of Understanding on the Settlement of Problematic Issues in the Renewable Energy Sector.
The document establishes that RES producers accept conditions for restructuring of voluntary green tariffs, which provides for their reduction. In particular, tariffs are expected to be reduced by 15% for all electricity facilities producing solar energy, and for facilities producing electricity from wind energy by 7.5%.
For their part, the Ukrainian authorities are committed to secure all measures to ensure timely payment to the Guaranteed Buyer State Company and repayment of existing debts to RES producers who have agreed to the terms of restructuring. The government also committed itself to set and approve annual quotas to support “green” energy and to arrange auctions to distribute such quotas.
Centrenergo privatization is planned for second quarter of 2021
The State Property Fund plans to privatize PJSC Centrenergo in the second quarter of 2021, says Dmytro Sennychenko, head of the State Property Fund. He noted that the privatization procedure lasts 9-11 months, and that the company’s sale will be preceded by careful preparation.
European Commission initiated antitrust investigation against Apple
The European Commission has initiated a formal antitrust investigation to assess whether Apple is violating EU competition rules by using the ApplePay system.
The investigation concerns Apple’s terms and other measures related to the integration of Apple Pay into shopping applications and websites on iPhone and iPad, Apple restrictions on access to Near Field Communication (NFC) system functionality on iPhone for in-store payments, and possible denials of access to Apple Pay. Apple Pay is a patented by Apple mobile payment solution for iPhone and iPad, which is used for payments through shopping applications and on websites, as well as in physical stores. Following preliminary investigation, the Commission had concerns that Apple provisions, terms and other measures related to Apple Pay integration for the purchase of goods and services in shopping applications and on web sites on iOS/iPadOS devices may distort competition and limit choice and innovation.
Moreover, Apple Pay is the only mobile payment solution built into iOS mobile devices for in-store payments that operates using NFC plug-and-play technology.
The investigation is also to focus on potential restrictions related to Apple Pay access to specific competitors’ products on iOS and iPadOS smart mobile devices.
The commission has also initiated a formal antitrust investigation to assess whether Apple terms for developers of applications related to software distribution through App Store violate EU rules.
EU leaders prolong economic sanctions against Russia over Ukraine
EU leaders decided to prolong economic sanctions imposed on Russia for another six months.
German chancellor Angela Merkel announced this following the EU summit, which took place via video conference. According to her, progress made by Russia in the implementation of the Minsk agreements has been insufficient for the lifting or relaxation of sanctions. The prolonging of sanctions will be finally approved by the EU Council.
Banking & Finance
NBU cut lending rate to minimum historical level of 6%
The Board of the National Bank has decided to lower the discount rate from 8% to 6% per annum from 12 June 2020. It is the lowest discount rate in the history of independent Ukraine. The change in the discount rate is an important signal for banks to set interest rates on deposits and loans. It affects the cost of loans provided by the National Bank to commercial banks. The higher the rate, the more expensive it is for banks to refinance loans, and the more expensive the loans offered by banks, the fewer the loans taken out by borrowers.
Performance of all economy sectors fell in Q1 except for agro sector
In Q1 2020, the performance of almost all sectors of the economy fell, except for agriculture (the latter mainly due to exhaustion of statistical effect related to a shift in the previous quarter’s harvesting period). The greatest negative impact was seen in the transport sector and most service sectors. Gross value added in accommodation and the catering sector decreased by 8.8% year-on-year, other services — by 13% year-on-year, transportation — 8.6% year-on-year.
Another negative factor for the performance of the transport sector was the reduction in gas transit.
Due to the difficult situation in the budget sector, gross value added fell in activity sectors that are mainly financed from the budget, namely education, healthcare, public administration, and defense.
Gross value added in the industry sector decreased significantly, not least because of the warm weather, which affected the energy sector’s performance, as well as in the construction sector.
Gross value added in the financial and insurance sectors decreased as a result of a reduction in bank revenues and a rise in costs. By contrast, trade, as well as the information and telecommunications sector, grew due to increasing demand for Internet access services by the population, not least because of the transition to remote working.