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Exclusive-US Foods seeks new top executives amid investor pressure -sources

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November 5, 2021

By Jessica DiNapoli and Svea Herbst-Bayliss

(Reuters) – US Foods Holding Corp is seeking to hire a chief operating officer and replace its chief financial officer as it faces pressure from an activist investment firm to improve its operations, according to people familiar with the matter.

US Foods, the largest U.S. food distributor after Sysco Corp, has been grappling with labor shortages and supply chain issues since the onset of the COVID-19 pandemic.

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While demand has picked up in the last few months with customers returning to restaurants it supplies, US Foods’ profitability has yet to return to pre-pandemic levels because it is forced to pay more to retain workers.

Sachem Head Capital Management LP, a New York-based firm run by hedge fund veteran Scott Ferguson, said in a regulatory filing last month that it owned 5.1% of US Foods’ common stock and that it may seek to speak with the company’s management and organize with other shareholders.

It also said it was being advised by Avis Budget Group Inc Executive Chairman Bernardo Hees, who as a partner at private equity firm 3G Capital developed a reputation for implementing draconian cost cuts. He practiced such austerity as chief executive officer of fast-food restaurant chain Burger King Worldwide Holdings Inc and then as CEO of food giant Kraft Heinz Co.

The management shake-up under way at US Foods offers the clearest indication yet that the Rosemont, Illinois-based company is pursuing changes as it prepares to defend itself against a possible board challenge from Sachem Head.

The company has not had a chief operating officer since 2015, when Stuart Schuette announced he would leave and then became chief executive of American Tire Distributors. It is now looking for a chief operating officer, the sources said, speaking on condition of anonymity.

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Dirk Locascio has been US Foods’ CFO since 2017. The company has been searching for his replacement, the sources said.

Pietro Satriano became US Foods’ CEO in 2015 after a federal judge blocked the company’s sale to Sysco. It is not clear how long he will remain with the company, which does not have employment agreements with any of its executives, according to a regulatory filing. One of the sources said US Foods’ board of directors has in recent months deliberated about Satriano’s succession.

“The company does not comment on rumors,” a company spokesperson said.

US Foods was previously owned by buyout firms Clayton, Dubilier & Rice LLC and KKR & Co Inc, which took it public in 2016. It now has a market value of $8.2 billion.

US Foods has been trying to address soaring price inflation and labor shortages that have led to inventory write-offs and higher distribution costs.

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It has sought to improve working conditions by capping the number of hours a new employee works and offering more bonuses, according to BTIG analysts.

Still, its profitability stood at 15.3% in the three months to July 3, compared with 17.7% in the corresponding period two years ago, before the pandemic hit. The company will report quarterly earnings on Monday.

(Reporting by Jessica DiNapoli in New York and Svea Herbst-Bayliss in Boston; editing by Jonathan Oatis)

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Alibaba overhauls e-commerce businesses, appoints new CFO

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December 6, 2021

(Reuters) -Alibaba Group Holding Ltd said on Monday it was reorganising its international and domestic e-commerce businesses and would appoint a new chief financial officer.

The changes come as Alibaba faces headwinds on multiple fronts, including increased competition, a slowing economy and a regulatory crackdown.

The e-commerce giant’s Hong Kong-listed shares slid 8% in early morning trade.

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Alibaba said it would form two new units to house its main e-commerce businesses – international digital commerce and China digital commerce, in a bid to become more agile and accelerate growth.

The international digital commerce unit will house Alibaba’s overseas consumer-facing and wholesale businesses, and include AliExpress, Alibaba.com and Lazada. The unit will be headed by Jiang Fan, whose past roles include president of the Taobao and Tmall marketplaces.

Alibaba will house its domestic commerce businesses in the China digital commerce unit which be led by Trudy Dai, a founding member of Alibaba, it said.

The company’s deputy chief financial officer, Toby Xu, will succeed Maggie Wu as the company’s chief financial officer from April, it said, describing his appointment as part of the company’s leadership succession plan.

Xu joined Alibaba from PWC three years ago and was appointed deputy CFO in July 2019.

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Wu, who helped lead three Alibaba-related company public listings as CFO, will continue to serve as an executive director on Alibaba’s board.

Last month the company slashed its forecast for annual revenue growth to its slowest pace since its 2014 stock market debut and saw sales at its banner event, online shopping festival Singles Day, grow at their slowest rate ever.

(Reporting by Akriti Sharma in Bengaluru and Brenda Goh in Shanghai; Editing by Edwina Gibbs)

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China Evergrande shares hit 11-year low after firm says no guarantee it can meet repayments

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December 6, 2021

By Clare Jim

HONG KONG (Reuters) – Shares of China Evergrande Group tumbled 12% to an 11-year low on Monday after the firm said there was no guarantee it would have enough funds to meet debt repayments, prompting Chinese authorities to summon its chairman.

The shares fell as a 30-day grace period on a coupon payment of $82.5 million due on Nov. 6 comes to an end on Monday.

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Evergrande, once China’s top-selling developer, is grappling with more than $300 billion in liabilities. A collapse could send shockwaves through the country’s property sector and beyond.

In a filing late on Friday, Evergrande, the world’s most indebted developer, also said it had received a demand from creditors to pay about $260 million.

That prompted the government of Guangdong province, where the company is based, to summon Evergrande Chairman Hui Ka Yan, and it later said in a statement it would send a working group to the developer at Evergrande’s request to oversee risk management, strengthen internal controls and maintain normal operations.

In a series of apparently coordinated statements late in the evening, China’s central bank, banking and insurance regulator and its securities regulator sought to reassure the market that any risks to the broader property sector could be contained.

Short-term risks caused by a single real estate firm will not undermine market fundraising in the medium and long term, the People’s Bank of China said, adding that housing sales, land purchases and financing “have already returned to normal in China”.

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Evergraned’s stock fell more than 12% to HK$1.98, its lowest since May 2010.

(Reporting by Clare Jim; Editing by Anne Marie Roantree and Christopher Cushing)

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Oil gains more than $1/bbl after Saudi price hike

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December 6, 2021

By Florence Tan

SINGAPORE (Reuters) – Oil prices rose by more than $1 a barrel on Monday after top exporter Saudi Arabia raised prices for its crude sold to Asia and the United States, and as indirect U.S.-Iran talks on reviving a nuclear deal appeared to hit an impasse.

Brent crude futures for February gained $1.69, or 2.4%, to $71.57 a barrel by 0033 GMT while U.S. West Texas Intermediate crude for January were at $67.92 a barrel, up $1.66, or 2.5%.

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On Sunday, Saudi Arabia raised January official selling prices for all crude grades sold to Asia and the United States by up to 80 cents from the previous month.

The price hikes were implemented despite a decision last week by the Organization of the Petroleum Exporting Countries and their allies including Russia, a group known as OPEC+, to continue increasing supplies by 400,000 barrels per day in January.

Prices were also buoyed by diminishing prospects of a rise in Iranian oil exports after indirect U.S.-Iranian talks on saving the 2015 Iran nuclear deal broke off last week. European officials voiced dismay on Friday at sweeping demands by Iran’s new, hardline government. The talks are expected to resume middle of this week.

Both benchmarks rebounded after falling last week for their sixth week in a row for the first time since November 2018 on concerns that the new coronavirus variant Omicron could impact global economic growth and fuel demand.

In another sign of the turmoil unleashed by the ever-changing pandemic, the head of International Monetary Fund said the global lender is likely to lower its global economic growth estimates because of the new variant.

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Omicron has spread to about one-third of U.S. states as of Sunday.

(Reporting by Florence Tan; Editing by Stephen Coates)

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