This week’s news includes; Brexit delay, Levi Jeans stock exchange listing, JLR wins important trademark case, JD acquires Footasylum, Google creates cloud based gaming system
Below are our top 10 stories that you need to know about. Be sure to check our twitter page and Facebook page for regular posts of important headlines. Get all the important stories and insights straight into your inbox by subscribing to our mailing list here.
Opinion articles of the week:
- BBC News – Why Tesco failed in the states
- All About Law – The changing roles of lawyers.
- City A.M – Monetary policy is no job for the politicians
1. BREXIT DELAYED
Leave with no deal on 12th April 2019 or leave with the negotiated withdrawal agreement on the 22nd of May. These are the two options the EU has granted Theresa May. Theresa May will now seek to bring her deal to Parliament for a third time, despite the blocking earlier last week. The Speaker of House John Bercow blocked May’s attempt to bring the deal back to Parliament, invoking a law from 1604. He stated it was not permissible for May to bring the same unchanged deal before the house. Theresa May can now only bring the deal back to Parliament with “substantial changes”. It is also becoming clearer that the vote may not be held at all if she does not believe she has the numbers.
May has not helped the sale of her deal to Parliament. In a bizarre speech on Thursday she expressed her frustration with Parliament for rejected the deal and blamed them for the impasse. She reached out to public claiming that “I’m on your side” (view). This was met with anger by many Parliamentarians.
EU President Donald Tusk stated that until April 12, all options are on the table, including the revocation of Article 50. A UK petition to revoke article 50 hit 5 million signatures although Theresa May has dismissed this prospect. Crucially, the UK must decide whether to participate in European Parliament elections by April 12. Theresa May initially dismissed this idea but if her deal is rejected, she explained that the possibility remained open in order to obtain a longer extension.
Sky News explores what’s coming up this week in Parliament
2. DISNEY FINALISES $71 BILLION FOX PURCHASE
Disney has finalised its $71 billion acquisition of 21st Century Fox. Under the deal, Disney will acquire all Fox film and TV studios. FX Networks and National Geographic will also be absorbed into Disney. Disney has been making moves to challenge the growing threat of Netflix and Amazon. Its recent acquisitions will allow Disney to provide a full entertainment package, from content creation to distribution. Disney also increased its stake in Hulu to 60%.
There are concerns however, that the merger will lead to need to numerous job cuts. It is estimated that over 4,000 jobs could go following the deal.
Check out our Netflix company watch page for more on why Disney is so worried.
3. LEVI JEANS LISTING
Levi Jeans has made a strong return to the stock exchange and has exceeded it’s target price. Shares in the jean-maker were priced at $17 a share, above the $14-$16 targets, after $623 million worth of shares were sold to institutional investors before the public offering went live. On IPO day Levi shares closed up 31.8% at $22 a share. Levi Jeans delisted in 1985 but this return to the market values the firm at $8.7 billion.
Denim sales have struggled since their peak in the 90’s. Over the past year however, jean sales have been rising globally and Levi Jeans has benefitted from and has seen it’s own sales increase. Levi jeans was founded 1853 and turned over $5.5 billion in 2018.
4. GOOGLE FINED
The EU has fined Google €1.49 billion for breaching anti-trust rules through its search engine. Google has abused its market dominance by blocking out rivals from displaying search ads. This was achieved through restrictive clauses in AdSense contracts which prohibited publishers from displaying rival ads or restricting how rival ads were published.
The fine relates to conduct between 2006 and 2016. Google has since updated its AdSense contracts with third parties. This is Google’s third EU fine over anti-competitive behaviour in just two years. The tech giant has faced over €8 billion in fines since 2017 although the figures aren’t exactly breaking the bank. In 2017 alone Alphabet made nearly €30 billion in pre-tax profits.
5. JLR WINS LEGAL CASE
Jaguar Land Rover has won an important trademark case in China against Jiangling Motor Corporation. The Beijing Chaoyang District Court ruled that JMC’s Land wind X7 copied five unique features in JLR’s Range Rover Evoque. JMCs model although it appears practically identical, it retails at just £14, 000 a cool £26,000 cheaper than JLR’S Vogue. The court ordered JMC to end all sales and manufacturing of the Landwind.
This case is a landmark win for JLR but also big business. The Chinese legal system has traditionally protected local companies who have allegedly copied Western designs and technology. This case could set an important precedence for future copyright cases involving global brands in China.
6. SAINSBURY’S AND ASDA CHARM OFFENSIVE
Sainsbury’s and Asda have made promises of price cuts and store closures to persuade the CMA. The Competition and Markets Authority expressed deep concerns about the potential harm of the merger to industry competition and consumers. Based on its preliminary findings, the CMA is unlikely to approve the merger. The findings were lauded by supermarket suppliers who would undoubtedly be squeezed if the merger were to be approved.
In response however, the supermarkets have now committed to sell up to 150 stores if the merger is approved. They also claimed that the merger would achieve £1.6 billion in savings and £1 billion of this would be passed on to consumers. Sainsbury’s would also cap profits it makes on petrol. An independent body would be invited to monitor this. It is hoped these guarantees can alleviate the concerns expressed by the CMA but whether it will be sufficient remains to be seen. The final decision will be released on 30 April 2019.
7. JD TO ACQUIRE FOOTASYLUM
JD is set to acquire struggling rival Footasylum for £90 million. JD is offering 82.5p per share, well above the current price of 40p per share and has received management approval. The deal still requires shareholder approval.
JD recently acquired a 18.5% stake in Footasylum and now seeks full control. Co-founder of JD Sports also co-founded Footasylum in 2005. JD dwarfs Footasylum however, with 2400 stores across Europe, while Footasylum has only 65 UK high street stores. Footasylum issued a profit warning last September and it’s share price slumped.
8. GOOGLE JUMPS INTO GAMING
Google has revealed that it will be entering the gaming sector in a big way. The tech giant will launch Google Stadia, where gamers will be able to stream video games to play on any device. Stadia will be cloud based and there will be no console. The service will be accessible on Chrome browsers, Chromecast devices or Google Pixel devices. The service will be integrated with Youtube, allowing for seamless upload and sharing. Google will also release its own accompanying controller.
Google has made a number of big name hires from the gaming industry to bring its product to life. The service will launch in the US, Canada and Europe in late 2019.
9. CANCELLATION OF BOEING ORDERS
Garuda Indonesia has become the first airline to request cancellation of its order of the Boeing 737 Max jet. After the tragic Ethiopian Airlines, Boeing’s 737 Max planes have been grounded globally. Garuda has only one 737 Max in its fleet but had an order for 49 new jets, which will now be cancelled. Boeing currently have over 5,000 orders of 737 Max jets. The manufacturer has however, announced that it will retrofit “safety alarms” in the cockpits of all 737 Max planes in a bid to assure customers. Whether this cancellation will be the first of many, remains to be seen.
For a full explanation of the Boeing 737 Max saga, please check out our insight article.
10. UK ECONOMY
The UK unemployment rate has fallen to the lowest rate since 1975, according to the ONS. Unemployment fell by 0.1% to 3.9% in the three months to January 2019. Crucially, wages also grew by 3.4% , ahead of inflation at 1.9%. The number of people in work rose by 222,000 with an employment rate of 76.1%. This is the first time that unemployment has fallen below 4% since 1975.
The political crisis caused by Brexit could impact these figures going forward as numerous companies anxiously consider contingency plans. The Bank of England voted to keep interest rates 0.75% in light of the Brexit uncertainty.