The week’s news included; UK lockdown easing measures summarised, Virgin Media & O2 £31bn merger confirmed, JD & Footasylum merger blocked, Adam Neumann sues WeWork owner SoftBank
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:
- City A.M – Three lessons law firms can learn from rivals’ collapses amid coronavirus.
- The Guardian – Covid-19 tracking app must satisfy human rights and data laws
- Lawcareers.net – What legal rights do vegetarians and vegans have?
- BBC News – Which country has the most generous deal?
1. UK LOCKDOWN MEASURES
Boris Johnson has revealed the UK government’s conditional plans to wind down the coronavirus lockdown. He stressed any such easing of measures was contingent upon falling rates of infections. Three of the five levels of lockdown easing were laid out by the Prime Minister and they are as follows;
- From week beginning 11 May, those who can’t work from home will be actively encouraged to return to work. When returning to work however, public transport should be avoided.
- Those can work from home should continue to do so.
- From Wednesday 13 May People can spend an unlimited amount of time exercises or sitting in parks but social distancing must be maintained. Such exercise or trips to the park must be with those who you live with.
- There will be larger fines for those who breach rules
- On 1 June at the earliest, some primary schools will reopen. The resuming of attendance will be staggered, with Reception returning to school first, followed by year 1 and so on.
- On 1 July at the earliest, some hospitality businesses may reopen, if safe to do so.
The government message is now ” Stay Alert” as opposed to “Stay at Home”. Wales and Scotland however, retained the “Stay at Home” message which has raised questions about the England’s choice to unilaterally change its message.
There will no doubt be a lot of serious questions for businesses regarding the practical steps of reopening and bringing staff back safely. The government will issue guidance for business over the coming days. We will be monitoring the guidance as it comes through, check out socials for regular updates.
2. VIRGIN & O2 TO TIE THE KNOT
The £31 billion merger between Virgin Media and O2 has been confirmed by the owners of two telecoms firms. Liberty Global, the owner of Virgin Media and Telefonica, O2’s owner, agreed to tie the knot. The two owners will receive a combined £7.1 billion from recapitalisation proceeds. Under the deal, the firm will invest billions in high speed broadband and 5G. This consolidation will help the combined company take on the likes of BT. The combined company will have over 46 million customers. Any deal will still be subject to regulatory approval and this will no doubt be a huge hurdle. O2 and Virgin Mobile will likely enjoy a 30% share of the market, exceeding BT & EE. Whether the regulators will see the deal as a lessening of competition remains to be seen.
3. MERCEDES BENZ EMISSIONS SCANDAL
Daimler AG, the owner of Mercedes Benz, was sued over its involvement in the diesel emissions scandal. Mercedes Benz vehicles were found to have included “defeat devices” in their engines to make emissions lower under test conditions. On the road however, emission levels were multiple times higher than advertised. Daimler was fined €870 million and had to recall over a quarter of a million vehicles. Law firm, Milberg Ltd, has now launched a group action lawsuit against Daimler seeking compensation for affected drivers in the UK. The firm is seeking people who owned or leased a “BlueTec” diesel Mercedes manufactured between September 2009 and February 2016 to join the lawsuit.
4. JD SPORTS FOOTASYLUM MERGER BLOCKED
JD Sports acquisition of rival Footasylum has been blocked. The Competition and Markets Authority claims the deal will harm consumers by reducing competition, given the similarity of the two retailers. The CMA suggests the only way to address the concerns was sale to an approved buyer. JD agreed to buy Footasylum over a year ago for £90 million. It argues the CMA failed to understand the market and will consider appealing the decision. JD Sports turned over £4.7 billion in 2019 but its share price has sunk 40% in 2020.
5. ADAM NEUMANN SUES SOFTBANK
Founder and former WeWork CEO Adam Neumann has sued SoftBank over its decision to pull a $3 billion tender offer to sell WeWork shares. SoftBank pulled the offer because WeWork failed to meet a number of conditions. Among the reasons were concerns about the unresolved criminal and civil investigations into WeWork, and a failure to obtain antitrust approvals. WeWork itself also launched legal action against Softbank over its decision, claiming the bank was putting its own interests above the company. Adam Neumann accused Softbank of abusing its power. Neumann was set to receive a huge $970 million from the sale of shares.
Neumann was ousted from the helm of WeWork last year after the firm’s failed IPO. The company’s value tanked over 80% in weeks and IPO plans were pulled as concerns were raised by investors over its profitability and corporate structure. SoftBank subsequently bailed out WeWork in a $8 billion deal and Neumann agreed to step down as CEO. He did however, receive a huge $1.7 billion severance package.
6. US JOBLESS SOARS
The number of unemployed people continue to rise in the US, reaching a staggering 33.3 million. An additional 3.2 million applied for unemployment benefits. This is still below the peak of 6.9 million who applied in early April but still nearly ten times above the average. Around 20% of America’s entire workforce sought unemployment benefits and more are expected to apply. Major firms including Uber, AirBnb and GE along with smaller business have all announced thousands of job cuts due to the outbreak. The coronavirus outbreak has turned the US job market upside down. Only in March, the US saw unemployment reaching a 50 year low at just 3.5%. The true US unemployment rate is now predicted to be around 15%. Some companies will begin recalling employees after the lockdown ends but some will be forced to make permanent cuts. How quickly the US economy will restart again remains to be seen.
7. UBER STRUGGLES
Uber has announced a nearly $3 billion loss in Q1 as it cuts 3700 jobs. The ride-hailing app is feeling the pinch of coronavirus and needs to reduce its hefty operating expenses. These cuts however, will cost $20 million in severance packages. Uber posted better than expected revenue of $3.54 billion but lost a huge $2.94 billion in the quarter. The loss has largely been driven by fewer customers due to worldwide coronavirus lockdowns. Fortunately for Uber, Uber Eats bumped up revenue and mitigated some of the losses. Uber currently employs 27,000 people excluding its 3.7 million contracted drivers. CEO Dara Khosrowshahi will forego his base salary. He received $45 million in total pay last year.
8. TESLA HQ MOVE
Tesla CEO, Elon Musk has pledged to move the carmaker’s headquarters out of California in response to lockdown measures. The Alameda County health department blocked Tesla’s plan to reopen its factory due to wider state lockdown measures. All non-essential business are required to be shut until further notice. The factory is Tesla’s only US plant and produces 415,000. Elon Musk tweeted that Tesla will now move its headquarters and operations to Texas/Nevada over the issue. Any operations remaining in California would be contingent on how California treats the company going forward. Musk is making headlines for numerous reasons as two weeks ago he wiped $14 billion of Tesla’s market value with a single tweet. He has been critical of the government response to coronavirus lockdown measures, claiming the approach is “fascist”. Tesla employ 10000 people in the US.
9. DEBENHAMS STORE CLOSURES
Debenhams has announced that it will permanently close 5 stores after failing to agree terms with landlords. Last month, the high street retailer fell into administration to protect the business during the coronavirus lockdown. Debenhams struck a deal with landlords and was able to keep 120 of its 142 stores open after the lockdown. For these five stores however, Debenhams failed to reach a deal and will be forced to close permanently. The closures will see the loss of 1000 jobs. The stores closing will be centres at Reading, Croydon, Birmingham, Leicester and Glasgow Silverburn.
10. VIRGIN ATLANTIC JOB CUTS
Virgin Atlantic is to slash 3000 jobs in a bid to stay afloat. Richard Branson’s airline has been seeking support globally as its Australian arm has already fallen into administration. In the UK, the airline is reshaping operations alongside the job cuts. Virgin Atlantic is reducing its fleet by 7 and retiring its Boeing 747 jets. The airline will no longer serve Gatwick Airport for the time being. Its landing slots will be retained however, in case demand picks up again.
This follows the wider trend in the airline sector which has been devastated by the coronavirus outbreak. Two weeks ago, BA revealed 12000 job cuts and Ryanair revealed 3000. With tourism and travel likely to be stunted for remainder of 2020 further restructuring will likely continue.