The week’s news included; Viagogo to sell all business outside of North America to complete StubHub takeover, Fox News & Trump’s lawyers sued for $2.7bn, FCA clamps down on Klarna, Sony selling PS5s at a loss.
Opinion articles of the week:
Opinion articles of the week:
- FT – The UK’s £35bn fashion and textile industry is facing “decimation” as a result of red tape and travel restrictions thrown up by the new post-Brexit trade agreement with the EU.
- Sky News – Electric vehicle charge points ‘must be fitted five times quicker’ to hit 2030 target.
- The Guardian – Is big tech now just too big to stomach?
- FT – Can viral app Clubhouse break into the mainstream?
1. LSE COMPLETES REFINITIV TAKEOVER
The London Stock Exchange (LSE) has officially completed its £20 billion acquisition of data company Refinitiv. LSE will gain a huge amount of financial market data but also take on Refinitiv’s £9 billion debt. This will see the stock exchange compete with the likes of Bloomberg and S&P Global in the world of financial market data. The company did recognise the challenges of integrating during the pandemic but are confident the deal will see LSE become a market giant.
Refinitiv is a financial software company created by Blackstone Group and Thomson Reuters. The LSE’s acquisition is an all-share deal. Blackstone group will receive a 37% stake in LSE but no cash.
LSE had to sell off its holdings in the Italian stock exchange, Borsa Italiana, to gain approval for the deal. LSE will also be required to allow access to its clearing services for 10 years.
2. VIAGOGO – STUBHUB MERGER
The Competition and Markets Authority (CMA) has stated that Viagogo will need to sell all of its business outside of North America to receive approval for its StubHub merger. The CMA found that the merger could harm consumers and reduce competition in the ticket resale sector. Viagogo and StubHub hold over 90% of the UK’s ticket resale market. Viagogo bought StubHub last year in a $4.1 billion deal. To satisfy the CMA’s competition concerns, Viagogo will need to sell its international business, including its UK arm. Viagogo will not have any direct influence over the company as it must be completely separate.
The purchaser of Viagogo’s international business must be approved by CMA and they will determine the key terms of the sale. Viagogo said it was “pleased” that a solution was found to allow its blockbuster acquisition to proceed.
3. FOX NEWS & TRUMP’S TOP LAWYERS SUED FOR $2.7BN
Voting technology company Smartmatic has launched a $2.7 billion lawsuit against Fox News and Donald Trump’s lawyers, Rudy Giuliani and Sidney Powell. They claim the parties worked together to create a ‘disinformation campaign’ regarding the veracity of the recent US election. Smartmatic claims that this campaign deliberately misled the public and has caused material damage to their company. They have suffered a decline in business, threats against staff and project a $760 million drop in its parent company’s profits over the next five years. All parties allegedly promoted various conspiracy theories about Smartmatic, which only served voting stations in Los Angeles County in the 2020 election. The firm will be seeking $2.7 billion in damages.
Dominion Voting Systems have also sued Giuliani and Powell over the same issue. Dominion faced similar allegations of election fraud from Trump and his team. CNN looks at the case in more detail.
4. MOONPIG £1.2BN IPO
Greetings card company Moonpig launched its IPO last week and it was a success. Moonpig put nearly £500 million of shares on the market. Shares were sold at the top end of the range at 350p per share. This gave the company a huge market capitalisation of £1.2 billion. Moonpig launched in 2000, has over 2000 employers and sends 46 million cards a year. Revenue at the firm soared 135% to £156 million in the six months to October 2020.
5. FCA CLAMPS DOWN ON KLARNA
The Financial Conduct Authority (FCA) is to clamp down on unregulated buy-now-pay-later firms like Klarna. Such firms are not currently subject to regulation by the FCA but with their growing presence in the retail sector, the FCA deemed it proper to step in. Swedish firm Klarna is one of the largest players and is the largest private fintech company in Europe. A unicorn, worth $11 billion, it boasts over 1 million monthly active users. Partnerships with popular retailers like Asos and Topshop have seen its usership soar. The FCA will now seek to extend its powers to bring Klarna and similar firms into the scope of regulation. Klarna competitor Zilch has recently become the first buy-now-pay-later firm to secure its FCA license in anticipation of pending regulation.
Buy now pay later firms, including Klarna, have come under fire for getting young people easy access to credit, leaving them with mountains of debt. The firms do not charge interest or fees, unless if the borrower fails to make payment on-time. Crucially, the firms’ credit checks are often basic, so they do not fully assess a borrower’s ability to make repayments. Under FCA regulation, the firms will undoubtedly need to do better assessments and improve their practices.
6. DAIMLER BUSINESS SPLIT
The owner of Mercedes-Benz, Daimler, is to split into two entities. The German automaker group will separate its truck and Mercedes-Benz car business to allow each arm to better focus on new technologies within their fields. Both businesses will be investing heavily in green and electric vehicles. The truck arm of Daimler will list on the Frankfurt stock exchange by the end of 2021, meaning a blockbuster flotation is on the way. Daimler’s truck division could be valued at up to €35 billion.
7. SHELL POSTS $20BN LOSS
Shell has posted a huge $19.9 billion for loss for 2020. The oil and gas giant has suffered heavily due to the pandemic as energy prices have tumbled. Last year, the company slashed around 9000 jobs as a result. It faced billions of dollars of accounting charges against the value of the company. This was the main contributory factor to the heavy losses. Without the charges, Shell’s profits were still down 71%.
The whole oil and gas sector is reeling from the pandemic, as competitor BP also posted a $18.1 billion loss. The pandemic has forced energy giants to accelerate their shift away from fossil fuels towards renewable energy. Shell had already announced plans to invest around $1 billion a year on renewable energy. Last year, it pledged to make further investments to reach net-zero emissions by 2050.
8. AMAZON’S BIOMETRIC PAYMENTS
Amazon is expanding its palm scanning payment system to more of its Amazon Go stores. Three new Amazon Go stores will receive the technology. Last year, two Amazon Go stores in Seattle launched the technology and it proved successful. Now, it will be rolled out to multiple locations across the state of Seattle.
The system allows customers to pay for goods using only their palms. Customers simply scan their palm, and the system registers their palm to their account. They will not necessarily need an Amazon account, simply a credit card and phone number. Palm scanning technology is tipped to be used for access to stadiums and offices in the future. As personal identities cannot be easily ascertained via palms, it better protects the user when compared with other biometric scanning technology.
9. BEZOS STEPS DOWN AS CEO
Jeff Bezos is to step down as CEO of Amazon. He will instead take up the role of executive chairman. Bezos said this will give him the ‘time and energy’ to focus on other ventures, like his Blue Origin space exploration programme. Amazon’s head of cloud computing, Andy Jassy, will take over as CEO.
Bezos had been leapfrogged by Elon Musk as the richest man in the world. Despite this, Bezos is still worth a cool $196 billion. Jeff Bezos founded Amazon as a bookstore in 1994. He branched out to become the e-commerce marketplace we know today in 2000.
10. SONY SELLING PS5s FOR LOSS
Sony has told investors that it is selling its new PlayStation 5 consoles at a loss. The tech giant has sold 4.5 million consoles since its release in November. On all of these sales however, the “strategic price point” was lower than the cost of production. The costs of manufacturing the PS5 has soared to around $450 per console. With an RRP of $499, Sony may just break even on standard console sales. The Digital Edition of the PS5 retails at $399 so Sony loses money on every sale.
Despite this, Sony’s gaming division saw strong results in Q4, posting a $2.5 billion increase in operation income. The losses on PS5 console sales were offset by gains in PS4 and additional content sales.
Sony and Microsoft are experiencing huge shortages in the supply of their next generation consoles. The PlayStation 5 and Xbox Series X are both sold out at almost all retailers as demand for the consoles soar. When stocks are replenished retailers sell out within seconds. Microsoft’s CFO has warned shortages could last until mid-Spring.
