The week’s news included; Court of Appeal classifies Deliveroo riders as self-employed, BuzzFeed to go public via SPAC deal, Hotel Chocolat buys Rabot 1745 for £4, PrettyLittleThing launches its own hotel.
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:
- Standard – Why Sainsbury looks ripe to follow Morrisons as a takeover candidate.
- City A.M – Investors should have a duty to investigate links to modern slavery.
- BBC News – How fashion designers flipped to athleisure during Covid.
1. DELIVEROO RIDERS RULED SELF-EMPLOYED
The UK Court of Appeal has ruled that Deliveroo riders are self-employed contractors. Deliveroo riders, alongside the Independent Workers’ Union of Great Britain (IWGB), had sought to be classified as workers and obtain collective bargaining rights. The Court of Appeal held however, that Deliveroo riders did not have an “employment relationship” with the company. This is partly because riders have extensive flexibility and have complete freedom to do other jobs. The court recognised that riders had the right to organise but just not through a trade union as they could not be considered workers. This contrasts with Uber’s case, where the courts considered Uber drivers to be workers and therefore entitled to employment rights.
The news buoyed Deliveroo’s share price, as it rose 8.5% on the day to around £2.75. This is still well beneath its IPO price of £3.90. IWGB is considering appealing to the Supreme Court.
2. J&J PAYS $230M SETTLEMENT
Johnson and Johnson (J&J) is to pay $230 million to settle a New York lawsuit alleging they fueled the opioid crisis in the state. J&J neither accepts or denies liability as part of the settlement. This is the latest settlement in a long list of legal claims against J&J. In 2019, J&J agreed to pay out $572 million to the state of Oklahoma over the same issue. Big pharmaceutical companies had been systematically downplaying risks of addiction and aggressively pushing doctors to prescribe its opioid painkillers. J&J was a primary offender and is now paying the price.
States across America are taking action against big pharmaceutical companies for contributing to a huge opioid crisis ravaging the USA. In the 20 years to 2019, there have been roughly 400,000 deaths from opioid overdoses in the USA, with nearly 50,000 deaths in 2019 alone.
3. BUZZFEED SPAC DEAL
Digital media site BuzzFeed is set to go public via a SPAC deal and is valued at $1.5 billion. BuzzFeed rose to popularity amongst millennials and Gen Z with its online quizzes and light-hearted articles. Recently, it has sought to cement its position in the media space with ground breaking articles, most notably on the Chinese Uighur concentration camps. It merged with Huffington Post last year after being forced to slash its workforce. BuzzFeed had previously scrapped plans for an IPO. This SPAC merger will now provide the access to capital the company needs. BuzzFeed posted revenue of $321 million last year and lost $2.9 million.
Special Purpose Acquisition Companies (SPACs) are publicly listed shell companies that are designed solely to buy and invest in other companies. When SPACs list on an exchange, the entity itself typically has no track record or operations. Investors buy into SPACs primarily based on the calibre of the team running the SPAC. Once money has been raised, the SPAC will scout companies to merge with or invest in to generate returns for investors.
4. VISA BUYS TINK
Visa is to buy open banking company Tink for €1.8 billion. Swedish firm Tink provides data to financial service firms allowing them to develop banking products and services. This includes aggregation of financial data and risk insights. For banking customers, Tink allows for account aggregation so payments and accessing statements from multiple banks can be done through a single application.
Open banking is where third party applications are granted access and use of consumer financial data and accounts to help develop and improve financial services. This deal is expected to provide a boost to the open banking landscape. Tink already boasts integration with 3400 financial institutions across Europe. Access to Visa’s vast network will help accelerate Tink’s growth and will help Visa keep up with Mastercard in the open banking space.
Visa is on an expansion drive and this move comes soon after Visa’s terminated €5 billion merger with fintech firm Plaid due to antitrust issues. The deal with Tink is subject to regulatory approval.
5. HOTEL CHOCOLAT BUYS RABOT FOR £4
Hotel Chocolat has bought cosmetics company Rabot 1745 for just £4. Rabot 1745 specialises in “cacao-powered beauty” and features chocolate themed cosmetic products. Hotel Chocolat already owned 47% of Rabot but this deal will give Hotel Chocolat full ownership. Hotel Chocolat’s non-executive chairman, Andrew Gerrie, will receive £3 under the sale, while other investors will share the remaining £1. Gerrie will also receive repayment of his £744,000 loan issued to Rabot as well as 200,000 new Hotel Chocolat shares.
Rabot is in hot water, posting a £400,000 loss last year. The purchase price of £4 is less than Hotel Chocolat’s cheapest chocolate box which sells at £5. Hotel Chocolat however, is confident that it can turn the business around. The confectionary giant will integrate Rabot 1745 beauty products into its outlets. This will diversify Hotel Chocolat’s income and provide a new unique attraction for customers.
6. RETURN OF ROAMING FEES
Mobile network operators are introducing roaming charges in Europe, despite earlier promises not to do so. For years, mobile network operators had competed to lower and scrap international roaming fees. In 2017, roaming fees were banned for EU states. The Brexit deal, however, allows for roaming fees to be reintroduced.
From January 2022, New EE customers will be charged £2 a day to use their contractual allowances in Europe. O2, on the other hand, will amend its fair use policy. The network provider will charge all customers £3.50 per GB used in Europe, if they exceed 25GB of data a month. These new rules will apply from August 2.
7. CANADA GOOSE STOPS USING FUR
Luxury fashion brand, Canada Goose, has announced it will stop using animal fur on its clothing by the end of 2022. The brand will stop purchasing fur by the end of 2021 and gradually stop using it over the next 18 months.
Canada Goose came under fire in recent years for using coyote fur on its coats, often trapping the animals in cruel contraptions. The company now says it is striving for greater sustainability in its processes and products. Growing pressure from animal rights groups has seen the fashion industry rethink its use of fur. Canada Goose follows various other fashion brands in ending the use of animal furs in their products. In 2018, Burberry it announced it would stop using rabbit, fox, mink, and racoon fur in its products. Nordstrom recently announced it would also stop the sale of animal furs and skins.
8. EMPLOYERS TACKLE VACCINE ISSUE
Hong Kong airline Cathay Pacific has warned aircrew that if they are not vaccinated by 31 August, they may be fired. Cathay says the segregation of vaccinated and non-vaccinated crew members is becoming increasingly difficult. Across the globe, coronavirus restrictions mean that only fully vaccinated people are exempt from quarantine after undertaking foreign travel. Cathay states that “vaccination is a critical component” in helping the airline industry rebound from the torrid time it has faced during the pandemic. 90% of Cathay’s pilots and 65% of its cabin crew have been or are scheduled to be vaccinated.
JP Morgan has announced that US staff will be obliged to provide their vaccination status to the company. To expedite the return of staff to the office, the investment bank will use the data to devise proper social distancing and safety measures. Those with both vaccine doses can return without needing a face mask. Staff may however, choose not to disclose the information. Only about a quarter of staff are at JP Morgan’s US offices but CEO Jamie Dimon wants most staff back from July. These surveys cannot be introduced in the UK and Europe because privacy laws essentially prevent employers collecting such a data on staff. Competitor Morgan Stanley has gone a step further and has currently prohibited non-vaccinated staff from returning to their New York offices.
There will no doubt be legal sagas over the right of employers to fire or restrict staff who choose not to get the vaccine. Check out our insight article exploring this issue.
9. PRETTY LITTLE HOTEL
Fashion company PrettyLittleThing is opening a hotel as part of a bold move into hospitality. The hotel, based in Devon, aims to provide a luxury hotel experience. Currently, a stay at the hotel can only be won through competitons but bookings will open soon. Winners of the competition will receive accommodation for up to three guests, PrettyLittleThing merchandise, a private chef, use of spa facilities and a makeup artist.
With restrictions on foreign travel seeming to continue throughout summer, demand for staycations has soared 14,400% this year. Fortunately for PrettyLittleThing, they have the brand appeal and the capital to venture into this increasingly profitable field. The rise of online fashion retailers has been remarkable, and this move by PLT is evidence of this. Their connection with popular culture has allowed them to transcend fashion retail and shift into other spaces. Whether competitors will follow suit remains to be seen.
10. LONDON UNDERGROUND GETS COVERAGE
London Mayor Sadiq Khan has announced that the London Underground network will have 4G and 5G coverage by the end of 2024. By the end of 2022, Oxford Circus, Tottenham Court Road, Euston, Bank and Camden Town will have internet access. The eastern half of the Jubilee line currently has 4G service but this will be rapidly expanded across the whole network. Transport for London has struck a 20-year £1 billion deal with BAI Communications who will provide the service. Bringing 4G network service to the Underground was one of Sadiq Khan’s campaign promises.