Top 10 Stories of Last Week! 28/02/2022

The week’s news included; Chelsea FC up for sale, Airbus sues Qatar Airways for $220m in ongoing dispute, CVS steps into the metaverse, Footlocker braces for Nike pull out.

There will be no top 10 next week. Check our social media pages to keep up with the latest news!

Below are our top 10 stories that you need to know about. Be sure to check our twitter page, Facebook page and Instagram 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 – As the cashless world grows, our financial ecosystems must build strong structures
  • The Guardian – Could Putin be exploring cryptocurrencies to bypass western sanctions?
  • City A.M – The healthcare system has much to gain from M&A. Digital healthcare founders have an important market to penetrate, writes Ranjan Singh
  • BBC News – Elon Musk’s Starlink arrives in Ukraine but what next?

1. WESTERN COMPANIES CUT TIES WITH RUSSIA

In response to the ongoing invasion of Ukraine, a range of Western companies are cutting ties with Russia or Russian products. Asda, Aldi, Morrisons, Co-op, Waitrose and Sainsburys have all removed Russian vodka from their shelves, alongside other products. Sainsbury’s also announced it would change the name of chicken Kiev to “chicken Kyiv” as a sign of solidarity with Ukraine. Microsoft and Apple have also stopped selling their products in Russia. A range of luxury fashion giants have suspended their sales in Russia including Chanel, LVMH, Kering and Hermes. Other brands including H&M and Burberry have all paused activities too.

This action by corporations was coupled with new sanctions by the UK & EU in a bid to cripple Putin’s inner circle and force an end to the war. The EU sanctions targeted 26 Russian Oligarchs and banned Russian air carriers from EU airports and airspace. The UK banned Russian ships from accessing UK ports. One of these designated Russian oligarchs, Mikhail Fridman, gave a rare press conference and argued that these sanctions on oligarchs will do nothing to stop the war. 

On the other hand, Russia has moved to block Western media and social media in its country. Facebook and Twitter have been blocked in Russia while BBC and Voice of America have also been blocked.

One element that looms overhead is the EU’s reliance on Russian natural gas. Across mainland Europe, Russian gas accounts for roughly 35% of supply. The supply of Russian gas to Europe has been a totem of peace for the past 30 years. Could Russia turn off the gas supply to retaliate against EU sanctions? It’s possible but it would mark a disastrous escalation of tensions and could lead to war between the EU (therefore Nato) and Russia. Regardless, Germany has said it is prepared in the event Russia does decide to turn off the gas.

2. CHELSEA FC UP FOR SALE

Chelsea Football Club owner Roman Abramovich has put the club up for sale amid growing calls for the Russian billionaire to be sanctioned. The Premier League has supported his decision and called his position “unsustainable” due to Russia’s invasion of Ukraine. Politicians and journalists are calling for Abramovich to face sanctions and asset freezes like other Russian oligarchs residing in the UK. Given the potential for Abramovich’s assets to be frozen, a quick sale is likely and the club could be sold in the coming week. The fastest sale of a club has been completed and approved in 10 days so a rapid sale is well within the realms of possibility. 

Abramovich bought Chelsea in 2003 for £140 million. His ownership ushered in a huge cultural shift in football, characterised by increased club spending on players alongside the rapid expulsion of poorly performing managers. Chelsea have enjoyed unrivalled success since he took over, winning 19 major trophies in just 19 years. Chelsea is currently valued at around £2 billion. 

3. AIRBUS QATAR AIRWAYS DISPUTE

Airbus is seeking a $220 million award from Qatar Airways in an ongoing legal dispute over undelivered planes. The aerospace giant requested the award in an English court last week as a counterclaim against Qatar Airways. Qatar has already sued Airbus for $600 million in compensation for flaws and damage to A350 aircraft it had sent to Airbus to repaint. Qatar claims this is a safety issue and the Qatari Government grounded 22 A350s.  Although Airbus agreed to provide compensation credits of $206,500 per plane per day, this was not sufficient for Qatar who later sued for $600 million. Last week, however, Airbus launched a counterclaim, arguing that Qatar is illegitimately claiming the paint issue is a safety concern in order to claim compensation. The Financial Times looks at the dispute in more detail.

4. POTENTIAL BUYERS PULL OUT OF BOOTS TAKEOVER BID

Private equity firms Bain Capital and CVC Capital Partners have pulled out of bidding for Boots. The two firms were planning a joint bid for the pharmacy chain but decided to pull out as they were unwilling to meet the price set by Boots’ owner. Despite this, Boots still has buyers lined up. Asda, Apollo Global Management and Sycamore Capital are all exploring bids for the company. Boots has 2000 stores across the UK and turned over £6 billion in 2020. The chain is owned by US pharmaceutical conglomerate Walgreens Boots Alliance. 

5. CVS STEPS INTO THE METAVERSE

US pharmacy giant CVS Health has filed a trademark to sell virtual goods, NFTs and health care services, marking the first pharmacy to enter the Metaverse. CVS filed the trademark with the US Patent Trade Office last week. The company will trademark its logo, provide an online store and sell downloadable virtual goods such as prescription drugs and personal care products. Major companies are scrambling to get involved with the Metaverse and NFTs after seeing the potential for new income streams. CVS joins giants Walmart, Nike, Gucci and Louis Vuitton in exploring avenues in the metaverse. Check out our article exploring NFTs and the Metaverse.

6. FOOT LOCKER BRACING FOR NIKE PULL OUT

Foot Locker is gearing up for Nike to remove many of its products from its shelves. Nike has said it is shifting focus to its own direct sales and pulling many products from traditional retailers. DSW, Macy’s, Urban Outfitters, Olympia Sports and Zappos have all been hit by this move. Foot Locker is the latest retailer to be affected and it will come as a huge blow. Sales of Nike products accounted for a whopping 70% of Foot Locker’s business last year. While Footlocker aims to bring this down to 60% this year and reduce this even further going forward, this could still be devastating for the retailer. Foot Locker remains stoic however, and has said it will expand on existing relationships with other brands such as New Balance, Puma and Crocs. 

7. AMAZON CLOSES BOOKSTORES

Amazon has announced that it will close all its physical bookstores, home goods stores and pop-up shops in the UK and the US. The decision was made in order to shift focus to its growing grocery business. Amazon was founded as an online book store in 1999 and only opened its first physical bookstore in 2015. The company currently has 68 book stores. Amazon’s grocery business however has grown exponentially. Its Amazon Fresh stores are gaining traction across the world and the tech giant aims to open 260 new stores by 2024.

One of the major selling points of Amazon Fresh is its checkout free system that allows shoppers with Amazon accounts to pick up items, walk out and be charged automatically for what they took. In the UK, Amazon is setting its sights to become a challenger to the likes of Tesco and Asda. It will also expand to European countries like Germany and Spain. 

8. FORMER NISSAN EXEC FOUND GUILTY

Greg Kelly, a former executive of Nissan was found guilty of assisting former CEO Carlos Ghosn to hide 9.3 billion yen (£60 million) of his income from financial regulators. Carlos Ghosn fled Japan in a box on a private jet in 2019, flying to his home country of Lebanon where he remains a fugitive to this day. Mr Kelly received a six month jail sentence, suspended for three years. This means he will not go to prison provided he does not breach the terms of his sentence for 3 years. Prosecutors sought a two-year prison sentence and can still appeal the decision. 

An investigation found former CEO Carlos Ghosn underreported his salary between 2010 and 2015. He was arrested in 2018, granted bail for $9 million and was awaiting trial. Ghosn fled to Lebanon in 2019, claiming he was fleeing political persecution as he would not receive a fair trial. In 2020, Nissan pleaded guilty to failing to disclose Mr Ghosn’s pay and received a 200 million yen (£1.3 million) fine. 

9. KLARNA LOSSES

Buy-now-pay-later (BNPL) giant Klarna has posted a loss of $748 million for 2021. While 99% of Klarna’s loans are repaid, the rapid increase in customer numbers has been costly. 46 million new customers used Klarna in 2021 and its expansion into new markets, primarily the US, contributed to losses increasing by 408%. Despite this, net operating income increased 38% to $1.6 billion. 

The BNPL company offers short term interest rate lending and is linked to a plethora of retailers allowing customers to spread out costs. The company generates money by charging retailers a fee. Klarna boasts over 100 million active users in 45 countries and expects continued rapid user growth. The company is launching a new funding round which could see it valued a $60 billion. It currently holds the title of Europe’s most valuable fintech. 

10. ULEZ EXPANSION

London Mayor Sadiq Khan has revealed plans to expand the Ultra Low Emission Zone (ULEZ) to cover the whole of Greater London. Drivers with polluting cars are charged £12.50 per day for entering the zone which currently covers all areas within North and South Circular roads. The impact could be significant as 3.5 million more drivers would be caught by the zone and 135000 vehicles would be affected. 

ULEZ only applies to vehicles that do not meet certain emission standards. It does not apply to diesel cars registered after September 2015 or most petrol cars registered from 2005. The charge is designed to limit highly polluting vehicles in the city and clean up London’s air. Those with vehicles registered outside of London would not face charges. This comes after Mr Khan rejected calls for a Clean Air Charge which would catch the majority of non-hybrid or electric cars. Any changes to ULEZ would be brought in next year.

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