The week’s news included; Twitter takes poison pill to fend off Elon Musk’s $43bn takeover bid, Sri Lanka to default on all $51bn of its foreign debt, FIFA launches football streaming platform.
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. – Musk’s anarchic vision won’t help Twitter but a subscription model might
- BBC News – Inflation: Five things that are going up in price and why
- City A.M. – If the FCA stays stuck in the past, London will lose capital to European competitors
- CNBC – How Russia’s war is cutting global auto production
1. MUSK EYES TWITTER TAKEOVER
Tesla & SpaceX founder Elon Musk has made a $43 billion hostile takeover bid for Twitter. A hostile takeover bid involves approaching shareholders directly with an offer, against the wishes of a company’s management. Last week, Musk rejected an offer to join Tesla’s board. Instead he wants to buy Twitter and “unlock” the social media platform’s potential.
Twitter’s management are staunchly opposed to the deal and felt Musk’s bid undervalues the company. Twitter has sought to defend itself using a “poison pill”. A poison pill, formally known as a “limited-duration shareholder rights plan” involves restricting shareholders from owning more than a 15% stake in the company. This however, gives investors an opportunity to buy more shares at a discount. This is quite an extreme measure and is often executed as a last resort to prevent a hostile takeover. Twitter’s board have said Musk is unwilling to negotiate the purchase price. Due to this, the poison pill plan was swiftly implemented and is in effect until 14 April 2023.
This saga comes just two weeks after Musk acquired a 9.2% stake in Twitter. He has been critical of Twitter and claims the platform infringes upon freedom of speech. Musk has said if his bid is rejected then he will consider selling his stake. Investors however, are suing Elon Musk for failing to disclose that he had bought his major stake in Twitter for over 2 weeks after purchasing them. A class action lawsuit has been filed in a New York Federal Court. Musk was obligated to report his purchase to the US Securities and Exchange Commission (SEC) within ten days. Elon Musk is currently the richest man in the world and is worth nearly $275 billion.
2. SRI LANKA DEBT DEFAULT
Sri Lanka has announced that it will default on all of its $51 billion foreign debt as its economic crisis worsens. The South East Asian country no longer has foreign currency to pay for its debts. Credit rating agency Fitch Ratings has said “a sovereign default process has begun” and that the organisation will downgrade its rating once a 30 day grace period for debt repayment expires.
Sri Lanka is suffering a deep economic crisis caused by the fallout from the pandemic and soaring fuel prices. These problems have been exacerbated by rampant corruption and mismanagement. Consequently, Sri Lanka is facing the worst economic crisis since its independence in 1948. The country now faces blackouts and food shortages. The suspension of all foreign debt payments will help pay for food, fuel and pharmaceuticals. Sri Lanka has now called for creditors to recapitalise their debts or accept payment in Sri Lankan rupees. The government has even called on its global diaspora to send money back to Sri Lanka to help pay for essentials. It claims these measures are a last resort to prevent further economic damage. BBC News looks at the crisis in more detail.
3. JERSEY COURT SEIZES $7BN OF ABRAMOVICH ASSETS
A court in Jersey has seized and frozen $7 billion of Roman Abramovich’s assets. This comes after the Russian billionaire was put on the UK sanctions list last month due to the invasion of Ukraine. Jersey Police searched premises they believe are linked to Abramovich’s business dealings in Jersey. Abramovich has been careful to keep assets out of the UK and EU jurisdictions to avoid sanctions. Some of his yachts worth $1.2 billion are currently docked in Turkey.
Chelsea Football Club, which Abramovich has owned since 2003, is undergoing a sale process due to the sanctions. Only three bidders remain after the Ricketts family withdrew their interest last week. Fans had protested against the Ricketts family taking over the club due to alleged issues of racism. A series of Islamophobic emails from the head of the family, Joe Ricketts, leaked, sparking protests. The American family owns Major League Baseball team Chicago Cubs. Three other bidders remain in the race to take over Chelsea. Todd Boehly, LA Dodgers owner, Stephen Lagliuca, Boston Celtics co-owner and Sir Martin Broughton, deputy chairman of IAG, parent company of British Airways.
4. CHRISTIAN LOUBOUTIN LOSES TRADEMARK DISPUTE IN JAPAN
Christian Louboutin lost a trademark dispute in Japan over its red soled shoes. Eizo Collection Co. Ltd had launched their own red soled shoes and Christian Louboutin sued, claiming that this breached their trademark. They sought that Eizo suspend sales of its own shoes. Louboutin even brought a survey claiming that 65% of people associated red soled shoes with Louboutin. The Tokyo District Court held, however, that consumers were unlikely to confuse Eizo’s products with Louboutin’s. The court said that red is commonly used on footwear throughout Japan and there was insufficient evidence to show that consumers would be confused between the two shoes. The court rejected Louboutin’s survey as it failed to compare them to Eizo’s shoes and the survey pool was almost exclusively luxury shoppers. The Fashion Law looks closer at the case.
5. NETFLIX SUED FOR RUSSIA WITHDRAWAL
Netflix has been sued by users in Russia for its decision to withdraw from the market following the Russian invasion of Ukraine. Around 200,000 users are demanding 60 million roubles (£563,000) in compensation for Netflix’s unilateral decision to suspend services. They argue the decision violates their rights and seek recompense. In addition to suspending its platform, Netflix also cancelled productions of Zato, a Russian language series and any other future projects.
Hundreds of Western companies have cut ties with Russia since the outset of the war in solidarity with Ukraine. Whether more companies will face legal action in Russia for this remains to be seen.
6. FIFA LAUNCHES STREAMING SITE
FIFA has launched its own football streaming platform. In what could be a huge shift in football broadcasting, the FIFA+ service is free and hosts archive footage, original documentaries as well as some live games from around the world. From 2023, the service is expected to host 40,000 games a year. FIFA will also produce original documentaries on top players, past and present. The service is currently live and will host 1400 games per month. There are currently no plans to charge a subscription fee. The platform is designed to take on streaming giants, like Amazon Prime who have crept into sports broadcasting. FIFA could soon broadcast World Cup matches itself and upset the current order of broadcasters.
7. TIKTOK HITS $11BN IN AD REVENUE
TikTok is storming ahead in the advertising space as it is on track to rake in $11 billion in ad revenue. This would bring the Chinese social media giant’s revenue above both Twitter and Snap’s ad revenues combined. Twitter and Snap are expected to generate $5.58 billion and $4.86 billion respectively. TikTok is fast becoming a challenger for the crown of social media king. According to research from Enders Analysis, 18-24 year old spend 20% more time on TikTok than on Facebook, Instagram and WhatsApp combined.
As with all new social media players, they face a challenge from existing players who attempt to copy their unique features. In 2016, Snapchat released its “Stories” function. In 2018, Instagram released its own “Stories” feature and Snap arguably never recovered. Growth at the platform has remained largely stagnant. In TikTok’s case however, Instagram and Facebook released a “Reels” function to mimic the design of TikTok and draw more users in. This has not slowed down TikTok in the slightest as its user numbers have soared 50% in the last year alone.
In our 2020 article, we explored what made TikTok so effective and how its rise to dominance came about.
8. JACK DORSEY NFT STRUGGLES TO SELL
A non-fungible token (NFT) of Jack Dorsey’s first tweet is struggling to be resold after its current owner paid $2.9 million for it. Last year, Sina Estavia bought the NFT of Twitter founder Jack Dorsey’s first tweet. The tweet, “just setting up my twttr” was posted on 21 March 2006. Last week, Estavia put the NFT up for sale. He estimated the NFT to be worth $25 million and said 50% of the proceeds would go towards charity. NFTs have been compared to digital artwork. Like artwork however, an item is only worth what people are willing to pay for it. After putting the tweet up for sale, the highest bid Estavia received was just $6200. Estavia says he may never sell the tweet unless he receives a high bid but is confident that people will soon realise the value of NFTs. Check out our article explaining what NFTs are.
9. TESCO PROFITS TREBLE
Tesco’s pre-tax profits trebled to £2.03 billion last year as the UK’s largest supermarket enjoyed rising sales. Sales at the retailer rose by 2.5% to £54.8 billion, excluding fuel. Tesco has however, vowed to keep prices low given the soaring cost of living. The supermarket will work with suppliers and invest to keep prices down. It expects that financial performance going forward would be affected by this. Some price hikes are unavoidable given the energy price crisis. Milk producers have had to raise prices by 20% due to rising energy costs. Furthermore, global sunflower oil stocks have been depleted due to the war in Ukraine. Ukraine produces around 50% of the global supply of sunflower oil.
10. STUDENT LOAN INTEREST RATES TO SOAR
The rate of interest for Students and graduates in England will soar up to 12% from this autumn. The current interest rate for those currently at university is the RPI rate of inflation + 3%. The RPI figure has been confirmed at 9% meaning interest on student loans will jump from 4.5% to 12% from September.
This has led to staunch criticism of the student loan system. A graduate earning £49,130 will receive £3000 in interest charges on a £50,000 balance in just six months. This huge spike will be tapered from March 2023 however. English law states that interest rates on student loans cannot be higher than the rates on unsecured commercial loans available on the High Street. This will see rates fall to around 7% from March. With both inflation and interest rates rising rapidly students will undoubtedly take a significant hit. Fortunately, those starting degree courses from 2023, interest rates will be fixed at the rate of RPI. This comes amid additional changes to the system which we discussed in our previous top 10.