Below are our top 10 stories that you need to know about. Be sure to check our twitter page for regular posts of important headlines. Click on the links for full stories.
Opinion articles of the week:
- Is Apple’s growth era drawing to a close? Click here for the debate.
- Morgan Stanley argues that the world economy looks a lot like the 1930’s. Click here for the implications.
- Uber is losing $1bn a year in China. The Financial Times looks whether Uber’s attempt to conquer China is failing. Click here for the debate.
- Take a look at the BBC’s comprehensive guide to the EU referendum. For more in-depth arguments;
Click here for The Economist’s arguments to remain.
Click here for Business Insider’s key arguments to leave.
1. MICROSOFT ACQUIRES LINKEDIN
Microsoft is buying the professional networking website LinkedIn for just over $26bn (£18bn) in cash. The software giant will pay $196 a share – a premium of almost 50% to Friday’s closing share price. The deal will help Microsoft boost sales of its business and email software.
Microsoft said that LinkedIn would retain its “distinct brand, culture and independence”.
Ben Wood, head of research at CCS Insight, said the deal would give Microsoft access to the world’s biggest professional social network with more than 430 million members worldwide.
“That’s a valuable asset that can be deeply integrated with a number of Microsoft assets such as Office 365, Exchange and Outlook. That said, Microsoft has stated that the company will continue to operate as an independent business, so we’ll have to see how deeply the integration occurs,” Mr Wood said. (BBC News)
For a short video explanation of how this deal will work click here. (BBC News)
The Economist argues Microsoft has had a poor track record with tech-deals and questions whether this deal will be any different. Click here for a more in-depth analysis of the deal. (The Economist)
Forbes also takes a look at the potential effects on social media. (Forbes)
2. iPHONE BREACHES CHINESE PATENT
Apple violated the design patents of a Chinese device maker and may have to halt sales of its latest iPhones in Beijing, the city’s intellectual property authority ruled, handing the U.S. company its latest setback in a pivotal market.
The iPhone 6 and iPhone 6 Plus infringe on Shenzhen Baili’s patent rights because of similarities to its 100C phone, the Beijing Intellectual Property Office wrote in its decision. Apple, whose iconic gadgets helped define the modern smartphone industry, said it’s appealing the ruling and is continuing to sell various iPhone 6 models during the process.
While the decision covers only Beijing, future lawsuits against Apple could take the case as a precedent, potentially influencing the outcomes of litigation elsewhere in China.
Last month, it lost its fight to keep the “iPhone” exclusive to its products after a Beijing court ruled that a little-known accessories maker can use the label for a range of wallets and purses. And in 2012, Apple paid $60 million to Proview International Holdings Ltd. to settle a dispute over the right to the iPad name in China. (Bloomberg)
3. TWITTER’S SOUNDCLOUD INVESTMENT
Tech giant Twitter invested $70m in music streaming service SoundCloud earlier this year it has been revealed. The social media network bought the stake as part of a round that would value SoundCloud at about $700m, tech website Recode has reported.
Twitter’s newly returned CEO Jack Dorsey didn’t reveal details of the deal but confirmed that the San Francisco-based company now owns a stake in SoundCloud.
“Earlier this year we made an investment in SoundCloud through Twitter Ventures to help support some of our efforts with creators,” he said. “They’ve been great partners of ours over the years and their community-supported approach mirrors ours in many ways.” (City A.M)
4. IRANIAN OIL PRODUCTION
Iran easily beat expectations with its speed in boosting oil exports after the lifting of sanctions. Without an injection of cash and the easing of remaining trade barriers, the recovery may have run its course.
When restrictions on Iran’s oil exports were relieved in January following a nuclear pact with world powers, analysts from Goldman Sachs Group Inc. to Barclays Plc doubted it could return to previous levels this year. The Persian Gulf state defied the skeptics with a 25 percent surge in production and aims to reach an eight-year high of 4 million barrels a day by year-end.
Since limits on crude sales were lifted, exports have doubled to about 2 million barrels a day, flowing again to previously prohibited markets in Europe, where Royal Dutch Shell Plc and Total SA resumed purchases. Production reached pre-sanctions levels of 3.6 million barrels a day in April and maintained that level in May, the Paris-based International Energy Agency estimates.
Iran’s own figures have output climbing to 3.8 million barrels a day in May, with plans to hit 4 million by the end of the year and ultimately reach 4.8 million within five years. (Bloomberg)
5. LLOYD’S WIN £1bn COURT CASE
Lloyds Bank has won a major court battle against bondholders that could save it up to £1bn.
Rebel investors had fought for years against forced repurchase of enhanced capital note (ECN) bonds. But the Supreme Court said the bank had been entitled to buy back the bonds at their original issue price.
The move means investors, who had originally bought bonds issued by mutuals, get lower payouts and lose out on future returns.
In 2015, the High Court rejected Lloyds’ argument on the basis that the bonds could still be taken into account in future stress tests. The Appeal Court overturned the verdict in the Spring and the Supreme Court has now upheld that decision.
Lloyds began redeeming the bonds after the Appeal Court ruling and remaining bondholders will now get paid the face value of their holdings .The bank expects to save on interest payments worth £200m each year. The move had originally been aimed at saving five years’ interest – £1bn – but the delay in redeeming the notes means that is likely to be reduced to four years. (BBC News)
6. BARCLAYS REJECTS FRAUD ALLEGATIONS
Barclays has described as “fundamentally misconceived” a $1.0 billion-plus lawsuit brought by British financier Amanda Staveley over the bank’s emergency fundraising from Gulf investors at the height of the credit crisis in 2008.
Staveley’s private equity group PCP Capital Partners is claiming damages for alleged fraudulent misrepresentation in a civil case lodged at London’s High Court in January that sheds light on how Abu Dhabi and Qatari sheikhs helped bail Barclays out nearly eight years ago.
The case hinges on the terms Qatari and Abu Dhabi investors received for participating in a cash call to help Barclays raise around 7.0 billion pounds ($10 billion) and avoid state aid. Barclays denied dishonesty and recklessness and called PCP’s assertion it had been a potential investor in the Abu Dhabi syndicate at the time “utterly speculative and flawed”.
The case is unfolding months before the Serious Fraud Office (SFO) is due to decide whether to charge Barclays and former executives in a separate criminal inquiry into financial arrangements with Qatar that included a loan to the Gulf state, as the bank battled to raise cash during the financial crisis. (Reuters)
7. TESCO ASSET SALES
Tesco confirmed the sale of Dobbies garden centres to a group of investors led by Midlothian Capital Partners and Hattington Capital.
Tescos bought Dobbies in 2008 for £150m and has now sold the garden store chain for £217m – a deal that has been in the wings since April – a year after Dobbies lost £48m. (City A.M)
Tesco has sold off a number of assets recently, most notably its South Korean arm. Click here for a summary of all of Tesco’s recent restructuring moves. (City A.M)
8. SIEMENS PARTNERS WITH GAMESA TO CREATE WORLD’S BIGGEST FARM MAKER
The world’s biggest wind farm maker will be created out of a proposed partnership between German engineering group Siemens and Spain’s Gamesa.
Siemens will take a 59 per cent stake in the new entity which is expected to have 69 gigawatts of turbines installed worldwide as well as revenue of €9.3bn (£7.3bn), it said in a statement today. It’s also making a one-off cash payment to Gamesa shareholders.
While Siemens’ wind power business has a strong footprint in North America and Northern Europe, Gamesa is well established in emerging markets such as India, Latin America and southern Europe. (City A.M)
For more on Siemen’s investment plans into fields such as Cyber security, click here.
9. POUNDLAND PROFITS FALL
Takeover target Poundland has posted a slump in annual profits after a “challenging but transformative” year as its suitor stepped up its pursuit with a 23 per cent stake in the business.
South African retail group Steinhoff – which owns UK furniture firm Harveys and Bensons For Beds – revealed last Wednesday that it had bought 61.2m ordinary shares in the budget retailer and confirmed any potential offer would be made in cash.
Its bid interest comes after a testing time for Poundland, which had seen its shares slump by a third in a year following tough trading and a difficult takeover of rival 99p Stores.
Annual results laid bare the group’s sales woes as underlying pre-tax profits fell 13.5 per cent to £37.8m in the year to March 27.
Bottom-line pre-tax profits crashed 83.7 per cent to £5.9m, but this includes converted 99p Stores. (Independent)
10. UK INFLATION
British inflation held steady in May against expectations for a small increase, as continued falls in clothing prices offset pressure from fuel prices, official data showed on Tuesday.
Consumer prices rose 0.3 percent compared with a year ago, the Office for National Statistics said, and slightly below economists’ expectation for a 0.4 percent annual rise. Overall, the figures underlined the lack of inflationary pressure in Britain’s economy, with inflation holding at 0.3 percent throughout 2016 with the exception of March.
British inflation has been below the Bank of England’s 2 percent target for more than two years and last year it was zero, the lowest since comparable records began in 1950. (Reuters)