Top 10 Stories of Last Week! 16/01/17

This week’s news includes; Apple sues its chip manufacturer Qualcomm for $1 billion, Ray-ban maker in 46 billion euro eye-wear merger Rolls-Royce fined £671m in corruption scandal and ASOS sales figures boosted by sterling slump.

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. Click on the links for full stories.

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 explores how blockchain technology could revolutionise global trade, making it cheaper, quicker & simpler.

  • Bloomberg breaks down how the U.K. could negotiate a unique trade deal with the EU after Brexit.

  • Forbes looks at whether Amazon is on its way to a $1 trillion market cap?

 

1. THERESA MAY OUTLINES BREXIT VISION

Theresa May has said the UK “cannot possibly” remain within the European single market, as staying in it would mean “not leaving the EU at all”.

The PM promised to push for the “freest possible trade” with European countries and warned the EU that to try to “punish” the UK would be “an act of calamitous self-harm”. She also said Parliament would vote on the final deal that is agreed. Labour warned of “enormous dangers” in the prime minister’s plans.

And the European Parliament’s lead negotiator said there could be no “cherry-picking” by the UK in the talks.

Mrs May used her much-anticipated speech to announce her priorities for Brexit negotiations, including maintaining the common travel area between the UK and Irish Republic and “control” of migration between the UK and the EU.

Negotiations are set to begin after notice under Article 50 of the Lisbon Treaty is served by the end of March.

It was not her intention to “undermine” the EU or the single market, Mrs May said, but she warned against a “punitive” reaction to Brexit, as it would bring “calamitous self-harm for the countries of Europe and it would not be the act of a friend”.

She added: “I am equally clear that no deal for Britain is better than a bad deal for Britain.” (BBC News)

2. TOBACCO GIANT BAT AGREES £40.8 BILLION TAKEOVER OF US RIVAL REYNOLDS

Dunhill and Lucky Strike firm British American Tobacco has agreed a 49.4 billion US dollar (£40.8 billion) takeover of US rival Reynolds in a deal creating the world’s largest listed tobacco company.

BAT, which currently owns 42.2% of Reynolds, will pay 59.64 US dollars (£49.27) per share for the remaining 57.8% of the company in an improved offer after originally tabling a 47 billion US dollar (£38.8 billion) approach in October.

The deal will bring together a raft of global brands under one roof, including BAT products Rothmans, Kool and Kent, and Reynolds’ brands such as Newport, Camel, Pall Mall, Doral, Misty and Capri slims.

The offer comprises 25 billion US dollars (£20.6 billion) worth of BAT shares and 24.4 billion (£20.1 billion) US dollars in cash, valuing Reynolds at more than 85 billion US dollars (£70.2 million). The sweetened deal represents a 26% premium against the closing price of Reynolds’ shares on October 20.

BAT is expecting to make at least 400 million US dollars (£330 million) in cost savings after the two companies merge. The boards of both BAT and Reynolds will recommend the takeover to shareholders and have agreed a so-called break fee of up to 1 billion US dollars (£825 million) if either party pulls out or if the deal is blocked by regulators.

If given the green light, it is expected to complete in the third quarter of the year. (Business Reporter)

3. APPLE SUES QUALCOMM FOR $1 BILLION

The world’s largest company is suing one of its suppliers for effectively holding it hostage. Apple filed a lawsuit on Friday against Qualcomm, accusing it of charging “excessive royalties” and withholding payments in retaliation for Apple cooperating with South Korean regulators that are investigating the chip supplier. Qualcomm, which provides crucial chips used in the iPhone, allegedly charges Apple an unfair amount to to license its cellular patents, according to the lawsuit.

Apple is also seeking nearly $1 billion in rebate payments, which it claims have been wrongfully withheld. The previously agreed upon rebates were conditional on Apple putting Qualcomm chips in its products and not pushing litigation that accused the chip maker of unfair licensing practices.

“To protect this business scheme, Qualcomm has taken increasingly radical steps, most recently withholding nearly $1B in payments from Apple as retaliation for responding truthfully to law enforcement agencies investigating them,” Apple said in a statement about the lawsuit provided to CNNTech.

Regulators in South Korea fined Qualcomm roughly $850 million last month for forcing phone manufacturers into unfair patent licensing agreements in order to get its modem chips.

Apple’s lawsuit comes the same week as the Federal Trade Commission filed an antitrust complaint against Qualcomm for using its position in the market to push “onerous and anti-competitive supply and licensing terms” on cellphone companies.

Qualcomm “maintains a ‘no license, no chips’ policy under which it will supply its baseband processors only on the condition that cellphone manufacturers agree to Qualcomm’s preferred license terms,” according to the FTC complaint. (CNN)

4. BIG BANKS BREXIT EXODUS

Goldman Sachs has suspended plans to move key operations from the US to London because of the uncertainty created by the vote to leave the EU. The Wall Street firm – in the midst of building a new £350m London headquarters – had been preparing to shift more of its global operations and IT activities from New York, but now appears to have embarked on a hiring freeze.

The warning from Goldman came as other major City employers used the Davos summit in Switzerland to warn that jobs would have to be moved from London.

HSBC’s chief executive, Stuart Gulliver, has reiterated that 1,000 roles will “move in about two years’ time, when Brexit becomes effective”, while the Swiss bank UBS has acknowledged that 1,000 of its 5,000 staff could shift, possibly to Frankfurt or Madrid. The Swiss bank is said to have held talks with the Spanish authorities about moving 300 roles to Madrid, although the finance ministry said it would not comment on private meetings.

Jamie Dimon, boss of JP Morgan, which has already warned that 4,000 UK jobs are at risk, said on Wednesday: “It looks like there will be more job movement than we hoped for.”

Amid speculation about the number of jobs that Goldman could shift out of London, the bank’s chief executive, Lloyd Blankfein, said New York was already proving the winner from the early Brexit fallout. “Operating our business to maximise our global potential, we were trying to get as much into the UK as we could. So if a business needed to be done in the UK, it was always there,” he said. He added that the UK time zone had always been a big advantage: “You wake up with Japan, you go to bed at the close in New York.” Blankfein’s remarks come amid speculation that the bank could shift half of its 6,000-strong workforce out of London, 1,000 of whom would be relocated to Frankfurt. (The Guardian)

5. RAY-BAN MAKER LUXOTTICA AGREES £40 BILLION MERGER WITH ESSILOR

Luxottica, the world’s biggest glasses maker, has agreed a huge merger with a rival eyewear firm.

The Italian eyewear designer, which owns Ray-Ban and Oakley, is to merge with French lens maker Essilor. Combined, the two firms will be worth about 46bn euros (£40bn; $49bn).

The deal will also help to offer a succession plan for Leonardo Del Vecchio, Luxottica’s 81-year-old founder. Mr Del Vecchio, an orphan who became Italy’s richest man, founded Luxottica in 1961.

Through a series of acquisitions, including of Ray-Ban in 1999 and Oakley in 2007, the firm has become the world’s biggest spectacles maker. It also has licensing agreements to create eyewear for major fashion brands, including Burberry, Dolce & Gabbana and Versace.

However, it has gone through three chief executives in the past two years after Mr Del Vecchio regained executive powers at the company.

Questions about Mr Del Vecchio’s succession plans have also weighed on the firm’s share price, which is down 14% in the past year. The firm said in 2014 that it had previously explored a deal with Essilor, the world’s biggest maker of prescription lenses, but that conditions were not right at the time. (BBC News)

6. ROLLS-ROYCE FINED £671m IN CORRUPTION SCANDAL

British engineering giant Rolls-Royce will pay £671m to settle corruption cases with UK and US authorities. The UK’s Serious Fraud Office (SFO) found conspiracy to corrupt or failure to prevent bribery by Rolls-Royce in China, India and other markets.

The firm apologised “unreservedly” for the cases spanning nearly 25 years. A UK court ruled the aerospace firm would pay £497m plus costs to the SFO, which conducted its biggest ever investigation into the firm.

The SFO revealed 12 counts of conspiracy to corrupt or failure to prevent bribery in seven countries – Indonesia, Thailand, India, Russia, Nigeria, China and Malaysia. Rolls-Royce said it would also pay $170m (£141m) to the US Justice Department, and a further $26m (£21.5m) to Brazilian regulators.

Described by the judge as “a jewel in the UK’s industrial crown”, Rolls-Royce makes engines for military and civil planes, as well as for trains, ships, nuclear submarines and power stations.

The firm’s shares finished nearly 4.5% higher on the news of the settlements and the company’s announcement that its 2016 profits would beat expectations. (BBC News)

7. WESTERN UNION TO PAY $586 MILLION OVER FAILURE TO STOP FRAUD

Western Union Co. agreed to pay $586 million and admitted it failed to stop money laundering and wire fraud as part of a deal with the U.S.

Lapses in the company’s anti-money laundering controls allowed hundreds of millions of dollars in prohibited transactions to be processed, enabling the proliferation of illegal gambling and scams that defrauded tens of thousands of victims, U.S. authorities said Thursday. Undocumented immigrants from China used Western Union to wire money from New York and California to their human smugglers, the Justice Department said.

The U.S. charged the firm with aiding and abetting wire fraud and failing to keep an effective anti-money laundering program. Prosecutors agreed to put the case on hold for three years and drop it if the company makes promised reforms. In the agreement, Western Union admitted that fraudsters around the world used its system to receive dirty money, and it failed to take action.

The penalty imposed by the Justice Department and Federal Trade Commission is the biggest ever against a money-services company. It’s part of a wave of settlements in the final days of the Obama administration that have cost companies billions of dollars to resolve probes into toxic debt, foreign bribery and auto-emissions cheating.

Western Union, the largest money-transfer business, said it anticipates taking a charge of $570 million in its fourth-quarter earnings, which is the company will announce on Feb. 9. The company is expected to post adjusted profits of $837 million in 2016, according to the average of 16 analysts’ estimates compiled by Bloomberg.  (Bloomberg)

8. UBER PAYS $20m TO SETTLE CLAIMS OF DRIVER DECEPTION

Uber Technologies is paying $20 million to settle allegations that it duped people into driving for its ride-hailing service with false promises about how much they would earn and how much they would have to pay to finance a car.

The agreement announced Thursday with the Federal Trade Commission covers statements Uber made from late 2013 until 2015 while trying to recruit more drivers to expand its service and remain ahead of its main rival, Lyft.

The FTC alleged that most Uber drivers were earning far less in 18 major U.S. cities than Uber published online. Regulators also asserted that drivers wound up paying substantially more to lease cars than the company had claimed.

“Many consumers sign up to drive for Uber, but they shouldn’t be taken for a ride about their earnings potential or the cost of financing a car through Uber,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection.

Most of the proceeds from Uber’s settlement will be paid out to drivers. Documents filed in San Francisco federal court didn’t spell out how many people will get a cut of the settlement or what the average payment will be.

Uber has grown into a cultural phenomenon largely by undercutting the prices typically charged by taxis with rides that can be quickly summoned on its smartphone app.

To ensure cars are widely available, Uber has persuaded hundreds of thousands of people in the U.S. to become drivers by dangling the lure of making money at any time that’s convenient for them. The drivers are treated as independent contractors, another contentious issue because the classification excludes them from many of the benefits and protections given to full-time employees. (CNBC)

 

9. METRO BANK CREATES 500 JOBS IN BRANCH EXPANSION

Metro Bank has announced plans to create 500 new jobs as it continues to expand its interests beyond London and the South East.

The loss-making challenger bank, which first hit high streets a little over six years ago as major lenders juggled the damaging fallout from the financial crisis, said the new roles included customer-facing and head office positions.

It is also seeking more staff for its online operations and looming branch openings – with 12 in the immediate pipeline. The lender currently has a branch network of 48 across London and southern England.

While it remains a small player, it has attracted 900,000 customer accounts. Many of those people are likely to have been drawn in by its proposition of seven-day-a-week store opening – maybe even a pooch-friendly policy that includes free water and dog biscuits.

Its ambition, at least, is in stark contrast to the closure of branches and dramatic shift towards online banking followed by bigger, and its biggest, rivals in the domestic market as they look to save costs and invest more digitally.

It has outlined ambitious plans to achieve 110 branches by 2020 – with its expansion dragging on profitability to leave it loss-making on an annual basis since its launch. It made its first pre-tax trading profit, of £0.6m, in the third quarter of 2016. (Sky News)

10. STERLING SLUMP FUELS ASOS INTERNATIONAL SALES BOOST

ASOS has bolstered its outlook after sterling’s slump since the Brexit vote helped trigger a significant surge in international sales. The fashion retailer said it was pencilling in full-year sales to be 25% to 30% higher after international figures leapt 52% to £361.7 million in the four months to the end of December. The firm said its global business was lifted after it reinvested the currency boost from the Brexit-hit pound and benefits from US import duty.

ASOS, which stands for As Seen on Screen, also drove home a strong performance in the UK, with sales climbing 18% to £244 million over the period, up from £206.2 million in 2015. Chief executive Nick Beighton said the retailer had built on a strong performance over the festive period.

“Following record sales over cyber weekend and the Christmas trading period, I’m pleased to report a strong start to the year. “A 50%-plus increase in international sales is a stand-out performance. UK sales growth at 18% was a strong performance in a more promotional market.”

The firm said capital expenditure for the financial year would come in between £150 million and £170 million.

ASOS announced plans in December to hire another 1,500 people over the next three years to work at its London headquarters. It said it would take an additional 40,000 square feet to house the extra workers and will spend £40 million on renovating the space in Camden.

In recent months, the company has been dogged by claims of poor working conditions at its warehouse in Barnsley, South Yorkshire, but the firm has consistently said the allegations are ”inaccurate and misleading”. (Business Reporter)

Be the first to comment

Leave a Reply