Seven Days: 11 December 2020

Brexit in the balance 

No-deal still on table 

The German chancellor Angela Merkel said that the European Union would accept a no-deal outcome if trade talks with the UK are fruitless. With the 31 December deadline fast approaching, Ms Merkel warned that Prime Minister Boris Johnson’s scheduled meeting with  European Commission president Ursula von der Leyen may not provide any further clarity. Still, the FTSE 100 appears relatively unfazed, having advanced 5 per cent since the beginning of the month. The pound meanwhile has climbed back above its previous highest US dollar value of $1.34 this year year, in anticipation of an eleventh-hour Brexit deal 

Green execs ditch Shell

Wave of resignations

Royal Dutch Shell (RDSA) has been hit by a wave of resignations by clean energy executives, as the oil giant makes the difficult transition towards greener fuels. The head of solar, storage and onshore wind businesses, Marc van Gerven, and a leader in the energy transition team, Katherine Dixon, have both left in recent weeks, among others. The resignations come soon before the company is expected to announce its strategy for a transformation towards renewable energy. Dorine Bosman, the vice-president for offshore wind, is also expected to resign. 

Ofgem eases up 

Higher return on equity  

Ofgem has set the allowed return on equity for network energy companies at 4.3 per cent for the next regulatory period from 2021 to 2026. The decision marks an improvement from the 3.95 per cent it suggested at the draft determination stage in July. The softening of the regulator’s stance led to National Grid (NG) and SSE’s (SSE) shares rising by 2 per cent and 3 per cent respectively on the day of the announcement. SSE said that it “cautiously welcomes Ofgem's movement on a number of fronts”. Both companies will review the regulator’s decision and decide whether to appeal to the CMA.

BAT lifts outlook 

Cigarette sales robust

British American Tobacco (BATS) expects a softer impact on sales than initially expected, after cigarette sales in the US proved robust despite Covid-19. However, it downgraded its expectations for adjusted earnings per share to grow by mid-single figure percentage, compared to an earlier high-single figure forecast. The dip is in part because of heavier investment in its ‘new categories’ range, which is designed to offset the decline of its traditional tobacco products. Chief executive Jack Bowles said that the company encourages those who would otherwise continue to smoke to switch to “reduced risk alternatives”.

Tesla’s $5bn raise 

Selling stock 

Tesla (US:TSLA) plans to raise as much as $5bn by selling stock, as the electric car maker moves to take advantage of a rally that has pushed its shares up more than 600 per cent in the year to date.  It will sell new shares occasionally on the open market, which gives it more flexibility over the pricing compared to a formal secondary offering of stock. In August, the company introduced its first stock split, in an attempt to make it easier for smaller investors to buy shares. The company is set to join the S&P 500 benchmark index towards the end of this month. 

G4S agrees takeover 

£3.8bn bid 

Security group G4S (GFS) is recommending an all-cash offer from Allied Universal, which values the company at 245p per share, or £3.8bn. Allied’s bid is 4 per cent higher than the hostile takeover bid from Canadian rival GardaWorld.  If accepted by shareholders, G4S chief executive Ashley Almanza said that the deal would create a “global leader in security”, with more than 750,000 staff and combined revenues of around $18bn. GardaWorld’s offer reaches its deadline on 16 December, and it could still put in another bid. 

Data from the Office for National Statistics (ONS) show that online shopping has picked up again, after a dip when some shops reopened in June.