Media mergers ahead
In what may light the touch paper for consolidation among media and telecoms majors, the US courts approved AT&T’s $80bn (£60bn) takeover of Time Warner. The decision – which comes almost two years after the deal was announced – represents a defeat for the US Department of Justice, which had argued that the tie-up would reduce competition in pay TV and lead to higher prices for consumers. However, Judge Richard Leon found that the government had not provided adequate evidence mergers between content provider and distributors harmed competition. That’s a likely relief for Comcast, which has announced its intention to make a bid for the entertainment assets of 21st Century Fox (US:FOXA).
FRC less bark?
Fines issued
Following the highly publicised criticisms of the ‘Big Four’ accountancy groups – and the efficacy of the Financial Reporting Council in overseeing them – perhaps it’s little wonder the latter is trying to show more bite. The regulator reprimanded KPMG and PwC this week over their work auditing Quindell – since renamed Watchstone (WTG) – and BHS, respectively. KPMG was fined £3.2m after admitting that its conduct “fell significantly short” of professional standards. The accounting watchdog also slapped a record £6.5m fine on PwC, following a two-year investigation into the group’s audit at the collapsed retailer.
Shareholder upset
Pay disputed
While the circumstances around WPP (WPP) founder and former chief executive Martin Sorrell's departure may have grabbed most of the headlines this week, the advertising giant also had to contend with a shareholder revolt at its annual meeting. Around 30 per cent of its voting shareholders failed to back the executive remuneration package, either by abstaining or voting against it. That included share awards worth up to £20m for Mr Sorrell. That’s hardly surprising – the shares have declined by more than a quarter over the past 12 months, with the agency’s 2017 results its worst since the financial crisis.
Blockchain goes public
Argo IPO
A potential new float announced this week could give investors an easy way to access cryptocurrency mining. Argo Blockchain, which wants to raise £20m as part of a main market listing, offers 'Mining as a Service', which means cryptocurrency fans can mine one of four cryptocurrencies, including Bitcoin and Ethereum, via a subscription payment to Argo, which does the mining itself at its facility in Canada. Users can pay a subscription to access Argo's facilities rather than having to spend time and considerable money setting up their own server.
Conflict resolution
Capital contributed
Glencore (GLEN) has had to contend with a plethora of political headaches during recent months. One of the biggest may have just been resolved, at a price. The mining major has agreed to convert $5.6bn of debt belonging to its Kamoto Copper (KCC) subsidiary into $9bn of new equity, to plug a capital shortfall at its Katanga mine joint venture (JV) in the Democratic Republic of Congo. The capital injection settles a dispute with its state-backed JV partner Gécamines, which in April launched legal action to dissolve KCC and take control of its mining licences.
Risers and fallers (%)
| OXFORD BIOMEDICA | 38.56 |
| INMARSAT | 30.76 |
| PETROPAVLOVSK | 29.52 |
| OCADO GROUP | 20.18 |
| PETRA DIAMONDS | 19.67 |
| ACACIA MINING | -11.58 |
| RPC GROUP | -9.95 |
| CARPETRIGHT | -9.43 |
| NOSTRUM OIL & GAS | -9.09 |
| FRESNILLO | -8.97 |
Week to 12 June 2018
Tired Tesla
Staff cuts
There are limits to how much cash-burn a company can withstand. Tesla has been forced to cut 9 per cent of jobs across the company, as part of a restructuring chief executive Elon Musk called “difficult but necessary”. The group is trying to control costs, while simultaneously increasing the production of its latest Model 3 electric car. The job reductions are thought to be the first company-wide cuts in Tesla’s history, and follow the departure of senior executives earlier this year, including senior vice president of engineering, Doug Field.
Stobart winning
Ryanair for LSA
Stobart (STOB) looks set for an uplift in revenue, after Ryanair (RYA) announced plans to begin flying from London Southend Airport (LSA) as of summer 2019, which the support services group owns and operates. The agreement will see Ryanair invest around $300m to have three planes based at LSA, which will fly 13 routes to eight European countries. This is expected to bring at least an additional 1m passengers through the airport during the first year, and more than 5m in five years. The initial agreement is for five years, but can be extended to up to 10 years.
