Microsoft and TikTok
Trump concerns
Microsoft (US:MSFT) intends to push ahead with discussions to potentially acquire video platform TikTok in the US. The tech giant had encountered opposition from President Trump, who sought to ban TikTok – which is owned by Chinese firm ByteDance – amid national security concerns. But after Microsoft chief executive Satya Nadella spoke with the president, Mr Trump ostensibly changed his mind – giving a deadline of 15 September for a US company to buy the business. In a further twist, Mr Trump said that the US Treasury should receive part of any sale price.
WH Smith job cuts
Low footfall
WH Smith (SMWH) could make up to 1,500 job cuts as part of a restructure as travel restrictions and low high street footfall continue to smash its revenues. The retailer’s turnover is recovering as its stores open up, and last month sat just over half below its July 2019 level. Travel and high street revenues are down 73 per cent and 25 per cent, respectively. But the retailer envisages pre-tax losses of £70m-£75m for the year, and its restructuring costs could reach £19m.
Car registrations rise
SMMT data
New car registrations rose for the first time this year in July, according to new data from the Society of Motor Manufacturers and Traders (SMMT). Pent-up demand and manufacturer support helped push new registrations up by 11.3 per cent, as car dealerships traded with open doors for their first full month since lockdown. Electric cars took a 9 per cent share of new registrations, compared with 3.1 per cent in 2019. But registrations remain 41.9 per cent lower than this time last year.
New Ford CEO
Hackett retires
Jim Farley will replace Jim Hackett as the chief executive of Ford Motor Company (US:F), as the auto industry battles through the fallout of coronavirus. Mr Hackett plans to retire, having led the company since 2017. Ford noted that he will continue as a special advisor until the end of March 2021. Mr Farley, who joined the company in 2007 and is currently the chief operating officer, will assume the role of president and chief executive from the beginning of October.
Siemens health deal
Varian purchase
Siemens Healthineers (GR:SHL) is to buy US business Varian Medical Systems (US:VAR) for $16.4bn, creating a leader in cancer research and therapeutics. Healthineers will pay $177.50 per share, representing a premium of around 42 per cent to the 30-day volume weighted average closing price of Varian’s shares as of 31 July. The acquisition will be financed via the issuance of new shares in Siemens Healthineers as well as bonds. Healthineers was separated out from Siemens (GR:SIE) in 2018. After completion, Siemens’ stake in Healthineers will reduce from 85 per cent to about 72 per cent.
Deliveroo deal cleared
Amazon investment
The UK’s Competition and Markets Authority (CMA) has given the go-ahead for Amazon (US:AMZN) to make a 16 per cent investment in food delivery platform Deliveroo. After an in-depth ‘phase two’ investigation – entailing analysis of internal documents from both companies, a survey of more than 3,000 consumers and submissions from interested third parties – the regulator has found that the transaction will not substantially lessen competition. However, it noted that if Amazon were to take a larger or controlling position in Deliveroo, this might lead to a further investigation.
Google/ Fitbit snag
EC investigation
The European Commission has opened an in-depth investigation into Google’s (US:GOOGL) proposed $2.1bn acquisition of the fitness technology business Fitbit (US:FIT). But this wasn't the only deal putting Google in the news in recent days. The group has also agreed to buy a 6.6 per cent stake in ADT (US:ADT) for $450m. The partnership should strengthen Google’s hardware proposition, integrating its ‘Nest’ smart-home hardware with ADT’s security and monitoring services. The companies will launch a jointly developed product in 2021, according to comments from Jim DeVries, ADT’s chief executive, in an analyst call.
The rate of growth in UK services activity in July was the fastest in five years, as the economy emerged from lockdown. The seasonally-adjusted IHS Markit/ CIPS UK Services Purchasing Managers Index (PMI) gave a reading of 56.5 last month, up from 47.1 in June. The reading for April was just 13.4. Anything above 50 signifies expansion.
Tim Moore, economics director at IHS Markit, said: “UK service providers are starting to see light at the end of the tunnel” – although weak employment figures reported in July are “clearly a cause for concern and likely to hold back the longer-term recovery in business and consumer spending”.
