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2November 2019 THE WEEKSterlingjumpedaftertheLabourleader
JeremyCorbynagreedtobackasnap
election.Tradersexpectthepolltocut
theriskofahardBrexit.Thepolitical
limbocontinuestotakeitstoll:a
YouGov/CEBRsurveyfoundthatUK
consumerconfidencehititslowestlevel
insixyearsinOctober,thethird
consecutivemonthofdecline.Britons,
itfound,areincreasinglyanxiousabout
jobsecurityandthevalueoftheir
homes.TheUSS&P 500 hitanew
recordhigh,buoyedbymorepositive
tradediscussionswithChinaandalikely
cutinUSinterestrates–thethirdtime
thisyear.MarioDraghihandedthereins
oftheEuropeanCentralBanktoformer
IMFchief,ChristineLagarde.
BoeingbossDennisMuilenburgtestified
infrontofCongressforthefirsttime
sincetwooftheplane-maker’s 737
Max8planescrashed,killing 346
people.USlawmakersaccusedBoeing
ofdeliberatelyconcealingtechnical
problems.Onesenatorsuggestedithad,
ineffect,designed“aflyingcoffin”.
GoogleownerAlphabetannounceda
dealtobuyfitnesstrackerFitbit,paving
thewayfora“wearab les”sho wdown
withApple;Fitb itsharesjumped30%.
HSBCreportedweakquarterlyresultsin
itsEuropeanandUSdivisions,andsaid
itwas“acceleratingplanstoremodel”
itsbusiness;10,000morejobsmaygo.
SharesinthelistedWoodfordPatient
CapitalTrustjumped30%onnewsthat
Schroderswilltakeoverasmanagerand
rebrandthetrustinitsownname.Tiffany/LVMH: huckleberry friends?
SharesinTiffanyjumpedbyalmost 30 %aftertheUSjeweller,famedforitsdiamond
engagementrings,confirmedthat itis“reviewing”a$14.5bnall-cashtakeoverbidfrom
LVMH,theworld’slargestluxurygoodsgroup.Adealwouldgivethelatter“critical
mass”intheglobaljewellerymarket,addingtobrandsincludingBulgariandHublot,
saidTheNewYork Times.Still,BernardArnault–theFrenchbillionaireattemptingto
sliparingonTiffany’sfinger–couldbeinfora“bruisingfight”.Tiffanywantsmore
moneythanLVMH’s$ 12 0-per-shareoffer.Supporters,whoargueshareswerepricedat
$136ayearago,arehoping thisbidwillflushoutahigherofferfromoneofLVMH’s
rivals,saidAdamSageinTheTimes.Kering(theFrenchownerofGucci)andRichemont
(theSwissownerofCartier)arebothintherunning.Andplentywouldarguethat
Tiffanyisaprizeworthfightingfor.Foundedin 183 7,“itcametosymboliseAmerican
glamour”afterAudreyHepburn“displayedapenchantforthebrand”inthemovie
BreakfastatTiffany’s.YetTiffany,sadly,isn’twhatitwas,saidLexintheFT.Whoever
buysitwillneedtoputinalotofinvestment.“Itneedstomoveupmarket,atrickthatis
hardertopulloffthanexpandingtheappealofararefiedbrand.”Arnaultcouldwell
concludetherearebetterbaubleselsewhere.
Just Eat:deliverywars
ThetakeawaydeliveryserviceJustEatwasthisweeknamed“headlinesponsor”ofthe
realityTV hitLove Island,noted Campaign.Youwouldthinkthe companyhadenough
on itsplatewithits own romanticdramas.A£5bnmergerwithDutch suitor Takeaway
seemedsetinthe stars–untilanunrulynew prospectstormedontothescene.The Dutch
internet conglomerate Prosus isn’t messingaround,said Reuters.Thecash-richoutfithas
“usedits superiorfirepower”totryand“scupper”Takeaway’sall-shareoffer–tabling
an“unsolicited” £4.9bncashbid,which theaffronted JustEatboardhasrejected.And
now thereareclaims ofdirtytricks, said SimonEnglishin the London EveningStandard.
OneofTakeaway’slargestshareholders –CatRockCapital –has“accusedaProsus
division” (DeliveryHero)“ofmanipulatingTakeaway’ssharepricedownwardsto
dam agethevalueoftheagreed deal”.Thisfoodfightcouldgetnasty.
KPMG:hometo roost
Thebigfour accountingfirms–KPMG,EY,DeloitteandPwC –have “comeunder
increased scrutinyfordevelopingcosyrelationshipswithclients”,saidLouisaClarence-
SmithinTheTimes.Anditlookslike thenumber’supon oneparticular KPMGperk.
Fouryearsago,thefirmconvert edaMayfair townhouse into aluxury privatemembers’
clubforpartners“and well-heeledclients”–thinkingtheymight feel“more atease”
therethanatitsHQin thewastes ofCanary Wharf. Now“Number Twenty”isunder
threat ofclosure,as partofaplantosave£100min costs.Still,accountantsare“a
tenacious bunch”,saidCat RutterPooleyin the FT. “Everytimeyouknock the BigFour
theycomebackstronger.”Accordingto the latestannualreviewfromtheFinancial
ReportingCouncil,the Big Four audited “all”thecompaniesin theFTSE10 0 indexlast
year,up from96in 2017 ,despitethe effor tsofpoliticiansand regulators to“bash” them
for“their dominanceof themarketand perceived conflictsof interest”.
Virgin Galactic: to infinity and beyond?At last, some “welcome relief” for Wall Street
“afteraturbulent period for flotations”, said
James Sillars on Sky News. Andacase of
mission accomplished for Britain’s leading
space cadet, Sir Richard Branson. Shares in
his space tourism company, Virgin Galactic,
rocketed 10% on their market debut in New
York, valuing the outfit at around $2.4bn.
The daredevil Sir Richard, who “attended
the launch inaspace suit”, beat rival space
tycoons Jeff Bezos (Blue Origin) and Elon
Musk (SpaceX) to the market, viaatimely
merger with an existing cash shell
backed by former Facebook executive
Chamath Palihapitiya. But he still faces “stiff
competition” to win the race to completeacommercialspace
flight. Galactic hopes to be in the air by the middle of 2020.“Despite the whizzy-looking planes”, Virgin Galactic is “quite a
simple financial bet”, said Nils Pratley in The Guardian: thatmultimillionaires would rather spend
$250,000 ona90-minute flight, 50 miles
above the Earth’s surface, “than tootle
around the Med onafloating gin palace”.
When you consider that “a Philip Green-style
cruiser” costs $500,000aweek to hire, “one
can see how the numbers might stack up”.
Galactic reckons just 0.1% of the global “high
net worth” market would make the venture
viable. Still, “a single mishap would ground
the whole project”.“A lot has to go right” to justify Virgin
Galactic’s starry price-tag, agreed Lex in the
Financial Times. Then again, if the company
can “bring space tourism, like low-cost aviation, to the masses”,
the potential prize is considerable. But adapting “hypersonic
flight” to existing routes might prove to be an even better
strategy. “London to New York in an hour would open the door
to afar bigger market than sightseeing.”Branson: Britain’s leading space cadetSeven days in the
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Companies in the news...and how they were assessed