The Week - UK (2021-07-17)

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17 July 2021 THE WEEK

TheUKinflationratehit2.5%intheyear

toJune,thehighestfornearlythree

years,toppingtheBankofEngland’s2%

targetforthesecondmonthrunning.

Theupwardtickislikelytofueldebate

aboutinterestraterises.Consumer

pricesintheUSroseby0.9%fromMay-

June–thelargestmonthlygainsince

2008.FedchairJayPowellsaidhewas

readytointerveneifinflationspiralled

outofcontrol,butstressedtheFedstill

expectspricerisestoeasethisyear.

ChancellorRishiSunakurgedBritons

toreturntoworkaftertheliftingofthe

ordertoworkfromhomeon 19 July.

Butmanycompaniessaidtheywould

optforastaggeredapproach.TheBank

ofEnglandliftedrestrictionsonbank

dividendsandsharebuybacksimposed

duringthepandemic.Britain’sshortage

ofHGVdrivers–blamedonEUnationals

returninghomeandadelaytothe

qualificationprocess–wasreportedto

havereachedcrisispoint.

Waitroseand John Lewisoutlined plans

to cut 1,000 jobs as part ofashake-up.

The US fintechCircle,which operates

the crypto USD Coin, announced it

would float, valued at around $4.5bn.

The company is merging withConcord

Acquisition,a“blank cheque” company

chaired by former Barclays chief Bob

Diamond.Tate&Lyle confirmed plans

to break itself up, by selling its £1.2bn

sweetener division. David Cameron was

revealed to have been paid more than

$1mayear for his part-time advisory

role atGreensill Capital.

DMGT:abetterclassofbuyoutbaron
TheDailyMailhasbeenrunning“avociferouscampaign”againstprivateequityfirms
gobblinguplistedUKcompaniesatbargainprices,saidHelenThomasintheFT.What
willitmakeofitsowner’splanstogoprivate?ProprietorLordRothermere–whose
ancestorsfoundedthenewspaperin1 89 6andfloatedtheDailyMailandGeneralTrust
(DMGT)in 1932 – hasproposedbuyingthe7 0 %ofthepublisherhisfamilydoesn’t
ownforaknock-down£810m,includingdebt.Thedeal,conductedviathefamily’s
Bermuda-registeredcompanyRCL,wouldtakeintheMail,Metro,NewScientistand
ipublications,aswellasDMGT’spropertyinformationandeventsbusinesses.Lord
Rothermeremaybe“acutaboveyourregularbuyoutbaron”,butit’sa“mystery”why
hewantstogoprivate,saidNilsPratleyinTheGuardian.“It’snotasifhesuffersunder
theshacklesofcorporategovernance.”Thefamilyalreadyownsallthevotingsharesin
DMGT,whichhasinvested–verysuccessfully–inthesouped-upused-cardealerCazoo
(soontofloatonWallStreet)andtheinsuranceriskbusinessRMS,alsosettobesold.
Perhapsbuying“rumpDMGT”issimply“atidyingupoperation”nowtheseassetshave
beendivested.“Theunspokeninvitationtooutsideshareholdersistoliebackandthink
oftheriches”CazooandRMScreated–“andnotasktoomanyawkwardquestions”.

PhilipMorris/Vectura:healthhypocrisy?
MarlboroManandhisbuddiesatPhilipMorrishavebeenstokingrichretirements,
controversially, fordecades.But like otherhigh-yieldingBigTobaccostocks,the USfag-
makerisracingto diversifyas regulatorsbiteandsmokers quit.Aspartofitsstated
“evolution intoabroader healthcareandwellness company”, thecompanyrecently
snappedupthe Danish nicotinegumcompanyFertinPharma,for $ 813 m, saidReuters.
Nowit hasgoneastepfurther withamooted £1bntakeoverofBritishpharmaVectura

• aspecialistinrespiratoryailmenttherapies.Thedealis“part ofacarefullythought-out
  shifttosmoke-free products”and anexercisein “goodPR”,observedAJ Bell analyst
  Danni Hewson.Noteveryone’s buying it. Indeed, thetobaccogiantfacesabacklash
  fromanti-smokingcharitiesand politicians,who accuseit ofrank“health hypocrisy”
  andhavecalledon theGovernment toblockacynical attempttoprofit from the effects
  of smoking,saidSabah Meddings andJamie NimmoinTheSunday Times.PhilipMorris
  aims to generateatleast$1bnfrom whatitcalls “beyond tobaccoand nicotine products”
  by 2025 .Thechallengeis todosowithoutleavinganasty tastein themouth.

CairnEnergy: Indiantakeaway
Gover nmentshaveahistoryofseizingproperty fromcompanies,rarelythe other way
round.SokudostoCa irnEnergy fortakingon themightofIndia. Inanescalation of“a
seven-year-longtaxdisputewithNewDelhi”, theScottish oilminnowhasseized Indian
state-ownedproperties inParis,said UnaGalani onBreakingViews –in responseto
India’s“refusaltohonour”aninternationalarbitration rulinglast yearthatawarded
Ca irn$1.7bn.“NoquestiontheScottishoutfit’sgot taste,” saidAlistairOsborneinThe
Times.Ithasseized 20flatsin Paris’s16tharrondissement,worth$20m,with“quality
viewsof theEiffel Tower”.Andthat’sjust“the hors d’oeuvre”.Cairnhasidentified
$70bnofIndian assetsworldwide,frombuildings toAirIndiajets,aspotentialtargets.

Chinese techlash: the “hit and run” on Didi

Not so long ago, it was the US threatening to

de-list Chinese businesses floating in New

York, said Lex in the FT. Now the bigger

concern is Beijing. Some of China’s most

powerful companies including Didi, Alibaba

and Tencent–and an “army” of smaller

Chinese companies with US listings–are

reeling fromadraconian crackdown intended

to shatter the allure of Wall Street and hook

them back to Chinese venues such as

Shanghai’s Star Market.

The trigger was the float of Didi Global, the

international arm of China’s largest ride-

hailing company, Didi Chuxing, which raised

$4bn on 30 June, in Wall Street’s largest IPO this year. Within

days, the company was “in hot water” at home, said The Wall

Street Journal. Chinese regulators, who had opposed the listing,

banned the Didi app from online stores and hit it with

“antimonopoly fines”. The crackdown has now extended much

further, said DealBook in The New York

Times. This week, punishing new regulatory

requirements were extended to all Chinese

firms intending to float abroad. Meanwhile,

President Biden is preparing to warn US

companies “about the risks of doing business

in Hong Kong, further fraying relations

between the US and China”.

“This wasaclarifying week for global

investors–orfor anyone concerned about

authoritarian capitalism,” said Frederick

Kempe on CNBC. The bid to decouple

Chinese companies from Western investment

could mean “an immeasurable loss of

economic dynamism”. It’s always been questionable whether

China “can combine thuggish autocratic politics with the

predictable rules and property rights that entrepreneurs and

capital markets need to thrive”, said The Economist. This “hit

and run” on Didi is further evidence that it simply cannot.

Sevendaysin the

Square Mile

CITY

Companies in the news

...and how they were assessed

Didi:hit witharegulatory crackdown