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  • Today's business and finance round up 10th October 2022

Today's business and finance round up 10th October 2022

Energy provider nears takeover of failed rival

10th October 2022

Bite-sized business news from the UK and beyond

Good morning

Today's stories

  • Energy provider nears takeover of failed rival

  • Peloton cuts jobs again to save the company

ENERGYEnergy provider nears takeover of failed rival

What happened?Yesterday Sky News reported that Octopus Energy is closing in on a takeover of its rival Bulb.How did we get here?Last November Bulb, Britain’s seventh largest energy supplier, went bust amid the turmoil in the energy market which saw gas prices double in a matter of weeks. But the energy price cap meant it was unable to pass on rising prices to customers.Normally customers of failed suppliers are taken on by remaining providers. But Bulb’s customer base of 1.6m was far too many to transition overnight. Instead the company entered special administration which means it’s been run by the government until a new owner could be found.The government auction to sell Bulb attracted only one bidder, Octopus, the fifth largest supplier. Sources say the transaction could be completed by December.The deal could be the mostly costly bailout in years.The government has already been forced to spend billions buying gas to supply Bulb customers because the company did not buy enough in advance (aka as hedging) to fix its cost base.Altogether the deal could cost the taxpayer £4bn due to combination of soaring gas prices costs and £1bn which Octopus asked for to set up a hedging strategy for the new customers it is taking on.This would make it the most expensive taxpayer support deal for a company since RBS bank faced collapse in the financial crisis in 2008.

Other stories to keep you in the loop

  • Energy use advice campaign pulled due to cost

  • Superdry back in profit as shoppers return to the high street

  • LadBible to sack 10% of staff as it warns of tough trading conditions

  • eToro revenues jump 531% as Brits embrace stock trading

  • Scottish airline Loganair goes on the market

LEISUREPeloton cuts jobs again to save the company

What happened?Last week Peloton announced its fourth round of job cuts in 2022. The struggling spin-bike maker is slashing 500 employees (12% of workforce) and CEO Barry McCarthy is giving the firm six months to turn around, or else.How did we get here?Peloton was the home fitness pandemic darling but is facing a tough road ahead as many of the lockdown restrictions that pushed the company to stardom have been lifted. The company, once heralded as the future of fitness, has posted six straight quarters of losses, halved its workforce in the last eight months, and watched its share price fall by 90% in 12 months. In a sign of just how downbeat inventors have grown toward Peloton, its current market value of $3bn is less than its 2021 revenue.The Wall Street Journal reported that the CEO gave the company a six-month ultimatum to turn itself around…or else end its run as a stand-alone company.Peloton disputed this interpretation and McCarthy clarified in a staff memo that there’s no “ticking clock” on Peloton’s performance. Still, rumours about a potential sale to a big tech company like Amazon or Apple have been circulating since the beginning of the year.Looking ahead: McCarthy said that with the layoff portion of his turnaround plan complete, the company will focus on growing its subscription service. Peloton also announced big-name partnerships, most recently with Hilton hotels to put bikes in all 5,400 of the chain’s branded locations.

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