Today's business and finance round up 17th August 2021
💣UK defence firm in £3bn US takeover
17th August 2021
Good morning What would tempt you to return to the office? Oil giant BP hoped that the offer of free ice cream and yoga classes would be enough to get UK workers back but it hasn’t been the case. Even though the company has gone for the hybrid model of two days working from home, bosses are apparently frustrated that less than 10% of staff are back in the office. .
UK defence firm in £3bn US takeover
Crackdown on “green” energy deals
Yesterday's market moves
FTSE 100 -0.9% 7,154 FTSE 250 -0.3% 23,713
Markets had a soft start to the week as weak macro data from China and the continued spread of the Delta variant led to renewed concerns of a slowdown in the global economic recovery. On top of that trading volumes were light with many investors on their holidays.
DEFENCEUK defence firm in £3bn US takeover
What’s going on?British defence company Ultra Electronics has agreed to be taken over by American owned rival Cobham in a deal worth £2.6bn.Cobham itself was a UK-listed business but was taken over by US private equity firm Advent in a controversial £4bn deal in 2019.
Why is this important?
Ultra is a major supplier to armed forces across the world. It specialises in hi-tech systems that give military forces an advantage in the air, on land and at sea, via the detection of emerging threats.The government did take a closer look at the deal last month on the grounds of national security concerns. Cobham has made a long list of promises to allay any concerns. These include a commitment to protect UK manufacturing and engineering jobs and apprenticeships, as well as creating new ones and maintaining Ultra’s London headquarters.However when Cobham itself was bought, Advent made similar promises but ended up splitting up the business, loaded it with debt, and sold off many of its key assets. It also left the group with no UK manufacturing sites.Given that this is exactly the same company trying to take over Ultra, and it’s making very similar promises to those made prior to the Cobham deal, it’s really hard to believe that Ultra will be left intact once the deal goes through.
TakeawayIf this story sounds like déjà vu then you’re not mistaken. Already this summer another British defence company, Meggitt, has agreed a takeover by US rival Parker Hannifin for £6.3bn. These deals have drawn some scrutiny from the government as they could potentially impact national security.However unlike other countries the UK doesn’t tend to block these transactions, which could cause trouble down the road if operations and jobs end up moving out of the country.
ENERGYCrackdown on “green” energy deals
Green energy deals have become all the rage in recent years with more than half of new electricity tariffs advertised as “green”, “100% renewable” or “eco-friendly”.Nine million UK households are now on these type of energy products.But the government is concerned that these deals could be misleading and is accusing firms of “greenwashing” – the practice of giving a false impression on how environmentally sound a product or service is.So to tackle this the Department for Business is launching a review into how green tariffs are marketed to consumers including whether suppliers need to provide clearer information about the types of renewable energy used, where it was generated and when.It is also looking to gather evidence on whether third party intermediaries in the energy market, such as price comparison websites and auto-switching services - which currently operate outside the retail market rules - should be regulated.According to a YouGov poll 62% of British energy customers say their decision on whether to purchase a tariff is influenced by how eco-friendly it is.
Stat of the day
Pret A Manger is planning to open 100 new shops across the UK, creating up to 2000 new jobs
Other stories to keep you in the loop
Amazon adds own-brand food to online grocery offer
Miner BHP starts talks to exit oil and gas industry
Morrisons bid rival to make pledge on property sale
House prices drop for first time in 2021 says Rightmove
Oatly forecasts annual revenue surge on vegan milk boom
Traditional landlines axed by 2025 as all UK phone calls go digital
You’re back in the office. So are your bad WFH habits