9th June 2021
Good morning Yesterday the internet was thrown into panic after dozens of the biggest websites temporarily crashed. The Guardian, Financial Times and the UK government website were among those affected. Not a great day for Fastly, the cloud computing firm, who's platform was the cause of the outage.
Aviva under pressure to cut costs and dish out £5bn
At last, an Alzheimer’s breakthrough
Yesterday's market moves
FTSE 100 +0.3% 7,095 FTSE 250 -0.1% 22,896
Markets just about held their ground near record levels ahead of US inflation data later this week that could influence the Federal Reserve’s thinking on interest rates.In the UK all eyes are on the much anticipated date of June 21 for lockdown lifting. The Times reported that this could be delayed by a fortnight with ministers increasingly pessimistic after a “downbeat” briefing from the chief medical officer and the chief scientific adviser.
INSURANCEAviva under pressure to cut costs and dish out £5bn
What’s going onBritain’s largest insurer Aviva is facing calls from one of its biggest investors, Cevian Capital, to return £5 billion to shareholders and cut costs more aggressively. Why is this importantCevian Capital, is a Swedish investment firm with $16 billion of assets under management.It’s what’s known as an activist investor – it buys significant stakes in public companies in order to influence how the company is run. It’s the biggest of its kind in Europe and now owns 5% of Aviva.It had some strong words on Aviva saying the company had “been poorly managed for many years, and its high-quality core businesses have been held back by high costs and a series of bad strategic decisions."But Cevian believe Aviva "now has the potential to become a focused and well-capitalised market leader that produces profitable growth, generates significant cash, and is highly appreciated in the equity markets".Aviva has been on a selling spree in the last year, offloading international parts of it’s business so it can focus on its key markets in the UK, Ireland and Canada.Last month it said it had cashed in £7.5 billion from the sales and planned to return money to shareholders, but didn’t say how much. Cevian Capital believes that the majority of these proceeds should be returned to investors.On top of that the investment firm believes that Aviva should be more aggressive in cost cutting saying reductions of at least £500 million could be achieved by 2023. Aviva has already said it will reduce costs by £300m by 2022.
TakeawayCevian’s call for heavy cost cutting and increased cash returns come straight out of the activist investor’s playbook.Aviva shares closed up 2.7% indicating that the market was in support of Cevian’s demands.
HEALTHAt last, an Alzheimer’s breakthrough
Before this week it had been almost 20 years since a new drug to treat Alzheimer's disease was approved by American regulators.On Monday US pharma company, Biogen’s aducanumab drug was given the greenlight by the US Food and Drug Administration paving the way for its use in the UK.This is a big deal and a milestone in the path towards finding a cure for Alzheimer's, the most common cause of dementia which causes a progressive decline in brain functionality.
In the past decade, more than 100 potential Alzheimer's treatments have flopped.
At least 100,000 people in the UK with a mild form of the disease could be suitable for the drug if it were to be approved by the UK regulator.
Biogen says the treatment, which will be sold under the name “Aduhelm,” will cost $56,000 a year.
British Alzheimer's charities say they will be pushing for an early decision in the UK - but that could take another year.While the approval offers hope to millions worldwide, the drug is dividing scientists with some questioning just how effective it will be.Nonetheless the market reacted positively to the news with Biogen shares jumping 38% on the day.
Stat of the day
Foreign investors now own a record 66% of British shares
Other stories to keep you in the loop