WWD : From Runways to Resorts: Fashion Executives Are Reshaping Luxury Hospitali

From Runways to Resorts: Fashion Executives Are Reshaping Luxury Hospitality
Hospitality groups are recruiting fashion industry talent to drive innovation and enhance brand narratives.

When communications director Claire Abeillé traded the world of Christian Louboutin‘s red soles and Burberry‘s checks for the marbled lobbies and sandy beaches of Kerzner International’s luxury resorts, she brought more than her Rolodex of fashion contacts.

The executive, who now serves as vice president of global communications at the parent company of the One & Only Resorts and Atlantis Hotels, is part of a growing wave of fashion industry veterans being tapped by luxury hospitality groups for their brand-building expertise.

Leading international hotel groups are tasking fashion industry pros to reimagine everything from guest experiences to brand storytelling.

Brett Armitage, chief commercial officer of Kerzner International, recognized the luxury hospitality playbook needed a rewrite as he observed fashion houses masterfully build emotional connections with the same ultra-high-net-worth individuals their hotels were courting.

The solution? Tap into that expertise directly. Within 18 months, Kerzner recruited a trio of fashion industry veterans: Abeillé from Christian Louboutin to lead global communications; Edward Lee from Tom Ford as creative director, and most recently, Kandé Camara from Dior to spearhead sustainability.

“We’re embracing not just a creative influence, but an entire point of view on how we approach our brand story,” said Armitage, whose recruitment strategy reflects a larger transformation sweeping through hospitality.

More examples abound:

  • Two years ago, Marriott International brought on fashion PR veteran Saba Landmann to oversee global brand communications at Marriott International.
  • Michael Grieve was appointed chief brand officer at Dubai-based Jumeirah Group last year, poached from Gucci, where he served as vice president, brand and client.
  • And most recently, longtime LVMH watches and jewelry pr director Stephanie Le Badezet joined Accor Group, overseeing Orient Express’ global communications strategy.
“Fashion, at its core, is all about creating aspiration, curating narratives, and connecting deeply with a brand’s audience on an emotional level — beyond their wallet,” said Landmann, senior vice president of global brand and portfolio public relations at Marriott International. This “translates seamlessly into hospitality PR, where creating unique, immersive experiences is just as crucial as the aesthetic appeal of a brand.”

Landmann is responsible for leading communications for the company’s portfolio of 30 diverse hotel brands, including The Ritz-Carlton, Ritz-Carlton Reserve, St. Regis Hotels and Resorts, Edition, The Luxury Collection, JW Marriott, W Hotels on the luxury side and premium brands like Westin and Renaissance. She joined Marriott after leading communications at G-III Apparel Group, owner of Donna Karan, Karl Lagerfeld, Vilebrequin and more. Prior to that she held senior roles at Vince Holding Corp. and Alice+Olivia.

Tina Edmundson, president of luxury at Marriott International, explained its recruitment philosophy: “Fresh perspectives are essential to keeping global brands dynamic and relevant, which is why we chose to bring Saba on board from the fashion industry… The fashion industry is fast-moving, competitive, and dynamic and requires an understanding of how to craft aspirational narratives, tap into and navigate cultural trends, and build emotional connections with consumers.”

The shared clientele across both industries is also a key factor driving this cross-industry pollination. Abeillé emphasized the significant overlap in target audiences, especially for Kerzner, which operates ultra-luxury properties.

“In our segment of hotels, we’re ultimately speaking to the same ultra high-net-worth audience — the 1 percent.”

This shared consumer base means fashion executives bring valuable insights into the preferences and behaviors of luxury consumers. “Luxury fashion brands not only command the loyalties with the same customers we also hold dear, but they also constantly reinvent, innovate and respond to change,” Abeillé added.

The skills required to build and maintain luxury brands are increasingly transferable across sectors, particularly when it comes to understanding and serving the world’s most discerning consumers.

Jean Allen, partner at executive search firm Heidrick & Struggles in New York, said, “recruiting from fashion is high on the list for our hospitality clients.”

Communications executives transition particularly well, she added.

“There are a lot of parallels between fashion and hospitality in terms of understanding how to do a strategy shift and the complexity of the matrix. Fashion people have seen a lot of transformation, have great brand experience and they’ve worked with a certain level of intensity around personalities,” Allen said. “They understand the 24/7 nature of social media and all those things that really affect fashion and hospitality probably more than other industries.”

“The trend of luxury brand talent transitioning into hospitality reflects a strategic shift in crafting high-end experiences, blending the refined expertise of the fashion world with hospitality’s service-oriented focus,” said Grieve at Jumeirah, perhaps best known for the pioneering sail-shaped Burj Al Arab hotel, which marketed its 25th anniversary in 2024. “Fashion executives bring a sophisticated understanding of brand power — not just as a tangible offering, but as an emotional connection.”

Their toolbox also includes expertise with partnerships, strategic events, and media engagement to “amplify a brand’s visibility and prestige,” he said.

Fashion executives are arriving at hospitality companies amid an explosion in hotels branded after such famous fashion houses as Versace, Giorgio Armani, Karl Lagerfeld, Elie Saab and more, not to mention Bulgari.

Grieve argued that “hospitality pure players like Jumeirah are uniquely positioned to respond with deep-rooted expertise in delivering exceptional guest experiences.

“While fashion brands excel at design and creating aspirational appeal, hospitality pure players have a distinct advantage: operational excellence,” he said in an interview. “Running a hotel is an intricate art requiring seamless coordination across service, dining, housekeeping, and guest engagement.”

Le Badezet joined Orient Express as the legendary travel brand is set to open its first hotels in 2025, with Orient Express La Minerva in Roma and Orient Express Palazzo Dona Giovannelli in Venice. She said: “The hospitality industry is increasingly recognizing that modern luxury is about more than just high-end accommodations. It’s finding the right balance between heritage and a contemporary reinterpretation.”

Another particularly valuable asset those who have worked in fashion often bring to hospitality roles is a global mindset. “Clients couldn’t hire someone who didn’t have global experience. A hospitality company just really couldn’t take that risk,” Allen said. “Fashion brands are well versed in catering to diverse cultural expectations and regional preferences.”

The Jumeirah Group is expanding across international markets, with plans to double its portfolio by 2030.

“Jumeirah is an international brand with ambitious growth objectives, and we are actively raising our profile globally,” said Grieve, who came to the Dubai-based company with strong regional know-how, having handled all of Gucci Maison’s brand marketing, communications, and client engagement activities for Europe and the Middle East based out of Milan.

Grieve will oversee high-profile upcoming launches including Jumeirah Le Richemond in Geneva, Jumeirah Red Sea in Saudi Arabia, and Jumeirah Marsa Al Arab in Dubai.

In his view, luxury travelers “seek purpose-driven experiences that resonate deeply. They want more than amenities — they want memories.”

Grieve also cited a heightened interest in wellness, cultural discoveries, a sense of belonging, and “authentic and memorable culinary journeys.”

The transition from fashion to hospitality does have unique challenges. Marriott’s Landmann pointed out that while fashion PR often focuses on promoting specific products within seasonal cycles, hospitality requires a broader, sometimes more complex approach.

“We’re not just promoting a product, but an experience — an entire ecosystem that includes location, architecture, service, amenities, and lifestyle,” Landmann said.

The hospitality industry also demands a different kind of relationship building. “While fashion campaigns often focus on specific moments or seasonal launches, hospitality PR requires fostering ongoing relationships with media, influencers and guests. The storytelling must evolve while maintaining brand consistency over time,” said Landmann.

The fashion industry’s expertise in partnerships, strategic events, and media engagement helps amplify a brand’s visibility and prestige in measurable ways. Kerzner has pursued partnerships with luxury fashion brands like Dior and Balmain to create unique beach and pool club environments. Similarly, Marriott’s luxury portfolio saw an array of unexpected partnerships across fashion, such as the Ritz-Carlton x Late Check Out and JW Marriot’s co-branded line with Flamingo Estate.

“Fashion PR taught me the importance of staying ahead of trends,” Landmann said, noting that this skill is equally valuable in hospitality, where “consumers’ expectations are always evolving, whether it’s the shift towards wellness-focused travel, sustainable practices, or hyper-personalized services.”

As the lines between different luxury sectors continue to blur, the influx of fashion talent into hospitality is likely to accelerate as operators reveal ambitious expansion plans.

The growth of the luxury hospitality landscape has fashion-influenced leadership shaping innovative new concepts and experiences.

“We have pushed the boundaries of how we work with partners, the stories we tell in creative campaigns, and the spaces in which our brands are present in the world,” said Armitage. This year will see the opening of One & Only Moonlight Basin in Big Sky, Mont., from Kerzner — the brand’s first destination in the United States and its first alpine resort. The company is also launching its second wellness-focused SIRO Hotel in Boka Place, Montenegro, following the brand’s debut in Dubai’s One Za’abeel, with additional properties planned for Los Cabos and Riyadh beyond 2025.

WWD : From Runways to Resorts: Fashion Executives Are Reshaping Luxury Hospitali

From Runways to Resorts: Fashion Executives Are Reshaping Luxury Hospitality
Hospitality groups are recruiting fashion industry talent to drive innovation and enhance brand narratives.

When communications director Claire Abeillé traded the world of Christian Louboutin‘s red soles and Burberry‘s checks for the marbled lobbies and sandy beaches of Kerzner International’s luxury resorts, she brought more than her Rolodex of fashion contacts.

The executive, who now serves as vice president of global communications at the parent company of the One & Only Resorts and Atlantis Hotels, is part of a growing wave of fashion industry veterans being tapped by luxury hospitality groups for their brand-building expertise.

Leading international hotel groups are tasking fashion industry pros to reimagine everything from guest experiences to brand storytelling.

Brett Armitage, chief commercial officer of Kerzner International, recognized the luxury hospitality playbook needed a rewrite as he observed fashion houses masterfully build emotional connections with the same ultra-high-net-worth individuals their hotels were courting.

The solution? Tap into that expertise directly. Within 18 months, Kerzner recruited a trio of fashion industry veterans: Abeillé from Christian Louboutin to lead global communications; Edward Lee from Tom Ford as creative director, and most recently, Kandé Camara from Dior to spearhead sustainability.

“We’re embracing not just a creative influence, but an entire point of view on how we approach our brand story,” said Armitage, whose recruitment strategy reflects a larger transformation sweeping through hospitality.

More examples abound:

  • Two years ago, Marriott International brought on fashion PR veteran Saba Landmann to oversee global brand communications at Marriott International.
  • Michael Grieve was appointed chief brand officer at Dubai-based Jumeirah Group last year, poached from Gucci, where he served as vice president, brand and client.
  • And most recently, longtime LVMH watches and jewelry pr director Stephanie Le Badezet joined Accor Group, overseeing Orient Express’ global communications strategy.
“Fashion, at its core, is all about creating aspiration, curating narratives, and connecting deeply with a brand’s audience on an emotional level — beyond their wallet,” said Landmann, senior vice president of global brand and portfolio public relations at Marriott International. This “translates seamlessly into hospitality PR, where creating unique, immersive experiences is just as crucial as the aesthetic appeal of a brand.”

Landmann is responsible for leading communications for the company’s portfolio of 30 diverse hotel brands, including The Ritz-Carlton, Ritz-Carlton Reserve, St. Regis Hotels and Resorts, Edition, The Luxury Collection, JW Marriott, W Hotels on the luxury side and premium brands like Westin and Renaissance. She joined Marriott after leading communications at G-III Apparel Group, owner of Donna Karan, Karl Lagerfeld, Vilebrequin and more. Prior to that she held senior roles at Vince Holding Corp. and Alice+Olivia.

Tina Edmundson, president of luxury at Marriott International, explained its recruitment philosophy: “Fresh perspectives are essential to keeping global brands dynamic and relevant, which is why we chose to bring Saba on board from the fashion industry… The fashion industry is fast-moving, competitive, and dynamic and requires an understanding of how to craft aspirational narratives, tap into and navigate cultural trends, and build emotional connections with consumers.”

The shared clientele across both industries is also a key factor driving this cross-industry pollination. Abeillé emphasized the significant overlap in target audiences, especially for Kerzner, which operates ultra-luxury properties.

“In our segment of hotels, we’re ultimately speaking to the same ultra high-net-worth audience — the 1 percent.”

This shared consumer base means fashion executives bring valuable insights into the preferences and behaviors of luxury consumers. “Luxury fashion brands not only command the loyalties with the same customers we also hold dear, but they also constantly reinvent, innovate and respond to change,” Abeillé added.

The skills required to build and maintain luxury brands are increasingly transferable across sectors, particularly when it comes to understanding and serving the world’s most discerning consumers.

Jean Allen, partner at executive search firm Heidrick & Struggles in New York, said, “recruiting from fashion is high on the list for our hospitality clients.”

Communications executives transition particularly well, she added.

“There are a lot of parallels between fashion and hospitality in terms of understanding how to do a strategy shift and the complexity of the matrix. Fashion people have seen a lot of transformation, have great brand experience and they’ve worked with a certain level of intensity around personalities,” Allen said. “They understand the 24/7 nature of social media and all those things that really affect fashion and hospitality probably more than other industries.”

“The trend of luxury brand talent transitioning into hospitality reflects a strategic shift in crafting high-end experiences, blending the refined expertise of the fashion world with hospitality’s service-oriented focus,” said Grieve at Jumeirah, perhaps best known for the pioneering sail-shaped Burj Al Arab hotel, which marketed its 25th anniversary in 2024. “Fashion executives bring a sophisticated understanding of brand power — not just as a tangible offering, but as an emotional connection.”

Their toolbox also includes expertise with partnerships, strategic events, and media engagement to “amplify a brand’s visibility and prestige,” he said.

Fashion executives are arriving at hospitality companies amid an explosion in hotels branded after such famous fashion houses as Versace, Giorgio Armani, Karl Lagerfeld, Elie Saab and more, not to mention Bulgari.

Grieve argued that “hospitality pure players like Jumeirah are uniquely positioned to respond with deep-rooted expertise in delivering exceptional guest experiences.

“While fashion brands excel at design and creating aspirational appeal, hospitality pure players have a distinct advantage: operational excellence,” he said in an interview. “Running a hotel is an intricate art requiring seamless coordination across service, dining, housekeeping, and guest engagement.”

Le Badezet joined Orient Express as the legendary travel brand is set to open its first hotels in 2025, with Orient Express La Minerva in Roma and Orient Express Palazzo Dona Giovannelli in Venice. She said: “The hospitality industry is increasingly recognizing that modern luxury is about more than just high-end accommodations. It’s finding the right balance between heritage and a contemporary reinterpretation.”

Another particularly valuable asset those who have worked in fashion often bring to hospitality roles is a global mindset. “Clients couldn’t hire someone who didn’t have global experience. A hospitality company just really couldn’t take that risk,” Allen said. “Fashion brands are well versed in catering to diverse cultural expectations and regional preferences.”

The Jumeirah Group is expanding across international markets, with plans to double its portfolio by 2030.

“Jumeirah is an international brand with ambitious growth objectives, and we are actively raising our profile globally,” said Grieve, who came to the Dubai-based company with strong regional know-how, having handled all of Gucci Maison’s brand marketing, communications, and client engagement activities for Europe and the Middle East based out of Milan.

Grieve will oversee high-profile upcoming launches including Jumeirah Le Richemond in Geneva, Jumeirah Red Sea in Saudi Arabia, and Jumeirah Marsa Al Arab in Dubai.

In his view, luxury travelers “seek purpose-driven experiences that resonate deeply. They want more than amenities — they want memories.”

Grieve also cited a heightened interest in wellness, cultural discoveries, a sense of belonging, and “authentic and memorable culinary journeys.”

The transition from fashion to hospitality does have unique challenges. Marriott’s Landmann pointed out that while fashion PR often focuses on promoting specific products within seasonal cycles, hospitality requires a broader, sometimes more complex approach.

“We’re not just promoting a product, but an experience — an entire ecosystem that includes location, architecture, service, amenities, and lifestyle,” Landmann said.

The hospitality industry also demands a different kind of relationship building. “While fashion campaigns often focus on specific moments or seasonal launches, hospitality PR requires fostering ongoing relationships with media, influencers and guests. The storytelling must evolve while maintaining brand consistency over time,” said Landmann.

The fashion industry’s expertise in partnerships, strategic events, and media engagement helps amplify a brand’s visibility and prestige in measurable ways. Kerzner has pursued partnerships with luxury fashion brands like Dior and Balmain to create unique beach and pool club environments. Similarly, Marriott’s luxury portfolio saw an array of unexpected partnerships across fashion, such as the Ritz-Carlton x Late Check Out and JW Marriot’s co-branded line with Flamingo Estate.

“Fashion PR taught me the importance of staying ahead of trends,” Landmann said, noting that this skill is equally valuable in hospitality, where “consumers’ expectations are always evolving, whether it’s the shift towards wellness-focused travel, sustainable practices, or hyper-personalized services.”

As the lines between different luxury sectors continue to blur, the influx of fashion talent into hospitality is likely to accelerate as operators reveal ambitious expansion plans.

The growth of the luxury hospitality landscape has fashion-influenced leadership shaping innovative new concepts and experiences.

“We have pushed the boundaries of how we work with partners, the stories we tell in creative campaigns, and the spaces in which our brands are present in the world,” said Armitage. This year will see the opening of One & Only Moonlight Basin in Big Sky, Mont., from Kerzner — the brand’s first destination in the United States and its first alpine resort. The company is also launching its second wellness-focused SIRO Hotel in Boka Place, Montenegro, following the brand’s debut in Dubai’s One Za’abeel, with additional properties planned for Los Cabos and Riyadh beyond 2025.

Meanwhile, Orient Express is making its own bold moves launching La Dolce Vita Orient Express train service and introducing its first sailing yacht, the Orient Express Corinthian. Orient Express will be unique in combining boats, trains, and hotels under one luxury hospitality brand. As Le Badezet noted, “The future of luxury is increasingly experiential, with hospitality growing faster than traditional luxury goods sectors.”

FT : Real estate developers pile into UK student housing sector

Real estate developers pile into UK student housing sector
Record number of deals in 2024 comes despite sharp fall in international student numbers

Real estate developers are piling into UK student housing despite a decline in international student numbers and worsening financial challenges in the higher education sector.

Private developers signed a record 22 land deals in the purpose-built student accommodation market in 2024, totalling £473mn, according to a report published on Tuesday by real estate group Knight Frank.

The deals included Greystar’s purchase of an old hotel that is now the site of the 1,014-bed One Medlock Street in Manchester, and Dominus and Cheyne Capital’s conversion of an office block at 65 Fleet Street in central London into student flats.

Privately developed student accommodation has reshaped the skyline of Britain’s cities in recent decades as investors rushed to capitalise on rising rents and student numbers.

It has typically commanded higher rental prices than other kinds of housing for students, with the offer of additional amenities.

“The ongoing gap between supply and demand continues to support the sector, while affordability remains a key challenge for students,” said Katie O’Neill, an associate at Knight Frank and author of the report.

International student numbers, a crucial market for student accommodation, have plunged in the past year following a crackdown on visa rules by the previous Conservative government.

However, the sector remains highly profitable for developers thanks both to high rents and the density of flats.

Annual UK private rents rose by 9 per cent in the year to December 2024, according to official data, while research by the Higher Education Policy Institute, a think-tank, in 2023 found that rents for private sector student flats in 10 university cities rose at almost double the rate of rents for flats owned by universities.

Separate analysis of student housing costs last year found the average student rent in London of £13,595 in 2024-25 exceeded the maximum loan for students in the capital for the first time. 

Saranya Thambirajah, a vice-president at the National Union of Students, said that rents in accommodation run by for-profit companies tended to be more expensive and it was “not a sustainable way to do student housing or accommodation, for either students or institutions”.

But Joe Lister, chief executive of Unite Students — which acquired a 444-bed site at Kings Place in Southwark, central London, last year in one of the 22 deals — said there was a role for the FTSE 100 company in increasing housing supply.

He added that Unite was also exploring the possibility of purchasing existing housing assets from higher education institutions.

“Universities own about £30bn of real estate. We couldn’t do it in one go. But over 10 years there’s an opportunity to provide funding into the sector using our access to private capital,” he said.

In addition to the 22 private land deals, universities have partnered with the private sector to deliver student accommodation in recent years.

Developers typically benefit from these partnerships through cheaper land costs and assurances that universities will find students to take rooms.

Last year Newcastle University and Unite Students struck a £250mn joint venture deal for a redevelopment project that will lead to about 750 new beds for the university.

>>> US Research Calls II

Research Calls II
  • Upgrades:
    • Brixmor Property (BRX) upgraded to Outperform from In-line at Evercore ISI
    • Equifax (EFX) downgraded to Hold from Buy at Argus
    • Genmab (GMAB) upgraded to Neutral from Underperform at Exane BNP Paribas
    • Peloton (PTON) upgraded to Buy from Hold at Argus; tgt $15
    • RTX (RTX) upgraded to Buy from Hold at Argus
    • Southwest Air (LUV) upgraded to Buy from Hold at Argus; tgt $35
  • Downgrades:
    • First National (FXNC) downgraded to Market Perform from Outperform at Hovde Group; tgt $28.50
    • Q32 Bio (QTTB) downgraded to Neutral from Overweight at Piper Sandler; tgt lowered to $4
    • Q32 Bio (QTTB) downgraded to Market Perform from Outperform at BMO Capital Markets; tgt lowered to $3
    • REGENXBIO (RGNX) downgraded to Neutral from Buy at Goldman; tgt lowered to $14
  • Others:
    • Alkermes Plc (ALKS) initiated with a Buy at Deutsche Bank; tgt $40
    • Avadel Pharmaceuticals (AVDL) initiated with a Buy at Deutsche Bank; tgt $12
    • Axsome Therapeutics (AXSM) initiated with a Buy at Deutsche Bank; tgt $176
    • Gaia (GAIA) initiated with a Buy at ROTH MKM; tgt $10
    • Harmony Biosciences (HRMY) initiated with a Buy at Deutsche Bank; tgt $55
    • Marker Therapeutics (MRKR) initiated with a Buy at Brookline
    • Neurocrine Biosciences (NBIX) initiated with a Hold at Deutsche Bank; tgt $138
    • Xenon Pharmaceuticals (XENE) initiated with a Buy at Deutsche Bank; tgt $67

>>> US Gapping up

Gapping up
In reaction to earnings/guidance
:
  • LSCC +14.8%, CMP +10.6%, MYTE +7.5%, DD +7%, CINF +4.7%, DAC +4.3%, LDOS +3.7%, CRESY +2.8%, BRX +2%, KRC +2%, VNO +1.5%
Select steel and aluminum names showing strength:
  • CLF +3.2%, NUE +2.5%, CENX +1.9%, STLD +1.8%, AA +1.2%, X +1.1%, .
Other news:
  • SLQT +26.9% (signs $350 mln strategic investment)
  • ATEX +12.2% (engages Morgan Stanley as financial advisor to support a formal strategic review process after receiving inbound interest in the company)
  • HE +6.4% (confirmed Supreme Court decision relating to insurance subrogation claims in Maui Wildfire tort litigation)
  • GOLF +5.9% (replacing ROIC in the S&P SmallCap 600)
  • TVTX +5.8% (completes its Type C meeting with the U.S. Food and Drug Administration (FDA) and plans to submit a supplemental New Drug Application seeking traditional approval of FILSPARI for focal segmental glomerulosclerosis)
  • NVNI +3.8% (stock offering)
  • AGEN +3.1% (enters into license agreement with Incyte)
  • IONQ +2.3% (partners with General Dynamics)
  • BKSY +2.2% (establishes launch window with Rocket Lab)
Analyst comments:
  • COMP +5.1% (upgraded to Buy from Neutral at UBS)
  • FSLR +2.3% (upgraded to Outperform from Neutral at Mizuho)

>>> US Gapping down

Gapping down
In reaction to earnings/guidance
:
  • FLNC -37.3%, HLIT -25.8% (also announces $200 mln buyback plan), PETS -15%, AMKR -9.6%, CMCO -8.5% (also to acquire Kito Crosby Limited from KKR for $2.7 bln), ACLS -8.3%, SQNS -7.3%, MITK -6.5%, MEDP -6.1%, CXW -5.2%, ALAB -4.5%, WCC -3.7%, INSP -3.3% (also receives civil investigate demand), ARWR -3%, CG -2.9%, LZ -2.7% (also acquires Formation Nation), COTY -1.5%, VRTX -1% (also, COO to retire)
Other news:
  • THRD -25.8% (announces results from its Phase 1 single and multiple ascending dose clinical trial of THB335 in healthy volunteers)
  • SERA -10.1% (stock offering)
  • HLNE -3.8% (prices offering of by co and selling stockholder of 1,572,536 shares of Class A common stock for gross proceeds of ~$252 mln)
  • LTM -3.4% (Jan Traffic)
  • VYGR -3.2% (Provides Update on SOD1 ALS Gene Therapy Program)
  • MRP -3% (Completes Acquisition of Rausch Coleman Homes Land Assets)
  • HESM -2.8% (upsizes and prices offering of 11.0 mln shares of common stock at $39.45 per share)
  • WBA -2.2% (discloses commercial arbitration award update - federal court in Delaware upheld the Arbitration Award)
  • ALRM -1.3% (announces a majority-stake acquisition of CHeKT0
Analyst comments:
  • DVAX -5.2% (downgraded to Sell from Neutral at Goldman)
  • SNAP -1.8% (downgraded to Neutral from Buy at Guggenheim)
  • NET -1.7% (downgraded to Sell from Hold at DZ Bank)

The Information : OpenAI Board Will Reject Musk’s ‘Embarrassing’ Takeover Bid, C

OpenAI Board Will Reject Musk’s ‘Embarrassing’ Takeover Bid, CEO Says

Shortly after Elon Musk made a surprise $97 billion bid for OpenAI’s assets on Monday, its CEO Sam Altman told staff in a message that its board of directors intends to make clear it has no interest in Musk’s “supposed ‘bid’” and that the offer wasn’t in the interest of OpenAI’s mission to develop advanced artificial intelligence for all of humanity, according to a person who saw the message.

The letter indicates that OpenAI’s 10-person board is backing Altman in his fight against Musk’s monthslong effort to prevent the for-profit arm of OpenAI, which develops ChatGPT and other products, from getting out from under the control of OpenAI’s nonprofit by converting to a public benefit corporation. Musk is arguing that the nonprofit will be shortchanged by the conversion.

Altman rejected the offer on X earlier Monday, but it wasn’t clear if he was doing so with backing of the board. Nearly all of the directors joined after Altman was briefly fired, then rehired, by the nonprofit’s directors in late 2023.

Altman told staff about the board’s imminent rejection of Musk’s bid before he or the board saw an official offer letter from Musk, according to the message, and he referred to the effort as “just embarrassing to watch.”

Musk has sued OpenAI for allegedly defrauding him into making substantial donations to the nonprofit after cofounding it in 2015 with Altman and others. Altman and OpenAI have denied his charges. A U.S. district judge said in a hearing last week that she was leaning in favor of OpenAI in its initial defense against Musk’s effort to halt the planned conversion.

Altman launched OpenAI’s for-profit arm in 2019, with the nonprofit overseeing it. The for-profit arm later developed ChatGPT in 2022, and Musk started an OpenAI rival, xAI, in 2023.

In making his bid, Musk and a consortium of investors essentially placed a value on the nonprofit assets that’s higher than their theoretical current value.

Under the current structure, both the nonprofit and Microsoft, OpenAI’s largest outside shareholder, are in line to receive billions of dollars in profits if the company generates them. After the conversion, the nonprofit arm would end up with a stake of at least 25% in the corporation, The Information has reported, and Microsoft would also end up with a big stake.

OpenAI’s for-profit arm was valued at $150 billion in a financing last fall, which means the value of the nonprofit’s proposed stake following the conversion would be far less than what Musk is offering—even if the nonprofit got a 50% stake.

Musk’s team estimates that the nonprofit’s assets—control over the for-profit and rights to some of its future profits—is essentially equivalent to a 51% stake in the for-profit, meaning Musk is valuing the for-profit arm at about $190 billion. The for-profit arm is now in the midst of raising equity funding from SoftBank at a pre-investment valuation of $260 billion, but the deal hasn’t closed.

Last month, Musk’s lawyer sent a letter to the attorneys general in Delaware, where OpenAI is incorporated, and California, where it is based, arguing that OpenAI should auction off the nonprofit’s stake in the business to ensure the nonprofit is fairly compensated for the for-profit conversion. Monday’s bid could be another effort to get the attention of those state officials, who have so far not taken steps to stop the conversion.

If Musk succeeds in raising the potential market value of the nonprofit’s assets, it could dilute the value of stakes held by OpenAI’s investors in the for-profit arm, including Microsoft.

>>> US Research Calls I

Research Calls I
  • Upgrades:
    • Compass (COMP) upgraded to Buy from Neutral at UBS; tgt raised to $11
    • Monday.com (MNDY) upgraded to Overweight from Sector Weight at KeyBanc Capital Markets; tgt $420
    • Steel Dynamics (STLD) upgraded to Overweight from Sector Weight at KeyBanc Capital Markets; tgt $155
    • Super Micro Computer (SMCI) upgraded to Buy from Hold at CFRA; tgt $48
    • TXNM Energy (TXNM) upgraded to Outperform from In-line at Evercore ISI; tgt raised to $54
  • Downgrades:
    • Cloudflare (NET) downgraded to Sell from Hold at DZ Bank; tgt $145
    • Columbus McKinnon (CMCO) downgraded to Neutral from Buy at DA Davidson; tgt $35
    • Dynavax (DVAX) downgraded to Sell from Neutral at Goldman; tgt lowered to $12
    • Fluence (FLNC) downgraded to Sell from Buy at Guggenheim; tgt lowered to $6
    • Fluence (FLNC) downgraded to Market Perform from Outperform at BMO Capital Markets; tgt lowered to $10
    • First Solar (FSLR) upgraded to Outperform from Neutral at Mizuho; tgt raised to $259
    • Playa Hotels & Resorts (PLYA) downgraded to Hold from Buy at Deutsche Bank; tgt lowered to $13.50
    • Playa Hotels & Resorts (PLYA) downgraded to Perform from Outperform at Oppenheimer
    • Snap (SNAP) downgraded to Neutral from Buy at Guggenheim
    • TechTarget (TTGT) downgraded to Mkt Perform from Outperform at Raymond James
  • Others:
    • ACADIA Pharmaceuticals (ACAD) initiated with a Hold at Deutsche Bank; tgt $22
    • AZZ (AZZ) initiated with a Buy at ROTH MKM; tgt $108
    • Biogen (BIIB) initiated with a Mkt Perform at Bernstein; tgt $160
    • Biohaven (BHVN) initiated with a Buy at Deutsche Bank; tgt $65
    • Crinetics Pharmaceuticals (CRNX) initiated with a Buy at TD Cowen
    • Denali Therapeutics (DNLI) initiated with a Buy at Deutsche Bank; tgt $31
    • Domo (DOMO) initiated with an Overweight at Cantor Fitzgerald; tgt $11
    • Flex (FLEX) resumed with a Buy at Stifel; tgt $52
    • IBM (IBM) initiated with an Outperform at Oppenheimer; tgt $320
    • Praxis Precision Medicines (PRAX) initiated with a Buy at Deutsche Bank; tgt $111
    • Sarepta Therapeutics (SRPT) initiated with a Hold at Deutsche Bank; tgt $136
    • Silence Therapeutics (SLN) initiated with a Sell at Goldman; tgt $6
    • Sunrise Realty Trust (SUNS) initiated with an Outperform at Keefe Bruyette; tgt $12.75
    • TTM Tech (TTM) resumed with a Buy at Stifel; tgt $33
    • Waystar Holding Corp. (WAY) initiated with a Buy at Jefferies; tgt $51

WSJ : EU Pledges $200 Billion in AI Spending in Bid to Catch Up With U.S., China

EU Pledges $200 Billion in AI Spending in Bid to Catch Up With U.S., China
The announcement underscores efforts from the EU to position itself as a key player in the AI race

The European Union pledged to mobilize 200 billion euros ($206.15 billion) to invest in artificial intelligence as the bloc seeks to catch up with the U.S. and China in the race to train the most complex models.

European Commission President Ursula von der Leyen said that the bloc wants to supercharge its ability to compete with the U.S. and China in AI. The plan—dubbed InvestAI—includes a new 20 billion-euro fund for so-called AI gigafactories, facilities that rely on powerful chips to train the most complex AI models.

“We want Europe to be one of the leading AI continents, and this means embracing a life where AI is everywhere,” von der Leyen said at the AI Action Summit in Paris.

The announcement underscores efforts from the EU to position itself as a key player in the AI race. The bloc has been lagging behind the U.S. and China since OpenAI’s 2022 release of ChatGPT ushered in a spending bonanza.

The EU pledge comes a month after Washington announced Stargate, an AI joint venture that aims to build data centers in the U.S. for OpenAI. OpenAI, SoftBank Group, Oracle and MGX are the initial equity funders in Stargate, while Arm, Microsoft and Nvidia are technology partners. The companies are committing $100 billion initially and plan to invest up to $500 billion over the next four years.

Meanwhile, Beijing has also made strides in the technology. Chinese company DeepSeek developed AI models that it said nearly matched American rivals despite using inferior chips, raising questions about the need to spend huge sums on advanced gear provided by Nvidia and other tech giants.

“Too often I hear that the EU is late to the race,” von der Leyen said, insisting it was “far from being over.”

The commission’s initial funding for InvestAI will come from existing EU programs, though member states can also contribute. InvestAI will include a layered fund, with shares of different risk and return profiles.

The EU is aiming to establish gigafactories to train the most complex and large AI models. Those facilities will be equipped with roughly 100,000 last-generation AI chips, around four times more than the number installed in the AI factories being set up right now.

The bloc in December selected several consortia to establish seven AI factories, with plans to announce another five soon. Von der Leyen said the InvestAI fund would finance AI gigafactories through a mix of grants and equity.

News Corp, owner of Dow Jones Newswires and The Wall Street Journal, has a content-licensing partnership with OpenAI.