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Another activist hedge fund, Elliott Investment Management, is already agitating for changes at the coffee giant

Activist investor Starboard Value has a stake in Starbucks SBUX -0.87%decrease; red down pointing triangle and wants the coffee giant to take steps to boost its stock price, according to people familiar with the matter.

The size of the hedge fund’s stake and its exact demands couldn’t be learned.

Starboard’s arrival comes as Starbucks is in talks to strike a settlement agreement with another activist, Elliott Investment Management. The Wall Street Journal reported that Elliott had built a sizable position in the Seattle company and was quietly pushing it to make changes.

If Elliott doesn’t gain representation on Starbucks’s board, it is possible the activist will pivot to launching a proxy battle for board seats. It isn’t clear whether or not Starboard could also eye a seat in the boardroom.

The activists are piling in as Starbucks and its current management, led by Chief Executive Laxman Narasimhan, are at a critical juncture.

Sales in Starbucks’s key U.S. and China markets have slumped, prompting the chain to cut its financial guidance twice this year. The company’s stock is down around 20% so far in 2024, bringing the company’s market value to about $85 billion.

Starbucks said in an earnings call in late July that it is evaluating options for its China business.

Narasimhan said during an internal meeting following earnings that the company is looking at possible partnerships in China, according to a replay of the meeting viewed by the Journal.

Narasimhan asked investors for patience with the company’s turnaround efforts. He said initiatives to win back lapsed customers and make coffee shops more efficient are starting to bear fruit.

Another voice Starbucks will have to contend with as it fends off the activists is Howard Schultz, the three-time Starbucks CEO who remains a top shareholder in the company. Schultz officially handed the reins to Narasimhan in March of 2023 and currently holds the title of chairman emeritus. He has continued to surface publicly to criticize where he sees Starbucks as falling short.

Starboard, run by Jeff Smith, invests across sectors but is especially active in technology. The firm also recently secured board seats at Outback Steakhouse parent Bloomin’ Brands.

This isn’t the first time Starboard and Elliott have bumped into each other. Online-dating company Match Group was already facing Elliott when Starboard showed up. The two were also together in Salesforce and eBay.

China challenges Brussels’ electric car tariffs with WTO complaint

Beijing says EU trade measures undermine global co-operation on climate

Beijing has hit back against EU tariffs on Chinese electric vehicle exporters, filing a complaint with the World Trade Organization in an escalation of the trade dispute with Brussels.

In early June, the European Commission announced it would sharply increase its tariffs on Chinese-made electric vehicles following a months-long investigation which found that Beijing was unfairly subsidising its car industry.

The measure is still provisional, pending a vote by EU member states in November. The EU’s trade chief Valdis Dombrovskis told the Financial Times last week that he expected them to approve the tariffs.

The levies vary across companies, which include Geely and BYD, the world’s largest electric vehicle maker, but could be close to 50 per cent for carmakers judged not to have co-operated with the EU probe.

In announcing Beijing’s WTO complaint on Friday, China’s ministry of commerce said that the EU’s findings seriously violated WTO rules and undermined global co-operation on climate change.

The ministry urged the EU to “immediately correct its wrong practices”, safeguard economic and trade co-operation and the stability of the electric vehicle industry.

The European Commission said it was “carefully studying” the details of the Chinese complaint and would “will react to the Chinese authorities in due course according to the WTO procedures”.

“The commission is confident of the WTO-compatibility of its investigation and provisional measures,” it added.

Dombrovskis has defended the tariffs, arguing that they were not “prohibitive”.

The WTO complaint marks the latest in a series of mild retaliatory measures against what Beijing describes as against rising European protectionism. Some China trade experts have warned Beijing against stronger measures that could damage the world’s second-biggest economy which is already struggling from slower growth.

In January, China launched an anti-dumping probe into French cognac imports, a move targeted at punishing France for championing the electric vehicle probe. And in mid-June, less than a week after Brussels said it would impose tariffs on electric vehicle shipments from China, Beijing opened an anti-dumping investigation into EU pork imports in a move the European agricultural industry said would hit farmers in Spain, the Netherlands, Denmark, Germany and Belgium.

For the EU, the electric vehicle tariffs mark part of a more aggressive stance on trade as it seeks to protect its industry, which is subject to more stringent environmental standards, from cheaper international imports.

This year, Brussels has also launched trade probes into wind turbine and solar manufacturers and announced anti-dumping measures against imports of Chinese biofuels, which will come into effect next week.

The $1bn cash injection comes as entrepreneur’s telco empire is struggling with mounting debts

Abu Dhabi-based sovereign wealth fund ADQ is to take a stake in Sotheby’s as part of a $1bn capital injection alongside existing owner Patrick Drahi as the auction house seeks to cut debt and fund growth.

ADQ and Sotheby’s said in a joint statement on Friday that the investment fund had “signed a definitive agreement” to buy a minority stake via newly issued shares. No valuation for the company was given.

Drahi acquired Sotheby’s in 2019 in a deal that valued the auction house at $3.7bn, including debt. That the Franco-Israeli entrepreneur is now willing to accept a partner represents a change in position from what people close to him said in December, namely that he did not need to sell nor bring in outside investors.

The bulk of Drahi’s holdings are in telecoms and owned by his Altice group, although Sotheby’s sits in his personal holding company.

The deal with ADQ is expected to close before the end of the year. The fund’s involvement is a reflection of how many rich buyers of artwork and collectors’ items increasingly hail from the oil-rich Gulf states.

Founded in 2018, the sovereign wealth fund is tasked with fuelling development in the oil-rich emirate of Abu Dhabi. Chaired by the UAE’s powerful national security adviser Sheikh Tahnoon bin Zayed al-Nahyan, ADQ also invests abroad, and earlier this year announced $35bn investment plans in Egypt.

The Sotheby’s stake falls outside ADQ’s priority sectors, which span energy to agriculture, healthcare and logistics. However, a person close to the fund said it could lead to a Sotheby’s opening in Abu Dhabi, which has invested heavily in bringing art and culture to the emirate. The Louvre Abu Dhabi opened in 2017, and construction on a Guggenheim gallery has begun.

Drahi has been selling off assets lately as a wall of debt starts looms. His holding company Altice was built during an acquisition spree starting around 2014 that splashed out about €50bn and was partly funded with cheap borrowing. It expanded to include US cable companies, French telecom operator SFR, and other smaller communications groups from Portugal to Israel.

His deals often used creative financing methods and leverage: the purchase of a 24.5 per cent stake in BT was built through substantial loans and derivatives financing, allowing Altice to borrow heavily against the shares, according to people familiar with the situation and loan documents seen by the Financial Times.

In November, Altice struck a deal to sell a majority stake in its data centre business in France, valued at €764mn, to a Morgan Stanley infrastructure fund. 

In March, Drahi agreed to sell French 24-hour news channel BFM and RMC radio to Rodolphe Saadé, the billionaire owner of CMA-CGM shipping group, for €1.55bn in cash. This month, Altice sold an online video advertising group called Teads to digital marketing group Outbrain for about $1bn.

Other assets like Portugal Telecom have been on the block for more than a year, but have not found buyers. In Portugal, Altice was rocked by a corruption probe in which one of Drahi’s long-standing lieutenants was alleged to have embezzled money through procurement contracts.

The company has said it did not know of the problems, and is co-operating with prosecutors.

Although Series A and B funding for U.S.-based companies picked up in H1 2024 — up 34% year over year — the uptick may be deceiving.

While total funding reached $31.5 billion — the highest amount invested at this stage in two years — that increase was concentrated in larger fundings and in two leading sectors — healthcare/biotech and AI.

That includes a $6 billion Series B to xAI, which accounts for much of the increase. Still, if we remove that funding, H1 2024 is still above the half-year funding amounts in 2023.

Since the second half of 2022, we found a Series A bottleneck based on an analysis of Crunchbase data. As the market tightened, seed-stage companies faced a more challenging environment in which to raise a Series A round. While all companies face this crunch, seed represents the largest absolute number of companies funded, as well as the stage with the least funding and lower revenues to manage through a tightened funding environment.

The recent uptick in Series A and Series B funding does not address that bottleneck.

The increase at Series A and Series B fundings in the first half of 2024 was concentrated in larger funding at these stages. We looked at fundings by half-year both below and above the $50 million mark since 2018.

Large Series A rounds picked up in 2021 — the peak market. Those large rounds slowed every half year since, but increased in 2024.

Close to two-thirds of these large Series A companies in H1 2024 are in healthcare/biotech. The runner-up industry for large Series A rounds is artificial intelligence. Other sectors with large fundings in the low- to mid-single digits include Web3, energy and hardware.

Series B rounds show a similar trajectory. Around the market peak, larger rounds of $50 million and above increased and slowed since the second half of 2022. Recently, they’ve begun to pick up.

Alongside the xAI megaround, the pick-up this year is led by healthcare/biotech as the leading industry followed by AI. Hardware, including semiconductor and robotics, is the third-largest sector for large Series B rounds.

The increase in Series A and B fundings in H1 were concentrated in larger fundings and in two leading sectors; healthcare/biotech and AI.

Other sectors got short shrift.

There is a big gap between these two leading sectors and others. Financial services, e-commerce and shopping, and transportation sector amounts, for instance, were significantly down.

Despite the fact that funding was concentrated, there was a noticeable increase in large Series A round counts. That could be seen as a sign of optimism.

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