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Earlier today, we published our Generative AI Takeover List of 78 startups that could be acquisition targets. The list includes companies that develop their own models or robots, haven’t raised funding in at least two years, or both. These companies are most likely to face a cash crunch and be open to takeover offers.

My colleagues Stephanie and Rocket highlighted the conundrum for these startups: It’s expensive to build large language models and hardware, and customers are cautious of spending big on AI apps and tools with unproven returns.

A surprising company on the list is Mistral AI, the Paris-based developer of open-source models, founded early last year by alumni of Google DeepMind and Meta Platforms. The startup has found success among investors—and politicians—based in part on the notion of being a European alternative to OpenAI.

In June, Mistral raised $640 million in new funding, bringing its total funding to $1.2 billion, more than all but a handful of AI startups. That funding valued the company at about $6 billion.

Just because Mistral has raised a lot of funding doesn’t mean a takeover is unlikely: LLM developer Inflection, for instance, raised $1.6 billion but effectively sold itself to Microsoft in March—long before it had a chance to burn through that cash.

“We are an independent company and intend to remain so,” a spokesperson for Mistral told Stephanie and Rocket.

Mistral’s founders and researchers have AI expertise that big technology companies covet. Arthur Mensch, its CEO, worked on Gemini and Flamingo, a multimodal model, at Google. Timothée Lacroix and Guillaume Lample, its chief technology officer and chief scientist respectively, worked on the first generation of Meta’s flagship AI model Llama.

But Mistral’s path to revenue and profit is unclear. Its open-source approach to AI means it doesn’t sell access to many of its most popular models, while facing stiff competition from open-source model developers such as Meta.

Mistral generates some revenue by charging users of its application programming interface, but fewer than 10% of users pay for Mistral’s larger models at one of its partners, Stephanie previously reported. Mistral could also generate revenue from helping companies develop AI apps that use its models, the way Germany-based Aleph Alpha does after it slowed efforts to compete against OpenAI in developing advanced models. Mistral hasn’t indicated it is considering that type of business.

It’s also unclear how another major developer of open-source AI, Meta, will make a return on the tens of billions of dollars it is spending on its efforts. Meta, however, rakes in huge amounts of revenue from digital advertising and has bet that its investment in AI will improve its ads business.

The list of companies that could acquire Mistral is short. Amazon seems to have an appetite for license-and-hire deals, having struck them with Adept, a developer of computer-using AI agents, and Covariant, a robotics software startup. Apple has shown interest in M&A too; my colleague Jon previously reported that its executives have met with at least three AI startups about potential acquisitions, and it quietly acquired French AI startup Datakalab in December, French business magazine Challenges reported.

Alternatively, Mistral’s founders could mimic Character.AI’s founders and return to one of their alma maters—Google or Meta—in return for a handsome payout. We could also imagine the startup following Inflection into the arms of Microsoft, especially since Microsoft invested in Mistral in February. A spokesperson for Microsoft said Mistral isn’t a candidate for acquisition. Amazon and Meta declined to comment. Apple and Google did not respond to requests for comment.

Mistral could also pursue a strategic partnership involving more financing, revenue sharing or joint research efforts, like Cohere has discussed with Snowflake or OpenAI has inked with Microsoft. In the leadup to its deal with Google, Character held research partnership talks with Google, Meta, OpenAI and xAI.

Mistral’s valuation may be a tough pill for potential acquirers or strategic investors to swallow, though. Inflection, Adept and Character were valued closer to $1 billion when they struck their deals. It could be challenging for a Mistral acquirer to pay a licensing fee large enough to please shareholders and small enough to avoid regulatory scrutiny.

But any deal still may face heat from regulators in both the U.S. and the EU. Mistral is one of Europe’s few AI leaders, even more so after three of the five founders of France’s H left the startup and Germany’s Aleph Alpha lowered its ambitions.

Europe’s top antitrust regulator said in February it would examine Microsoft’s investment in Mistral. And in an interview with CNBC in May, French president Emmanuel Macron said he “would prefer [Mistral] to become independent and grow on their own.”

Mistral on Tuesday released two models called les Ministraux, which are small enough to run on devices such as phones, instead of in the cloud. It said those models perform better on certain benchmarks than similarly sized ones from competitors. That performance, and the success of other models from Mistral, is another reason why it could be a desirable takeover target.

Bottom line: Don’t be surprised if Macron doesn’t get his wish.

Stellantis-owned brand’s painful EV transition has shaken home city of Turin and sparked acrimonious spat with Rome

At 21, Gianluca Rindone got his first job making bodies for Fiat’s Maserati cars alongside his father, a Sicilian who had been lured to Turin’s auto boom in the 1970s. He thought it would be a lifelong career but after three decades Rindone has been furloughed, falling victim to the carmaker’s decision to suspend production at its last Turin factory.

Rindone’s own sons — aged 15 and 8 — are unlikely to follow his path into Fiat’s workforce, he says.

“If there is not a job for the father, how can there be a job for the son?” frets the 48-year-old, who is relying on help from his retired parents to pay his mortgage and bills. “When you see a factory with nearly 100 years of history stop, the heart cries. If Stellantis goes, Turin dies. It’s as simple as that.”

Rindone’s lament is one heard across Europe, as the continent’s auto industry — and its 14mn jobs — faces an existential crisis, squeezed between the soaring costs of developing cleaner vehicles to meet the EU’s tough emissions standards and the cheaper models from Chinese rivals.

Fiat-owner Stellantis, which also makes the Peugeot, Citroën and Jeep brands, last month warned on profits, while Volkswagen, Europe’s largest automaker, is considering closing down plants in Germany for the first time in its history.

Once the pride of Italian manufacturing and known as “Mamma Fiat” for its extensive cradle-to-grave welfare schemes, Fiat was subsumed into Stellantis in 2021, after years of troubles.

The company last month temporarily halted car production at Fiat’s historic Mirafiori plant due to lack of consumer demand for the Fiat 500e — the electric version of the iconic vehicle that democratised Italian car ownership in the 1960s and 1970s. Initially scheduled to last four weeks, the plant’s shutdown has been extended until at least the end of October.

The crisis has far-reaching political consequences for Italy’s Prime Minister Giorgia Meloni, who is battling to boost economic growth and stabilise Italy’s fragile public finances, as well as for the whole of the EU.

The Italian car industry, including its vast network of parts suppliers, employs some 250,000 people and accounts for over 5 per cent of gross domestic product. But since 2018 Italy’s total car production has halved to 500,000 vehicles.

On Friday the country’s auto workers are descending on Rome to demand Brussels, which has banned the sale of new combustion engine cars after 2035, provide more financial support for the green transition. The protesters also want Meloni’s government to work with Stellantis, the country’s only large carmaker, to tackle the sector’s challenges to save their jobs.

But Rome and Stellantis disagree on how to do this. Meloni has remonstrated against the production of Fiat models outside Italy, exacerbating tensions.

Italian industry minister Adolfo Urso has been pushing the EU to reconsider the looming curbs on combustion engine sales but Stellantis’ CEO Carlos Tavares disagrees on whether this is the right approach.

“Instead of arguing about the regulations, it’s better to work hard to comply in the most efficient manner,” he told Italian lawmakers at a parliamentary hearing last week.

Tavares also complained about Italy’s high energy prices and Rome’s paltry spending on incentives to support purchases of electric vehicles by the middle class — which he said was just a fifth of what other European countries had spent.

Yet he insisted Stellantis was committed to making cars in Italy, calling Fiat’s factories a “strong asset” for the company.

“We love our plants and believe they are the right answer to the challenges we have in the future,” he said. “That’s why we don’t sell them to the Chinese.” 

Such blandishments ring hollow to autoworkers in Turin, where Fiat was founded in 1899, and which prospered during Italy’s postwar car boom. “Turin was constructed for Fiat, but today we don’t have Fiat. Stellantis is a multinational company, and we know [they] go where costs are cheapest,” Rindone said

Fiat’s Turin workforce has already been steadily declining since the late 1990s, with four other factories closing in recent decades. While Stellantis denies it plans to close Mirafiori, many workers suspect the company wants to quietly wind down the plant by waiting for its labour force — whose average age is now 57 — to retire.

Many workers have already accepted generous buyout offers.

“We are the last generation hired,” said furloughed worker Fabbio Mosesso, 53, who joined Fiat nearly 36 years ago. “The business is not spending money to incentivise EV purchases, but to push people to leave their jobs.”

Autoworker and union representative Giacomo Zulianello, 58, accused Stellantis of “bleeding us”, adding that “the complete killing of Mirafiori is too much even for Tavares. But in reality, Mirafiori is already closed.”

Michaela San Filippo, 51, a second-generation Fiat assembly line worker also on furlough, said she and fellow workers were struggling financially, even skipping on medical expenses. “You have to renounce everything that is not necessary,” she said. “You don’t live; you just survive.”

Stellantis has put new businesses into Mirafiori, including an EV battery testing centre, a unit recovering and recycling car parts, and a new assembly line for transmissions for Fiat 500 hybrids, due to start production in 2026.

Part of the factory also houses an exhibition of vintage Fiat cars. Yet marking the 125th anniversary of Fiat’s founding this summer, Urso expressed anguish at the factory’s diminishing output.

“Fiat is Turin,” said the minister, a member of Meloni’s rightwing Brothers of Italy party. “It was the greatest industrial plant in Europe, and we can’t accept that it is becoming a mere industrial museum.”

Not everyone is pessimistic. Stefano Lo Russo, Turin’s mayor, said the city was undergoing a transformation not dissimilar to the era when cars replaced horse-drawn carriages.

“When we moved from horses to cars, we stopped having a horse supply chain in the city and we started to have engine mechanics,” Lo Russo said. “It was progress. New technologies mean change.”

He said Turin’s carmaking history and its engineering colleges were supporting a vibrant new aerospace industry, underpinned by activities of France’s Thales and Italian defence champion Leonardo.

“The real vocation of the city is not only automotive — Turin is the city of engineering and manufacturing,” Lo Russo said. “We can work on cars, satellites, aeroplanes. More than a city of cars, is a city of engineers.” 

David Avino, a former Italian military officer and software engineer, chose Turin to launch his space venture Argotech in 2008, offering space services and astronaut training as well as making small satellites. Employing around 170 people in the city, Argotech is actively recruiting, although Avino said the space sector needed at least another decade to grow to scale.

“If everyone keeps investing . . . it will be effective in 10 or 15 years. But it’s important to start,” he said.  

Andrea Giordano, 36, joined Argotech after his previous employer, a leading car components company, furloughed its Turin labour force earlier this year.  

“My hope is that like the auto boom of the 1970s, this city will have the aerospace boom,” said Giordano, a warehouse operator. “In the meantime it’s going to be hard. We are going to have to tighten our belts.” 

Adoption of new settlement cycle has led to greater efficiency, increased liquidity and enhanced risk mitigation

In May, the US and Canada moved from settling securities transactions two days after a trade to one. This shift to “T+1” was a resounding success. The EU should follow suit.

T+1 means greater efficiency, increased liquidity and enhanced risk mitigation. As policymakers focus on strengthening capital markets, adopting T+1 has become critical for all major financial centres.

The UK has announced its intent to transition by year-end 2027. The Swiss are keen to co-ordinate with the UK and EU. In the EU, a firm commitment to a date certain for T+1 is needed now, along with full support for the significant investment by industry to modernise markets, enhance capital markets competitiveness and deliver benefits to investors.

Given that work, and the intricacies of the EU legislative process, European policymakers should announce in the clearest terms that they will make all necessary legal and regulatory changes to enable adoption of T+1 by the close of 2027 in alignment with the UK, including through a formal amendment of the EU’s Central Securities Depositories Regulation. 

Under the new T+1 regime in the US, 95 per cent of transactions are affirmed on the trade date itself, a marked improvement on the 73 per cent rate recorded in January 2024. The settlement “fail rate” was just 2 per cent — consistent with the figure under T+2. Margin posted in the clearing fund fell by $3bn a day, a 23 per cent drop from previous three-month averages, freeing up $750bn annually for broker-dealers to use elsewhere. These results showcase how a shorter settlement cycle creates a more efficient, resilient market. European investors deserve these same advantages.

Adopting T+1 will strengthen European capital markets, and reduced counterparty risk is a central reason why. Currently, the two-day gap between trade execution and settlement creates the risk that a counterparty could default before a trade is finalised. This risk is especially significant during market volatility. Moving to T+1 reduces this exposure, offering better protection for investors and creating a more stable market environment.

A shorter settlement cycle also will lower costs and improve capital efficiency, reducing the need for collateral. This would unlock billions of euros otherwise tied up in margin. This freed-up capital can be reinvested into new opportunities, boosting market activity. For investors, this means lower trading costs and more efficient use of capital.

The faster trades settle, the faster investors can reinvest. T+1 would increase liquidity in European markets and improve price discovery, again lowering transaction costs. This will create a more dynamic marketplace.

Cross-border harmonisation between capital markets is another important benefit. North American and other international markets are on T+1. The UK is following suit. The EU risks falling behind. EU-listed ETFs, for instance, currently settle trades on a T+2 basis, but, if these products have exposure to US securities, those transactions must settle on T+1. This mismatch creates unnecessary complications and costs. Adopting T+1 will reduce these cross-border inefficiencies, ensuring the EU stays a competitive and attractive destination for investment.

That competitive edge has been a key focus of recent European reports on the Savings and Investments Union. T+1 would keep European investors on a level playing field globally and drive innovation in financial technology. It would also help integrate Europe’s capital markets and keep the EU, UK and Switzerland in sync.

This will be a large-scale undertaking. The move will require modernisation of market infrastructure, technology and back-office operations. In the US, buy-side participants worked with the broker-dealer community and the main central clearing party to produce a detailed playbook for the transition. This work enabled the US Securities and Exchange Commission to set a clear transition date. We offer similar support to EU policymakers.

As we saw in the US, it’s worth the investment. Yet the collective action problem requires policymakers to put their weight behind the move. ICI and our fellow members of the EU Industry Taskforce delivered recommendations to the European Securities and Markets Authority this week. With 41 trading exchanges and 30 central securities depositories under the supervision of various European authorities, a clear timeline is critical. Brussels must not equivocate; it must fully and clearly back the initiative at the highest levels politically. Delay would be too costly.

The country’s banks have been under pressure, with margins thinning under the weight of weak credit demand

China’s major commercial banks have cut their deposit rates for a second time this year, a move that could help ease pressure on lenders’ profits after officials lowered mortgage and lending rates as part of efforts to boost the economy.

Industrial & Commercial Bank of China and China Construction Bank Corp. and other big lenders cut the interest offered on one-two-, three- and five-year time deposits by 25 basis points, according to their respective websites.

Shares of ICBC 601398 -0.32%decrease; red down pointing triangle were down 0.5% in morning trade, while CCB shares were 0.85% lower.

That comes in the wake of a broader economic stimulus package that Chinese officials announced last month, which included a string of easing measures like cuts to benchmark rates and a reduction in reserve requirements for banks to encourage lending.

Prior to Friday’s news, the central bank’s governor, Pan Gongsheng, had said that a further 20- to 25-basis-point reduction to deposit rates would be made.

The move marks the latest step in a deposit-rate cut cycle that began in late 2022. Chinese lenders lowered deposit rates three times last year, and once more this July.

The country’s major state-owned banks have been under pressure, with margins thinning under the weight of weak credit demand, a sluggish economy and aggressive monetary easing. Official data showed that the sector’s net interest margins stood at 1.54% at the end of second quarter, the same level as the first quarter but down from 1.74% a year ago.

The PBOC has signaled that it will press on with easing measures. Local media reported Friday that Pan said it will cut the seven-day reverse repo rate by 20 basis points.

The loan prime rate, which will be announced Monday, is also expected to fall by 20 to 25 basis points, local media cited the PBOC governor as saying.