WSJ : Why a SpaceX-Tesla Merger Could Benefit Shareholders in Both Companies

Why a SpaceX-Tesla Merger Could Benefit Shareholders in Both Companies

The Takeaway
  • Merger could benefit shareholders by consolidating Musk’s focus.
  • SpaceX and Tesla share similar valuations, easing potential merger.
  • Combined entity faces significant cash burn and debt challenges.

In 2016, Elon Musk defended Tesla’s proposed acquisition of SolarCity, a solar energy firm co-founded and run by his first cousins, by calling it a “no-brainer.” As it turned out, the purported benefits of the $2.6 billion deal, which brought a cash-burning, debt-laden firm under the Tesla umbrella, never materialized, and SolarCity lost market share in the years that followed.

Observers of Musk today might worry he is on the precipice of facilitating another ill-fated union, this time of his two crown jewel companies, newly public rocket ship and satellite internet company SpaceX and electric vehicle maker Tesla. But that merger would be far more defensible than the SolarCity deal was at the time.

A merger would likely benefit shareholders of both firms by resolving some of the conflicts associated with Musk running them separately, and by easing intercompany dealings that already occur. Even so, there are risks around the capital-intensive expansion both companies are planning in the coming years.

The idea that SpaceX might buy Tesla gained steam two weeks ago on the company’s earnings call, after Musk coyly declined to answer a Wall Street analyst’s question about the prospect. While he acknowledged the increasing overlap between the two firms, including their planned joint venture to build a massive semiconductor fabrication plant known as Terafab, which Musk announced in March, he said a combination would need to go through an “appropriate process.”

A combined SpaceX-Tesla would have three main businesses, the largest of which would be Tesla’s automotive unit, which sells electric cars as well as services for those vehicles, such as maintenance and insurance. That segment generated $82 billion in revenue in 2025, 86% of Tesla’s top line. The rest of Tesla’s revenue comes from its fast-growing energy generation business, which includes solar panels and batteries.

SpaceX’s largest business is the Starlink satellite internet unit, which in 2025 generated $11.3 billion in revenue, 61% of SpaceX’s total that year. SpaceX is best known for its rocket-launching unit, which generated $4 billion in sales in 2025, and its xAI business, which houses social media platform X and the company’s AI data centers. Those centers are increasingly operating as a cloud firm. AI contributed 17% of SpaceX’s top line last year, although that’s likely to be higher now that SpaceX has started renting out its data center capacity to other companies. (SpaceX is also planning to buy coding firm Cursor for $60 billion, but the deal hasn’t yet closed.)


Musk promotes both companies by emphasizing his aspirations for them: He hopes to make Tesla a major manufacturer of humanoid robots as well as a robotaxi service provider. The company is still developing the robots, however, while its robotaxis are nascent and well behind those of industry leader Waymo. SpaceX’s future rests on getting its giant Starship rocket into commercial service, building data centers in space and traveling to the moon or Mars to build alternative civilizations.

Perhaps the most important benefit for investors in both companies is that a merger would unite two businesses run by the same person that already work together in various ways. Musk moves engineers and executives between his companies freely, and they share technology: For instance, Grok’s models, part of SpaceX’s xAI segment, are now available to Tesla drivers in their vehicles. A merger would resolve any concerns shareholders might have about the business dealings between the two companies and whether those deals are fair to both.

“If you are either a SpaceX or a Tesla investor, chances are you’re just a big believer in Elon, and no matter how you look at it, the other company is a major distraction for Elon from your perspective,” said investor Hamid Shojaee, who first bought Tesla stock in 2015 and cashed out after making a profit a few years ago. “The companies could benefit from being a single company that is run by Elon, with all of his focus being on the one as opposed to divided between the two.”

Ross Gerber, who helms wealth management firm Gerber Kawasaki and is a shareholder in both companies, said combining the different businesses would make it easier for them to buy and sell products and services to each other.

“So if I’m Tesla, I’m basically buying my compute from xAI, and as this gets more and more integrated into the car, essentially the entire operating system of the robots and the cars will be run by another company,” he said.

Big Believer

Then there’s valuation. A deal might have been more complicated in the days just after SpaceX first went public, when it reached a share price of $211, making its equity worth around $2.8 trillion—more than twice that of Tesla at the time, even though Tesla’s revenue last year was more than double SpaceX’s.

Since then, though, SpaceX stock has slid 15% from its initial public offering price, reducing its market capitalization to $1.5 trillion, just a little above Tesla, which is at roughly $1.3 trillion. Both companies are hugely overvalued, to be sure, but they currently trade at broadly similar forward price-to-earnings multiples, with SpaceX at 190 times and Tesla at 167 times, according to S&P Global Market Intelligence. That makes a combination easier than if only one was hugely overvalued.

Still, it is tough to nail down what kind of multiple is appropriate for each company individually, given the big unknowns each faces in future businesses such as Tesla’s hoped-for humanoid robot operation. At SpaceX, the future of the AI unit is especially unclear, while Starlink and its rocket launch business depend on SpaceX’s success in getting Starship into commercial service. The giant rocket is still in the testing phase.

SpaceX’s upcoming earnings report today will provide a fresh crop of data that could trigger movement in its share price, changing the financial logic of whether a deal makes sense. SpaceX is likely to be the acquirer, as Musk has supervoting shares in the rocket company—unlike with Tesla—which ensures he could maintain control of the combined company.

One big issue is that both companies are burning cash as they invest in new technology. While Tesla generated $6.2 billion in free cash flow in 2025, its free cash flow swung negative in the second quarter and will likely stay in that territory for the foreseeable future as the company invests heavily in robotaxi technology. Executives project Tesla will spend at least $25 billion in capital expenditures this year. There’s also the issue that SpaceX has nearly $7 billion in net debt, while Tesla has $27 billion, so a merger wouldn’t improve either company’s immediate cash position.

And the combined company would have enormous cash needs in the future, in areas like planned chip manufacturing and AI operations. “He’s building these massive data centers that will be worth a lot of money, but the problem with that is he’s got to invest, like, all of SpaceX’s capital into this because he’s competing with Amazon, Google and Microsoft,” Gerber said.

On the other hand, the larger combined companies might be more easily able to borrow money in the debt markets and at a lower interest rate, said one credit executive.

“It’s really a one plus one equals three scenario from a credit perspective, as the risk of default and loss given default are so low compared to other BBB-rated credits, which would generate significant demand,” said Prath Reddy, CEO of private credit marketplace Percent. “Not only would it be easy for them to raise debt, but oversubscribed demand would likely also secure favorable pricing.”

What Could Go Wrong

Still, there’s always the risk that those synergies aren’t substantial enough to offset the cash burn of the two companies as SpaceX doubles down on constructing data centers. There’s also a risk that geopolitics will torpedo the deal.

A report last week from The Wall Street Journal said Musk was instructing Tesla executives to prepare to separate its China business, heading off any potential regulatory hurdles that could throw a wrench in an eventual merger. Musk took to X to deny he was considering jettisoning the China business.

That denial may well be because for some investors, including Gerber, divesting from China would simply exact too steep a price. China contributed 18% of Tesla’s top line in the first half of 2026, and the country plays an important role in Tesla’s supply chain, housing some of its most productive, lowest-cost factories.

Divesting the China unit “guts the heart of Tesla’s revenue-profit engine,” Gerber said.

If that outcome can be avoided, though, a tie-up looks pretty attractive, if for no other reason than to consolidate Musk’s attention and effort on one entity in which investors share both risk and upside.

WSJ : Airlines Really Don’t Want You to Buy Their Cheapest Tickets No-frills bas

Airlines Really Don’t Want You to Buy Their Cheapest Tickets
No-frills basic-economy fares have always had restrictions, but the list of rules keeps growing

Think you know all the fine print on those basic-economy plane tickets? Better look again.

With airlines bringing the no-frills fares to business and first class, it’s easy to overlook continuing changes in the cabin that started this madness: economy.

I consider myself somewhat of an expert on, and occasional defender of, basic economy. I regularly lay out the restrictions to friends, family and readers looking to save money and only try to steer them away if their plans might change.

So I was surprised when I went to cancel an American Airlines basic-economy ticket someone else purchased for my son. To get a flight credit—minus the airline’s $99 basic-economy cancellation fee on domestic flights—he had to be a member of the airline’s frequent-flier program. (The good news: You could sign up on the spot before hitting “cancel.”)

Then I noticed something else: You aren’t eligible for any credit if you don’t buy your ticket directly from American. That means no Expedia and the like.

So clearly a basic-economy refresher is in order, for me and you. If you’re in the never-basic-economy camp, share this with the infrequent fliers or budget travelers in your life. Heck, laminate it. They can’t tell you that you didn’t warn them.

The general, basic-economy restrictions at major U.S. airlines remain the same. You don’t get advance seat selection without paying a fee and you board last.

Translation: You’re probably looking at a middle seat in the back of the plane and no room for your carry-on bag. (United still doesn’t allow basic-economy ticket holders to bring a standard carry-on bag. You have to check it.)

Where the rules are changing the most is around cancellation policies and loyalty perks and miles.

So here are some new wrinkles to be mindful of, by airline.

American Airlines: The cancellation restrictions I mentioned above aren’t the only changes. In May, the airline stopped allowing frequent fliers with status to use their seat perks when buying basic-economy tickets. (Some airlines including United and Delta also have this restriction.)

One Miami frequent flier with the airline’s highest status told me he and his wife frequently bought basic-economy tickets because they still got the airline’s extra-legroom seats free, at booking. Now they have to pay or buy up to a regular-economy ticket. He said it leaves a “bad taste.”

A spokeswoman says fliers with status still get priority boarding, bag allowances and other perks.

Late last year, American stopped awarding frequent-flier miles to basic-economy ticket buyers. Delta has long done this.

United: United really, really wants you to have its credit card. So much so that basic-economy ticket buyers no longer earn miles for their flights if they don’t have one or status in the airline’s Mileage Plus program. The change took effect in April.

Also worth noting: United has increased the fee it charges if you bring that forbidden carry-on bag to the gate if you don’t have status or certain United credit cards. If it doesn’t fit underneath the seat (they police this!) you have to fork over a $75 fee to check it, up from $65 because of the airline’s bag-fee increase. Save yourself $30 and check it at the ticket counter.

Delta: Want to visit the Delta Sky Club? No can do on a basic-economy ticket, even if you have a membership or one of those American Express credit cards that grants access. The airline is even going to restrict access to its primo Delta One Lounges beginning next year if you buy its new basic-business ticket.

Southwest: Southwest loyalists are new to the basic-economy game. The airline revamped its fare structure and pretty much everything else about the business model when it switched to assigned seating.

The good news: Basic-economy passengers can cancel their flight for a credit without a fee. The bad: The credit expires in six months instead of the usual 12 with regular-economy tickets. Note that the six-month period dates back to the time of booking. So if you bought a basic ticket in December for spring break and canceled in March, you only have a short period to travel.

Southwest is the only airline where I don’t hesitate to book basic to save money. That’s because I have status on the airline and perks apply even with basic tickets. That means I can pick a seat at the time of booking and board in Group 1.

All basic ticket holders earn points, too. Based on the trend at other airlines, we’ll see how long these perks last.

JetBlue Airways: Want to change or cancel your basic ticket? Buried in the fine print of its fare-category shake-up last week: The airline will now charge a $150 fee, up from $100. The balance is issued in a travel credit.

Basic ticket holders still earn points on their travel, and some loyalty perks, excluding seat selection, apply.

Alaska Airlines: Basic-economy passengers (Alaska calls them Saver fares) are no longer eligible to earn frequent-flier points. The new policy began Aug. 1.

Need to cancel a Saver ticket? Alaska’s restrictions are stricter than its competitors. You must cancel at least 14 days before departure for a 50% travel credit. (There is no cancellation fee.) Cancel outside that window and your ticket is worthless.

You’re probably getting the message by now: Brush up on all the restrictions before clicking “buy,” especially if you’re booking several tickets. Those cancellation fees can eat up a big chunk of the ticket value.

If you can’t live with them, bite the bullet and “upgrade.” Those are air quotes because we all know it isn’t a real upgrade. It’s a deliberate upsell to what we used to think of as basic.

FT : European carmakers turn to Chinese rivals to fill factory floors The second

European carmakers turn to Chinese rivals to fill factory floors
The second in a series on Chinese auto companies looks at the European industry’s struggle to keep its plants alive

Once the humming engine of the local economy, Fiat’s sprawling Cassino car plant, just 130km south-east of Rome, stands with the desolate air of near abandonment.

Parking lots are empty, gates locked and many guard booths deserted as its 2,200 employees are only called into work a few days a month. Just 6,700 cars were produced in the first half of 2026 — a fraction of the annual capacity of 300,000.

Denise Tisci, a 40-year-old mother of three, has not worked a shift since May and, like other workers at the plant, depends on a public furlough scheme. 

“We’ve cut back on a lot of things — even something as basic and simple as taking the kids out for a pizza,” said Tisci, a plant employee since 2007. “It’s humiliating when we have to face the children.”

Fiat workers expect the automaker’s owner Stellantis to seek a China solution for the Cassino plant, echoing its recent deals in Spain and France with Leapmotor and Dongfeng. It is not alone, as more European carmakers turn to Chinese rivals to help resolve problems partly stemming from their rapid inroads into the region.

“This is not just a way to survive and catch up with our new competitors but it is also an opportunity to gain volume and growth in Europe,” Emanuele Cappellano, the head of Stellantis’s European operations, told the FT on its recent Chinese partnerships. 

For the group’s plants in Italy, full closure has been ruled out and Cappellano indicated a solution for Cassino will be found by the year-end. With the company also looking for a partner to revive its struggling Maserati brand, the likely scenario is to tie up with a Chinese group it already works with — either its EV joint-venture partner Leapmotor or state-owned Dongfeng.

“Any partner that moves production to these plants is fine,” said Cassino’s mayor, Enzo Salera. “The automotive crisis is affecting the entire economy,” he added, noting that local retailers and restaurants had been hard hit.

European automotive manufacturing accounts for about 7 per cent of the continent’s GDP and supports nearly 14mn jobs. With the region’s car sales still some 3mn below pre-pandemic levels and Chinese entrants gaining ground, others are also adopting the new playbook for survival. Nissan is working with Chery in the UK, Volkswagen is in talks with Xpeng, while Ford clinched a deal with Geely in Spain. 

“The environment in Europe has changed forever,” Ford’s European boss Jim Baumbick said last week as he unveiled the Geely tie-up. “The goal is to get to the lowest cost.”

In all, with plant utilisation in the European car sector running at under 60 per cent, the capacity to produce some 2.5mn vehicles is potentially up for grabs, according to AlixPartners.

Stellantis is doubling down on a strategy some industry executives see as a short-term fix but an eventual road to self-destruction unless local supply chains and technological knowhow are bolstered.


At its Spanish and French factories, Stellantis has already invited Leapmotor and Dongfeng to produce models there.

The Dongfeng deal has also been broadly accepted by workers in France since it could help save a 1960s-era factory in Rennes, Brittany. Like many other Stellantis plants in the country, the plant has been reduced to one assembly line, with surrounding land sold off.

“Chinese cars are in our ports as we speak,” said Laurent Oechsel, a representative of the French CFE-CGE union at Stellantis. “Do we want to keep fighting this off like the textile industry did at one stage, or do we want to continue to produce cars in France, with the Chinese?”

The challenge for European policymakers, carmakers and unions is to ensure that the manufacturing partnerships will protect jobs while bolstering the region’s supply chains with Chinese technology.

Currently, many Chinese cars promoted as made in Europe are mostly fitted with components made in China and then shipped to the EU for final assembly.

“If the intention is to create a technological industrial partnership that can fill and preserve the plant and help safeguard the supply chain, it’s welcome,” Italy’s industry ministry Adolfo Urso told the FT. “As long as people come to Italy to produce — not to assemble.”

Partnerships are par for the course among carmakers, but European carmakers are hoping to learn to make car production faster and cheaper through the Chinese partnerships.

In turn, Chinese brands want to boost European production in anticipation of stringent new local content rules, which Brussels plans to impose as early as mid-2027 in a bid to increase investment flow into the continent, create additional jobs and pave the way for the transfer of technology and skills.

Under the so-called Industrial Accelerator Act, the EU is proposing a 70 per cent local content threshold for car components if they are to qualify for subsidies or public contracts, with local battery production expected further down the road.

Among the big unknowns is the extent to which Chinese groups will transfer technological knowhow and intellectual property, as well as how quickly they will start using European components.


In Spain, where the government has successfully courted Chinese groups including battery maker CATL, Chery, and MG owner SAIC to set up factories, they have yet to see guarantees over technology transfers and the level of local labour and components they will use.

There is high anxiety within the auto supply chain, where components companies employ twice as many workers as carmakers themselves. “We workers in the supply chain could be at risk,” said Marco Leone, 62, whose employer makes metal fenders for the Cassino plant.

Similar worries surround Nissan’s agreement to share production at its Sunderland plant with Chery from next year. People with knowledge of the discussions said three models will be built for the Chinese group, which also owns the Jaecoo and Omoda brands.

“Let’s say in year one, the cars are essentially made of kits from China. That’s great for the assembly line workers, but it’s not necessarily so good for people in the stamping shop, the body shop and the paint shop at Nissan and local external suppliers,” warned Ian Henry, an automotive production expert who runs the AutoAnalysis consultancy.

Henry added that Chery would need to increase localisation quickly if it were to export to the EU but the timeline was unclear and discussions were ongoing on whether UK-made cars would be included in the Made in Europe framework. The higher cost of using UK suppliers is also an issue, one person close to the talks added.

Chinese car executives stress that they are committed to using local supply chains but acknowledge that the shift would not come overnight.

“Localisation is a gradual process, one measured not by the calendar, but [by] the maturity of supply chains, cost structures and our readiness to become part of the local industrial ecosystem,” Charlie Zhang, executive vice-president of Chery International, said in a statement to the FT. 

Sluggish Chinese demand and the pressure to increase exports are leading factors holding back European localisation, according to analysts.

China’s global exports are set to rise 41 per cent to more than 10mn cars this year as the government presses manufacturers to utilise excess capacity. 

“Local Chinese demand is so much worse than expected that the pressure on the Chinese automakers to export is a lot bigger,” said Thomas Besson, head of autos research at Kepler Cheuvreux.

“Chinese automakers have not really started building a lot of cars in Europe, even if they talk a lot about it and their intention to do so,” he added.

The Made in Europe proposals are likely to further increase the costs of building cars in Europe, forcing some Chinese manufacturers with smaller sales to abandon access to European subsidies and continue exports in the near term.

“If it becomes financially too expensive, we pay the tariff and we keep on shipping cars [from China],” said one executive at a Chinese carmaker.

For some Chinese carmakers like BYD, tie-ups do not make strategic sense.

“I think it’s better run by ourselves,” Stella Li, BYD’s top international executive, said, calling a joint venture “impossible”. “It’s very hard to ask permission. We make decisions in like five minutes.” 

BYD plans to start mass producing its vehicles in Hungary by the end of this year. But the Made in Europe proposal has forced it to look for a second facility in Spain or France before finishing a plant in Turkey as earlier announced.

Not all European carmakers are searching for Chinese tie-ups. Some analysts say companies can respond more quickly to market changes on their own and there was no guarantee that their Chinese partners would succeed in Europe. “I think companies that remain independent have much more control,” said JPMorgan analyst José Asumendi.

Back at Cassino, veteran autoworker Roberto D’Epiro, 53, lamented that the plant was “shutting down — it’s slowly dying”.

However, he insisted a partnership with another carmaker “must be on equal terms” otherwise it would not have solved anything. “We’ll just be prolonging the agony.”

FT : Nik Storonsky in talks over new share award if Revolut hits $500bn valuatio

Nik Storonsky in talks over new share award if Revolut hits $500bn valuation
Pay deal by Europe’s most valuable start-up would emulate that of Elon Musk

Revolut chief executive Nik Storonsky is in discussions about a new pay deal that would boost his ownership of the fintech if it hits a valuation of about $500bn.

Europe’s most valuable start-up is in talks with investors about structuring a new incentive deal for Storonsky that would award him a stock windfall if Revolut hits the new target, according to people familiar with the matter. 

The pay deal followed the blueprint of Storonsky’s previous incentive scheme at Revolut, which triggers share payouts in stages when the company’s valuation surpasses certain pre-agreed thresholds, the people added. 

Such incentive packages are commonplace among American technology companies but are rarer in Europe. In November Elon Musk clinched an agreement with Tesla that would entitle him to a trillion-dollar pay package if he met a series of highly ambitious growth targets.

If Storonsky strikes his deal, it will be the largest of its kind in Europe.

He is already Revolut’s largest shareholder with a stake of about 29 per cent. The billionaire, who co-founded the company in 2015, explained in a Russian-language interview in December that his current incentive package would entitle him to hold about 40 per cent of the company if it reached a $200bn valuation. 

One Revolut investor said that they backed a programme for combining “meaningful investment and risk-taking with very ambitious targets.” The investor added that “more companies should apply incentive structures like these.”

Revolut declined to comment.

The discussions come as part of Revolut’s secondary fundraising round which values the company at $115bn.

The FT previously reported that Revolut had signalled to investors that it was aiming for a $200bn valuation at a potential IPO. That would unlock an extra 10 per cent of the company for Storonsky and value his stake at about $80bn, putting him in the ranks of the world’s richest people.

Revolut is also backed by major investors including Index Ventures, Balderton, DST Global and Ribbit. The UAE sovereign investor Mubadala and Jared Kushner’s private equity fund Affinity have also invested in the group.

Over the past 11 years, Revolut has grown to 75mn customers and operates in 40 countries. Last year, its pre-tax profits rose 57 per cent to £1.7bn on £4.5bn of revenue, with the increase driven by revenues from its premium services, which offer travel insurance, lower fees on currency exchange and higher interest on savings.

The group cleared a milestone in March this year when it was awarded a full UK banking licence, seen as key to its international growth, after a years-long wait. Since then, Revolut has secured approval for an Australian banking licence and is applying for a similar licence in the US.

FT : Banks to offload $15bn of debt for Anthropic data centre backed by Google B

Banks to offload $15bn of debt for Anthropic data centre backed by Google
Bond sale could free up lending capacity as mega AI deals stretch Wall Street financing limits

Banks are planning to offload $15bn of debt tied to a Google-backed data centre in Texas that has been leased to Anthropic, as Wall Street lenders grow wary of holding AI infrastructure debt on their balance sheets.

A consortium of banks led by Morgan Stanley is planning to tap the bond market to refinance the debt they committed to the 2,000-acre data centre campus under construction in Hubbard, Texas, as soon as the loans are drawn, according to people familiar with the matter. 

The bond market has become an increasingly popular avenue for colossal AI initiatives to raise long-term capital since the market’s depth means that projects can be financed more swiftly and at a lower cost than through bank loans.

For banks, jettisoning the debt also helps reduce their overall AI risk exposure and frees up capacity for more lending.

Meanwhile, the bank-focused market for infrastructure financing, which used to fund projects such as gas pipelines and airports, has been overwhelmed by the huge capital needs from AI build-outs. 

Big Wall Street banks have spent months seeking buyers for more than $50bn of construction debt for several data centre projects leased to Oracle earlier this year, and some lenders have sought to manage their exposure through risk-transfer deals.

The $15bn debt package was expected to be split into multiple bond sales, as the bank loan has a so-called delay-draw feature that allows Nexus Data Centers — the project developer — to withdraw the debt over a period of time after hitting certain construction milestones, the people said. Part of the debt could also be refinanced in the leveraged loan market. 

The bond is expected to carry a speculative-grade rating even with Google’s backstop, which is only effective after the data centre is fully built. This meant investors would have to shoulder risks including construction delays and cost overruns, the people added. 

The data centre will be filled with Google’s custom TPU chips, which will be financed separately.

The new Texas campus will be powered by its own natural gas power plant to avoid delays and surging costs. The large number of data centre projects set to be built in the Lone Star State has led to rising concerns around strained power and water supplies as well as rising utility prices.

Merging data centre and power assets, however, can lead to complex financing since lenders need to underwrite two different kinds of risks simultaneously. Project Walleye, a similar Meta-led data centre with behind-the-metre power, had to offer investors additional yield to compensate for the additional risks. 

Google’s financial support for the project was first reported by the FT in March. The Wall Street Journal last week reported on some aspects of the financing.

Nexus and Morgan Stanley declined to comment. Anthropic and Google did not respond to requests for comment.

FT : UK’s ability to make medicines and missiles hit by decline of chemicals ind

UK’s ability to make medicines and missiles hit by decline of chemicals industry
Rate of UK chemical company closures doubled between 2020 and 2025, study finds

The UK’s advanced chemical industry is in rapid decline with potentially serious implications for the country’s ability to make missiles, medicines and other strategically critical products, a new analysis has warned. 

The study by Imperial College London found that the rate of UK chemical company closures had doubled between 2020 and 2025, with the high-end chemical sector that supplies technologically advanced industries hardest hit.

High electricity costs, increasing regulatory compliance expenses, weakening domestic supply chains, ageing factories and competition from China are among the factors to blame for the deterioration, the report says.

Although the UK has long struggled to compete with China in mass-produced chemicals, it had until recently been globally competitive in speciality products that required smaller manufacturing plants and were more suited to production in the UK industrial base. 

Such high-performance chemicals are key to advanced manufacturing sectors of the UK economy such as aerospace, biopharma, automotive and electronics, the report said.


Imperial’s analysis said that while the UK’s non-speciality chemical industry had been in decline since the 1990s following the break-up of Imperial Chemicals Industries (ICI), the decline in specialist chemicals production represented a “new trend”.

It found that the contribution to the economy from that category had declined by 70 per cent between 2020 and 2025.

Thomas Aubrey, lead author of the report for the Centre for Sectoral Economic Performance at Imperial, warned the industry and government need to “act fast” to address the decline in the sector which was once the jewel in the crown of British industry.

“The contraction in the high value-added chemicals sector is now a material drag on macroeconomic growth. Since 2020, sector output has fallen by nearly 40 per cent, weakening one of the economy’s higher-productivity industrial bases,” he added.

The study comes almost six months after the Chemical Industries Association lobby group wrote an open letter to the then prime minister Sir Keir Starmer warning that the sector was in the “fight of its life” to survive in the face of weak global demand and “hostile” government policy, including new green taxes. 

The government responded in May by announcing a £350mn fund to help financially stabilise firms manufacturing critical chemicals in the defence, pharmaceutical and energy sectors. 

CIA chief executive Steve Elliott said the Imperial study had highlighted the critical juncture that the industry now found itself in. 

“The resilience fund was a welcome recognition of our plight, but it’s only a small step to putting the industry on a sound footing,” he added.

The report warned that the Covid-19 pandemic had highlighted the shortages of basic pharmaceutical ingredients, adding that continued plant closures had further constrained the UK’s ability to rapidly scale production of essential medicines.

It added that plant closures were also creating a growing dependency on foreign suppliers for key reagents used in armaments production, undermining the UK’s strategic military autonomy. This includes concentrated nitric acid, needed for the production of nitrocellulose propellants used in bullets, shells and missiles.

“Unlike commercial chemicals, defence-grade materials often require specialised production facilities, quality assurance, and security protocols that cannot be rapidly reconstituted if lost,” the report added.

It also called on the government to take steps to defend the sector against Chinese excess production being dumped on UK markets, which has left British-based companies vulnerable to takeover by competitors from the country. 

The Department for Business, Innovation, Science and Trade said it was taking steps to both cut electricity bills for manufacturers and support the chemical firms that supplied critical inputs to the food, energy, water and healthcare industries.

“We’ve taken bold action to support our chemicals industry, including £350mn for strategically important chemicals producers, trade measures on foreign chemicals imports and an Industrial Strategy that is tackling the issue of high electricity costs,” a spokesperson added.

>>> US After Hours Summary: BKNG +5.9%, APPS +21.7%, QLYS +13.6%, INTA +12.5%, A

After Hours Summary: BKNG +5.9%, APPS +21.7%, QLYS +13.6%, INTA +12.5%, ANET +10.4% higher on earnings; SPCX -7.6%, AMD -8.5%, PINS -8.5% lower on earnings; SGHT +11.2% on FDA 510(k) clearance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: APPS +21.7%, QLYS +13.6%, TVTX +13.4%, INTA +12.5%, COMP +12.5%, KODK +12.2%, UPST +11.7%, PGEN +10.6%, ANET +10.4%, ECG +10.2%, NGL +10.2%, WTTR +10.1%, SWIM +8.6%, LRN +8.1%, OSPN +8%, IPI +7.5%, FTK +7.4%, BXC +7%, GSM +6.7%, RIGL +6.6%, RARE +6.2%, BKNG +5.9%, TALO +5.8% (also increases share repurchase authorization to $200 mln), RYAM +5.6%, WYNN +5.4%, ECO +5.1% (also increases dividend), NVGS +4.2%, CACC +3.5%, PCTY +3.4%, GIC +3%, PAM +2.4%, FLYW +2.3%, MCY +2.3%, KTOS +1.6%, WTRG +1.6%, FBIN +1.5%, KAI +1.5%, SU +1.2%, CRBG +0.9%, SGHC +0.9%, LIME +0.8%, HL +0.7%, DVN +0.6%, AMGN +0.5%, ARWR +0.5% (also acquires FDA priority review voucher for planned plozasiran sNDA), FRSH +0.5%, PACS +0.4%, EOG +0.3%, MQ +0.3%, IFF +0.2% (also announces enhanced $2.5 bln share repurchase authorization, including $500 mln accelerated share repurchase), PARR +0.1%

Companies trading higher in after hours in reaction to news: SGHT +11.2% (FDA 510(k) clearance for OMNI Ultra glaucoma surgical system), TXO +4.9% (increases dividend), DRS +1.7% (new facility will expand ops for its Naval Power Systems business), MCFT +1.6% (Crest, Balise add Savvy Navvy navigation with Apple CarPlay, Android Auto), FRO +1.6% (announces sale of two VLCCs), SON +1.2% (aligning its Global Consumer Packaging businesses under single structure), IONQ +0.7% (signs MOU on quantum co-design for national security applications), GD +0.7% (files prospectus supplement), GOOG +0.6% (expanded Gemini in Classroom to higher education students), DFNS +0.5% (receives initial purchase order from leading Israeli defense contractor), NB +0.4% (confirms the signing of a MoU with LMT), MO +0.1% (FDA authorizes 4 new nicotine pouches)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: USNA -21.8%, TDC -17.7%, ANGI -16.7%, MBC -14.9%, ALIT -12.3%, LMB -12% (also acquires CYMCOR for $30 mln to expand data center services platform), WK -11.7%, LMAT -10.7% (also authorizes new $100 mln share repurchase program), MTCH -9.1%, AMD -8.5%, PINS -8.5%, BL -8.4%, BV -8.3%, MNTN -8.2%, CC -8.1%, AROC -7.8%, LCID -7.7%, VSAT -7.7%, SPCX -7.6%, DVA -7.1%, ZETA -7%, BBBY -6.5%, LSCC -6.5%, EGHT -6.3%, NAGE -6.3%, OPEN -6.1%, HY -6.1%, CPNG -5.8%, HCKT -5.7%, VOYA -5.6%, BIO -5.4% (also discloses restructuring program), SUJA -5.2%, GXO -4.6%, PRCT -4.5%, MEC -4.4%, EMR -3.7% (also names new CTO), SNDX -3.6%, HRZN -3.5%, ALAB -3.3%, TMDX -3.3%, CALY -2.9%, ALGT -2.7%, CE -2.6%, SSRM -2.6%, J -2.4%, TOST -2.4%, HNGE -1.9% (also to acquire Cylinder Health, expanding into GI care; also $300 mln share buyback authorization), PLMR -1.6%, ACAD -1.5%, DNTH -1.5%, AZTA -1.1%, LUMN -1%, MOS -0.9%, GILD -0.8%, EQH -0.5%, AFG -0.4%, PSKY -0.1%, RBA -0.1%

Companies trading lower in after hours in reaction to news: DVA -6.8% (Warren Buffett on behalf of Berkshire Hathaway sold 182,980 shares), TWST -1.8% (launches $250 mln common stock offering), AGX -1.2% (buys ValCor Communications), MATW -1.1% (CEO to retire), PNTG -0.3% (acquires assisted living community in Tucson)

FT : P&G seals $3.8bn deal for supplements company Thorne Consumer goods group e

P&G seals $3.8bn deal for supplements company Thorne
Consumer goods group expands its health business in a sector that has boomed since Covid pandemic

Procter & Gamble has agreed a $3.8bn deal to acquire supplements maker Thorne, delivering an outsized return for private equity group L Catterton less than three years after it bought the company.

P&G, whose stable of brands includes Gillette, Ariel and Pampers, saw off competition from rivals to buy Thorne in a deal that underscores its ambitions to expand its health business.

The supplements industry has boomed since the Covid-19 pandemic as consumers have become increasingly interested in their health and wellbeing. The cash deal is set to close in the fourth quarter of this year.

“Consumer interest in self-care, prevention, wellness and personalised health continues to grow, and Thorne strengthens our position in premium wellness,” said Paul Gama, P&G’s chief executive of healthcare.

Thorne, which sells supplements such as magnesium and omega-3, was on track to reach $650mn of revenues this year. The FT reported in June that Unilever was also interested in buying the South Carolina-based business.

The deal marks a bumper return for L Catterton, which originally acquired Thorne in a take-private deal for $680mn in 2023. LVMH-backed L Catterton has invested in a range of consumer brands such as the footwear group Birkenstock and Dishoom, the Indian restaurant chain.

Thorne listed on the Nasdaq in 2021 at $10 per share, marginally below the level at which it was taken private. The group has built its brand by partnering with athletes and sports associations, including Major League Rugby in North America.

L Catterton said it had accelerated Thorne’s growth including by bringing on new leadership, expanding its marketing and investing in research and development.

“Our investment in Thorne reflects what L Catterton does best: identifying enduring shifts in consumer behaviour and partnering with category-leading brands to help them realise their full potential,” said Marc Magliacano, a managing partner.

The Thorne acquisition adds to P&G’s portfolio, which has grown through a series of bolt-on acquisitions, including its $4.2bn deal to buy Merck KGaA’s consumer health unit.

Lately, P&G has focused more on wellness brands in an effort to attract younger consumers. It struck a deal this year to buy digestive health brand Wonderbelly, also backed by L Catterton, for an undisclosed price. P&G also owns New Chapter vitamins.

P&G has faced pressure from surging commodity prices and weaker consumer sentiment, and failed to increase sales volumes in the most recently ended fiscal year. Last year it embarked on a drive to cut 7,000 non-manufacturing jobs.

“Procter & Gamble’s acquisition of supplements maker Thorne is a clear indicator of where consumer demand is currently strongest,” said Rachel Wolff, senior analyst at eMarketer.

“Acquiring Thorne would give P&G a larger foothold in the health and wellness space, as well as offset some of the softness the company is experiencing in other categories.”

P&G shares rose 1.86 per cent to $147.67 on Tuesday.

FT : Water companies feel squeeze of abstraction limits as drought deepens Indus

Water companies feel squeeze of abstraction limits as drought deepens
Industry group calls for government targets to be relaxed during heatwaves

Water companies are struggling to cope with strict limits on the amount they can abstract from the ground, river and lakes after the driest July on record led to a drought being declared across large swaths of England.

Restrictions introduced by the Environment Agency limit how much the water utilities are licensed to take by about 2.7 per cent by 2030 and 18 per cent by 2050, with some companies subject to more stringent targets than others.

The measures, designed to protect the environment and future water sources, have heaped pressure on water companies as they manage the strain on supply after a series of heatwaves.

Stephen Slessor, chair of British Water, an industry association for equipment manufacturers, suppliers and contractors in the sector, said that while long-term abstraction targets should not be reduced, they should be relaxed during drought-ridden summers “where the evidence shows river flows aren’t harmed”.

About a third of drinking water in England — and up to 100 per cent in many areas of the South East — comes from boreholes. These draw water from aquifers, or rocks, such as chalk and sandstone that form large natural underground reservoirs, which are replenished over time by rainfall.

The water that comes out of boreholes is often of good quality and requires little treatment. In the wetter north, most of the water supply is taken from rivers, lakes and reservoirs.

In an emergency, water companies can apply for “drought orders” that allow them to temporarily increase abstraction levels, but this puts pressure on the environment by draining the aquifer, rivers and lakes. 

If approved, drought orders are issued by the secretary of state for the environment, but in 2022 when several regions were at risk of water shortages, just one such order was given the go-ahead.

Southern Water, which already has a hosepipe ban in place in Hampshire and the Isle of Wight, has submitted a drought order application this month to ban non-essential use such as commercial car washing to ease supply pressures.

The company, which has been told to cut abstraction overall by 1 per cent by 2030 and 44 per cent by 2050, is also asking to be allowed to abstract more water from the River Test in Hampshire, a rare chalk stream, despite lower river levels.

However, Feargal Sharkey, the environmental campaigner, said that further abstraction of the River Test “would deplete endangered species such as wild salmon”.

“Southern Water is arguing yet again that corporate greed and ineptitude should surpass the needs of the environment,” he added.

The utility said the application was “precautionary” and did not necessarily mean they would go ahead with the abstraction if approved.


Water companies manage their networks by switching between other authorised sources and transferring water between supply areas where possible. 

Affinity Water, which serves 4mn people in London and surrounding areas, said the cuts to abstraction levels meant it had been forced to increase the amount of water it takes from Anglian Water’s Grafham reservoir in Cambridgeshire. However, Anglian Water is also facing an increase in demand from customers, putting further pressure on supplies.

Affinity Water, which has been told to reduce abstraction by 4 per cent by 2030 and 37 per cent by 2050, said the cuts “have made it much more difficult to respond to peak demand this summer”.

“We are hoping that the government will be more lenient on abstraction during this hot weather and look at introducing more flexible abstraction licensing overall,” it added.

The water shortages are exacerbated by the poor state of the infrastructure, which includes distribution pipes that leak a fifth of the water they carry, a failure to build new storage capacity such as reservoirs, and the contamination of waterways with unknown quantities of raw sewage.

There is also growing public anger against water companies, which could undermine hosepipe bans that are estimated to save 6 to 7 per cent of water if adhered to. Eight water companies have already imposed hosepipe bans.

Professor Alan MacDonald, head of groundwater at the British Geological Survey, said the “stringent abstraction targets had led to drought-resilient groundwater supplies being unavailable during drought periods even when this may not affect river flows”.

The BGS produces a monthly report on groundwater status, which has found that there is little evidence of long-term decline as the aquifers are generally replenished every winter by rainfall. 

Water companies have plans to deliver nine new reservoirs by 2050, mostly through private finance initiative-type deals, which will see new companies set up to deliver the infrastructure and customers paying a surcharge on their bills.  

But MacDonald said the government should “consider revisiting groundwater targets rather than spending billions on reservoirs”.

He added: “There is still often considerable groundwater available in a dry summer, so a good resource to buffer against drought.”

The Department for the Environment, Food and Rural Affairs described the UK’s current lack of rainfall as “exceptional” and said it was working with the National Drought Group and water companies to maintain supplies.

It added: “We expect water companies to go further and faster to reduce leaks and will make a decision on the drought order in due course.”

FT : Polymarket in fundraising talks at valuation of more than $20bn Prediction

Polymarket in fundraising talks at valuation of more than $20bn
Prediction platform looks to raise $1bn as it tries to gain ground on rival Kalshi

Polymarket is in talks over a $1bn fundraising at a valuation of $20bn as investors rush to back rapidly growing prediction markets.

The platform, which offers wagers on everything from elections and sports to measles outbreaks and missile launches, is seeking new investment that could more than double the valuation it achieved in a funding round last October, according to a person familiar with the matter.

Polymarket was valued at about $8bn in October when Intercontinental Exchange, the owner of the New York Stock Exchange, said it would invest up to $2bn. It raised another $1bn at a $15bn valuation in April when it brought in new investors.

The latest funding talks, first reported by Bloomberg, come as Polymarket seeks to gain ground on its larger rival Kalshi, which closed a $1bn funding round at a $22bn valuation in May.

The total volume of contracts bought and sold on Kalshi hit $41bn in June, while Polymarket recorded about $13bn across both its original international platform and its US-regulated product, which launched in December, according to figures from data platform Dune.

Polymarket declined to comment.

Polymarket and other prediction platforms have been boosted by the World Cup, a major event for the gambling sector.

However, its trading volumes have fallen further behind Kalshi’s this year as it has grappled with technical glitches, blowback from lawmakers and heightened scrutiny over suspected insider trading on its platform.

A US soldier involved in planning the country’s January raid to seize Venezuelan leader Nicolás Maduro was charged in April with placing Polymarket wagers on the mission that netted more than $400,000. Gannon Ken Van Dyke, the soldier, pleaded not guilty to the charges.

France’s weather forecasting service also filed a police complaint in April after detecting anomalies in its temperature gauges in Paris, which coincided with a surge in well-timed bets on Polymarket.

Polymarket has said it tracks and reports suspicious bets and that Van Dyke’s arrest was “proof the system works”.

The company is also facing further legal and regulatory challenges, including a probe opened in recent weeks by the Commodity Futures Trading Commission.

The investigation came after consumer protection advocates called for stricter oversight following allegations of misleading marketing. Polymarket said it was “committed to maintaining accurate, fair and transparent markets”.

The company has in recent months sought to regain ground on Kalshi by expanding its range of markets and pushing further into sports, signing partnerships with leagues from the UFC mixed martial arts franchise to football’s Serie A. It has also hired new executives including Ari Borod, who previously worked at sports betting company Fanatics, and Hayk Mkrtchyan, who spent nearly a decade at the New York Stock Exchange.

The company now employs close to 300 people, up from just a few dozen at the beginning of 2025.