FT : François-Paul Journe on winning over the watch purists

François-Paul Journe on winning over the watch purists
Founded just 24 years ago, the watchmaker is attracting a loyal young following with its takes on antiquarian-inspired horology

Step into the salon and manufacture of FP Journe, in a 19th-century building where Geneva’s old town meets the modern city, and it is immediately clear how far the watchmaker stands apart from its independent peers.

Founded in 1999, the brand hails from the same era-defining decade as today’s other indie watchmaking stars, such as Richard Mille, Urwerk, De Bethune and MB&F — brands that are synonymous with disruptive horological concepts and futuristic, avant-garde design.

But, rather than propel you into the future, FP Journe is more likely to thrust you centuries into the past. Visitors to the three-storey manufacture are met by a 168-year-old astronomical clock by the French maker CL Detouche and the complete library of the distinguished horological expert and historian Jean-Claude Sabrier, all overlooked by elaborate ceiling frescoes that reproduce the first sky charts of 16th-century astronomer Petrus Apianus, who mapped time via the stars.

FP Journe watches do the same: its award-winning complications notably revolutionise antiquarian watchmaking concepts, with most set in signature, classic round cases with traditional styling — think blue steel hands and guilloche accents. Dials come etched with FP Journe’s Latin tagline, “Invenit et Fecit” (Invented and Made).

“I don’t do this on purpose,” says founder François-Paul Journe, 66, who first cut his teeth in 1977 at his uncle’s antique watch restoration workshop in Paris. By age 21, the Marseille-born Journe had started his first tourbillon pocket watch. “I was born in a museum, immersed in the history of watchmaking. I’m just presenting my vision without being conscious about it. It’s not a strategy,” he says.

Journe rarely gives interviews and has a reputation for being elusive and intimidating. Celebrated as an inventor, he once said that “watchmaking, even the one I make, is a fossil science, because we no longer need it”. In his salon, he sits beside a 1.7m-tall resonance regulator from the 1780s by Antide Janvier.

Journe is the only person in the manufacture allowed to handle the piece, which partly inspired his popular Chronomètre à Résonance watch — the name taken from a natural physical phenomenon, first discovered in 1665, where two pendulums placed together will naturally synchronise. Journe recreated the concept in a wristwatch — the first to do so.

“We’re playing with completely useless concepts from the 18th and 19th centuries, but which make people dream,” he says. Journe admits that art will always trump the commercial. “If we are talking about watchmaking art, we are the first; but if we talk about turnover, we are the last,” he says, with a smile.

However, while rooted in antiquarian horology, FP Journe is increasingly catching the eye of young collectors, aged 25 to 30.

Its first London boutique opens next month, in Mayfair, hot on the heels of a new flagship that opened in New York last month, in SoHo.

And, today, Christie’s Geneva is hosting a FP Journe live sale — the first ever dedicated to a single independent watchmaker. With just 39 lots, the auction is expected to achieve SFr7.8mn-SFr13.9mn ($8.8mn-$15.6mn) — a conservative estimate if past auction results are any indication.

In November 2021, Phillips auctioned several ultra-rare FP Journe watches, including a 1999 Tourbillon Souverain and 2000 Chronomètre à Résonance, both which were among Journe’s first-ever models, limited to just 20 pieces each and sold under a subscription model when the brand was first starting out. They fetched SFr3.5mn and SFr3.9mn, respectively. An original Tourbillon retailed in 1999 for SFr27,500.

Limited series are part of FP Journe’s offering, and there are long waiting lists for all models. The brand only makes around 1,000 mechanical watches a year. Other independent watchmakers, such as Patek Philippe and Richard Mille, produce 70,000 and 5,300, respectively. All the watches are assembled by 25 watchmakers and seven artisans who finish every component — one part can take between five and 45 minutes to mirror-polish, depending on the model.

Remi Guillemin, head of watches for Christie’s Europe, says FP Journe “redefines what rarity is”, noting that, where big brands will make 100 limited pieces of a model, FP Journe may make only 10. “It’s very different from watch manufacturers where the same watch comes out for 10 years, with four different dial colours,” he notes.

In an age of slick marketing campaigns and commercial agendas, Journe’s genuine and singular commitment to his craft resonates with collectors, especially the watch purists who have been crucial to the brand’s continued independence.

“Journe was fortunate to have had this extremely loyal, diehard base of watch nerds,” says Michael Tay, group managing director of Asia-Pacific-based retailer The Hour Glass. “The nerds were the ones that had believed in him from the beginning and understood what he was trying to accomplish.”

And the brand loyalty runs deep. The Journe Society is a members-only group of FP Journe enthusiasts that grew from an informal band of passionate collectors in New York in 2016. Today, there are about 100 members worldwide and it is a close-knit community that enjoys travelling and socialising together, bonding over their love of FP Journe watches.

“Most of our members joined before the recent luxury watch craze, attracted to the brand’s traditions, design and technology, rather than flashy marketing or celebrity endorsements,” says Journe Society president Brad Schwartz.

Although the society is independent of the brand, Journe is appreciative of its support. Several years ago, he created a special edition watch for the society, with each piece engraved with a member’s name on the case back.

Being close to his clients, Journe is aware of how limited production is driving not only speculation for his watches, but also frustration. For the sake of quality, production will not be increased, he insists, though he hopes to streamline distribution by reducing independent retailers and focusing on boutiques, such as New York and London.

The latter venue will echo the identity of the New York flagship, which notably features a library, bar, kitchen, wine cellar and lounges — with all furniture chosen by Journe — and is designed as a space where collectors can convene. “The main idea is to propose entertainment, since we’re not able to provide clients with enough watches for the demand,” he says.

“His watches have an incredible aesthetic sensibility that allows you to fall madly in love with their aesthetics and conception,” says Tay.

“It’s going to take a couple of generations more before we see somebody quite like Journe.”

FT : Germany’s new chip factories: a bet on the future or waste of money?

Germany’s new chip factories: a bet on the future or waste of money?
The Scholz government is spending billions subsidising the country’s semiconductor industry. Some believe it does not make economic sense

It was a moment of triumph for Jochen Hanebeck, boss of German chipmaker Infineon, as he broke ground on the company’s new €5bn semiconductor plant in the east German city of Dresden earlier this month. And there was one man, he said, who had made it all happen.

Addressing his guest of honour, chancellor Olaf Scholz, he thanked him for providing “substantial budgetary resources” to support the German chip industry. “At a time when our country is facing so many great challenges, that’s quite a feat,” he added.

Over the past couple of years, Germany has attracted massive investments in its chip sector. Intel, Wolfspeed and Infineon are all building big new factories. The largest chipmaker of all, TSMC of Taiwan, reportedly might follow suit.

But the new fabrication plants, or fabs, are coming at an eye-watering cost. Scholz’s government is throwing billions of euros in subsidies at the tech companies to lure them to Germany — €1bn in the case of Infineon’s new plant.

“That’s €1mn in state grants for every new job created, just to improve our security of supply by a little bit,” Clemens Fuest, head of the Ifo, a leading economic research institute, told ARD TV. “Even if it all works, we’ll still be importing 80 per cent [of our chips] by 2030.”

The sudden passion for subsidies comes at a time of growing alarm in Europe over the fragility of its supply chains and its huge dependence on Taiwan and South Korea for a resource that Scholz in Dresden described as the “oil of the 21st century”.

The end-of-days scenario stalking the corridors of government in Berlin and Brussels: China invades Taiwan, source of more than 90 per cent of the world’s most advanced chips, and the supply of semiconductors dries up, bringing factories the world over to a standstill.

“We saw last year what a mess we’d got into with our energy dependence on Russia, how fatal that was,” says Michael Kellner, state secretary at the German economy ministry. “The lesson from that is, in terms of our chip production, we in Europe have to have greater autonomy.” 

The EU’s response has been to loosen state-aid rules and mobilise billions of euros in grants for tech companies. Officials argue they have no choice: the US is enticing chip manufacturers and clean energy companies with a vast array of financial incentives, and if Europe fails to act it risks losing the race for the technology of the future.

“In the competitive situation we’re in globally with fabs, everybody dopes,” says chip industry expert Jan-Peter Kleinhans of Stiftung Neue Verantwortung, a think-tank. “And whether you like it or not, if you don’t dope, you cannot compete.”

But the level of state support is beginning to reach levels that even advocates of more chip investment find excessive. Intel, for example, was due to receive €6.8bn in government support for its new fab in the east German city of Magdeburg. Yet it is now demanding around €10bn. Critics are questioning why it should get so much state aid, especially when there’s so little domestic demand for the cutting-edge chips it plans to produce in Germany.

Intel’s fresh demands for cash have unleashed a heated debate among economists about whether it’s the best use of taxpayers’ money.

“This may lead to a significant misallocation of resources,” says Reint Gropp, head of the Leibniz Institute for Economic Research, Halle (IWH). “It would probably be more efficient to just buy cheap subsidised chips from the US.”

Where the US leads
The decision to open the subsidy floodgates in Europe was a direct response to the new, activist industrial policy being pursued by the US. At issue are the Biden administration’s Chips and Science Act, a $280bn package that includes $52bn in funding to boost US domestic semiconductor manufacturing, and the Inflation Reduction Act, which provides $369bn of subsidies and tax credits for clean energy technologies.

The legislation put the EU in a quandary: should it match it with financial support of its own, in the midst of a cost of living crisis that was putting huge strain on Europe’s citizens and member states’ public finances? Or should it ignore them and run the risk of its companies defecting to the US?

The EU chose the first route. It has enacted its own Chips Act, which aims to mobilise €43bn in public and private investments for the bloc’s chip industry, and in so doing double its share of the global semiconductor market from less than 10 per cent today to 20 per cent by 2030.

One of the EU’s main motivations was the traumatic memory of the havoc wreaked by the Covid-19 pandemic. Lockdowns and trade chaos disrupted global chip supply, causing production shutdowns across the auto industry.

“We lost 1-1.5 per cent of our GDP in 2021 because of a lack of semiconductors — or about €40bn,” says a senior German official.

But the spectre of conflict over Taiwan is much more alarming. Speaking at the Infineon groundbreaking ceremony, Ursula von der Leyen, European Commission president, noted that any disruption to trade caused by tensions over Taiwan “could do immediate and serious harm to Europe’s strong industrial base and our internal market”. The response, she said, must be to “put our chip production on a broader footing and expand our own capacities”.


If the only way to achieve that is to offer billions of euros in financial support to tech giants, then so be it, officials say. “I’m no great fan of subsidies,” says Kellner. “It would be great to be able to abolish them all. But that’s just impossible. And we have to live in the real world.” 

But the shift has proved painful for the academic economists still wedded to the principles of German “ordoliberalism”, with its abhorrence of state intervention in the economy and the idea of granting subsidies or tax privileges to certain industries.

Critics of the EU’s drive for greater self-sufficiency also claim it is misguided: it misses the point that materials for chip production are just as critical as the chips themselves — and the market for them is often just as concentrated.

Kleinhans says one reason — of several — for the semiconductor crisis during the pandemic was a shortage of ajinomoto-build-up-film substrate, an insulating material which is used in high performance processors and is made by just a handful of manufacturers.

Chip fabs also depend heavily on imported chemicals, he says: “To produce a modern semiconductor you need about 80 per cent of the periodic table in terms of elements.” So even if all the fabs that have been announced for Europe are actually built, “we will continue to depend on chemicals from foreign countries — there’s just no way around that”.


Some economists have, for that reason, argued that Germany should consider alternatives to showering money on tech companies — such as trying harder to improve the business environment and making it more conducive to innovation.

A lot needs to be done: companies routinely complain about Germany’s poor digital infrastructure, its shortage of IT workers, its burdensome regulation. “Believing that giving money to companies can fix all those problems is simply wrong,” says Marcel Fratzscher, head of the DIW think-tank.

It is also far from clear that Germany and the EU can win the subsidy race. Data compiled by Everstream, a supply chain data company, show there were investments totalling $122bn in new chipmaking capacity in the US between 2021-25, compared to just $31.5bn in the EU.

“Worldwide subsidies for chip production total more than $700bn,” says Gropp. “So with its €43bn the EU’s not really making much of a dent.”

Meanwhile, despite the EU’s move to open its purse-strings, it is still proving painfully slow to approve applications for financial support. US chipmaker Wolfspeed and ZF, a German automotive supplier, announced in February they were teaming up to build a chip plant in the west German state of Saarland. They are still waiting for a decision from Brussels to approve the subsidy they requested, as is Infineon.

Value for money?
However vehement the critics, business groups in Germany have generally given a warm welcome to the new state aid regime announced by the EU, and credit it with an upsurge in chip investment.

Indeed, Germany has over the past couple of years attracted some of the world’s largest semiconductor companies to its shores. Intel’s €17bn fab in the eastern city of Magdeburg will be its biggest in Europe. Wolfspeed and ZF’s planned €2.5bn plant will produce silicon carbide chips, used in electric vehicles, solar cells and industrial hydraulic systems. And then there’s Infineon’s “smart power fab” in Dresden which will make power semiconductors and analogue mixed signal components, used in power supply systems and data centres.

All of them will receive big subsidies, Intel the biggest. But, faced with higher costs, it now wants more. One driver is the company’s worsened financial outlook. Chief executive Pat Gelsinger slashed Intel’s dividend to shareholders by nearly two-thirds in February to conserve cash. Late last year it announced it would seek cost savings of $10bn by 2025.

Some German officials have expressed sympathy with the company’s demands, chief among them Sven Schulze, economy minister of the state of Saxony-Anhalt, of which Magdeburg is the capital.

“The world has changed — energy and construction costs have gone up and Germany’s competitive position globally has worsened,” he says. “It’s no use to anyone if manufacturing is so expensive here that [Intel’s] products are no longer competitive on international markets.”

But others are less amenable. “We will not let ourselves be blackmailed,” finance minister Christian Lindner told the German business daily Handelsblatt in February. “A US company that made $8bn net profit [last year] is not a natural recipient of taxpayers’ money.”

He also wondered aloud whether the chips that Intel will produce in Magdeburg “are really needed by German industry” or will simply be sold into the global market.

Lindner’s point has been taken up by others, too. Germany has strong demand for “power semiconductors”, tailor-made chips for industrial applications and the automotive sector, which will be the mainstay of Infineon’s new fab in Dresden. But Intel’s Magdeburg plant will make “leading edge” chips, which are needed for things like AI.


Similar arguments over where to focus the firehose of government investment in semiconductors are playing out in other parts of the world. Silicon Valley companies such as Apple and Nvidia are overwhelmingly reliant on TSMC’s unparalleled capabilities in producing the cutting-edge chips that power iPhones or OpenAI’s breakthrough ChatGPT chatbot. Any interruption to the Taiwanese manufacturer’s output would quickly throttle the availability of many of the world’s most popular tech products, used by millions of consumers every day.

But outside an elite handful of American Big Tech companies, a far larger number of businesses depend on older chips to produce cars and household appliances — at a time when Chinese semiconductor companies, under pressure from US sanctions, are ramping up their investment in these more “mature” chips.

Kleinhans, of the SNV think-tank, says demand for semiconductors in Germany is strongest in the automotive industry, industrial automation and in the manufacturing of medical devices.

“None of them need cutting-edge chips in large quantities,” he says. The car industry, for example, needs semiconductors made according to “older manufacturing technologies” that have long been in the market.

Others agree that Germany and the EU, with its Chips Act, are making a mistake by placing such a big bet on cutting-edge chips. The approach “threatens to ignore the actual needs of Europe’s key industries”, says ZVEI, a trade body which represents Germany’s electronic and digital sectors.

Officials dismiss that argument. “In terms of digitisation . . . Germany is really failing to keep up with other developed economies,” says Kellner from the economy ministry. “And if we just stick with the old technologies, we’ll fall even further behind. And that’s not the logical path.”

Intel has also dismissed the claim that there is no domestic market for the chips it will produce in Magdeburg. “There’s lots of applications for leading-edge technology in cars — autonomous driving, recognising obstacles, the entertainment system, for example,” says the company’s Europe spokesman Markus Weingartner.

Intel also plans “accelerator programmes” to help the car industry introduce leading-edge technologies into its systems, he adds.

That view is shared by experts. “Intel Magdeburg is a strategic investment and a bet on the future,” says Lukas Klingholz of the digital association Bitkom. “We don’t know exactly how demand for leading-edge chips will develop in Europe, but it’s definitely going to grow overall over the next few years. And so far, Europe has no capacity and knowhow to produce them.”

Indeed, according to Kearney, the management consultancy, European demand for leading-edge semiconductors will grow by 15 per cent every year, compared to just 3 per cent a year for more mature chip technologies. Making sure the EU has its own leading-edge chip factories is an “investment in Europe’s resilience and sovereignty”, says Klingholz.

Scholz’s government appears open to increasing the amount of state aid to Intel — but only if the company raises the volume of investment earmarked for Magdeburg. Officials say Intel is open to that; the company declined to comment.

“There are good reasons for Intel to increase the level of investment, and for that reason, there are also good reasons to look again at how much support Germany and the EU will provide,” says one official.

“The level of state aid depends on how much [the company] invests,” says Kellner. “It’s quite normal that additional state support depends on the total investment volume that is deployed.”

Meanwhile, the government has also sought to provide comfort to Intel on the question of energy costs, which have ballooned in Germany since Russia’s invasion of Ukraine. Earlier this month Kellner’s ministry put forward plans to subsidise the cost of electricity for energy-intensive industries, proposing that prices be capped until 2030 at €0.06 per kilowatt hour — about half their current level. The estimated cost to the public purse will be €25bn-€30bn.

“The point of this is to create an attractive business environment for energy-intensive companies — including those that produce semiconductors and batteries,” says Kellner. “Clearly this agenda is going to benefit the whole semiconductor industry — not just Intel but others, too, such as Infineon and Wolfspeed.”

The proposed reform shows how determined Scholz and his government are to make sure that Germany becomes a major player in the global chip industry.

At Infineon’s groundbreaking in Dresden, Scholz said chips were pivotal to Germany’s plans to derive 80 per cent of its electricity from renewable sources by 2030 and go carbon neutral by 2045.

All the things needed for that — wind turbines, solar panels, heat pumps and electric vehicles — had one thing in common: chips. “We need semiconductors,” he said. “Lots and lots of semiconductors . . . And that’s why we have to strategically expand our own capacities [to produce them] in Europe.”

FT ; EU says China will take advantage of Russian defeat in Ukraine

EU says China will take advantage of Russian defeat in Ukraine
Foreign policy chief Josep Borrell urges ‘coherent strategy’ towards Beijing’s ambitions

The EU’s chief diplomat has warned that China will “take geopolitical advantage” of a Russian defeat in Ukraine and that Brussels needs to respond to Beijing’s global ambitions.

Josep Borrell, the bloc’s high representative for foreign policy, has urged member states to find a “coherent strategy” to deal with China that responds to both Beijing’s rising nationalism and a “hardening of the US-China competition”.

“The China issue is much more complex than the Russia issue,” Borrell wrote in a private letter to EU foreign ministers seen by the Financial Times. “China’s ambition is clearly to build a new world order with China in its centre . . . A Russian defeat in Ukraine will not derail China’s trajectory. China will manage to take geopolitical advantage of it,” he added.

The letter was pitched as a starting point for two days of discussions between EU foreign ministers starting on Friday to draft a new policy towards Beijing which EU leaders are set to discuss next month.

The Stockholm discussions are expected to focus on adjusting the bloc’s current strategy on China with its three-pronged approach of “partner, competitor, rival” to give greater weight to the “rival” part, according to people familiar with the talks. This shift “follows from a careful analysis of what China is doing”, one EU diplomat said.

In his letter sent on Thursday, Borrell also emphasised the bloc’s willingness to “engage seriously” with Beijing over the war in Ukraine, despite its rhetorical support for Moscow. He said the EU “welcomes all genuinely positive moves coming from China aiming at finding a solution”.

The Chinese leadership has put forward peace proposals but has been criticised by the west for taking Moscow’s side and failing to engage with Kyiv. China president Xi Jinping eventually called his Ukrainian counterpart Volodymyr Zelenskyy 14 months after Russia’s full-scale invasion in February last year, but that gesture was largely seen as an attempt at repairing strained relations with European capitals.

Borrell wrote in the letter that the EU should not seek to “block the rising power of emerging countries”, in a nod to reluctance among member states to embrace the US’s more hardline approach to China.

He also made a pitch for the EU’s “de-risking” strategy, which he portrayed as less risky than America’s decoupling from China. The strategy was first laid out by European Commission president Ursula von der Leyen when she called for “new defensive tools” for sectors such as quantum computing and artificial intelligence.

Brussels should also factor in China’s influence when dealing with low-income countries, Borrell wrote, warning against expecting those nations “to take one side or the other”.

The majority of developing countries have been reluctant to endorse western sanctions against Russia and China has seized the opportunity to cast itself as a non-aggressive power that is neither starting wars nor pressing other countries to adopt economic restrictions on its rivals.

“The EU must be aware that many countries see the geopolitical influence of China as a counterweight to the west and therefore to Europe,” Borrell wrote. “They will seek to strengthen their own room for manoeuvre without picking sides.”

WSJ : Yellen Doubts Biden Administration Can Avoid Default Without Congress

Yellen Doubts Biden Administration Can Avoid Default Without Congress
Treasury secretary says invoking 14th Amendment would be ‘legally questionable’

NIIGATA, Japan—Treasury Secretary Janet Yellen said it was “legally questionable” whether the Biden administration could rely on the 14th Amendment to effectively ignore the debt limit, pouring cold water on a method favored by some Democrats to avoid a default.

The 14th Amendment to the U.S. Constitution states that American debt authorized by law “shall not be questioned.” President Biden said this week he was considering invoking the amendment as a way to keep paying the nation’s bills if Congress doesn’t raise the debt limit. But he added the issue would be subject to litigation and may not be a solution in the current standoff.

At a news conference in Niigata, Japan, where finance ministers of the Group of Seven advanced democracies are meeting this week, Ms. Yellen said she doubted whether the 14th Amendment was an effective solution.

“What I would say, it’s legally questionable whether or not that’s a viable strategy,” Ms. Yellen said.

Republicans and Democrats in Washington are locked in a standoff over raising the nation’s $31.4 trillion borrowing limit. Republicans, led by House Speaker Kevin McCarthy, are demanding cuts in federal spending in exchange for raising the debt limit. Democrats are pushing for an increase in the debt limit without policy conditions.

Ms. Yellen has warned that the U.S. could fail to pay its bills on time as soon as June 1 if Congress doesn’t authorize additional borrowing. The political impasse and looming deadline have prompted Biden administration officials to explore unilateral options that could stave off the first-ever U.S. default. A failure by the U.S. to pay its bills on time could have broad financial and economic consequences.

Ms. Yellen said she viewed all potential alternatives—which also include prioritizing interest payments on the debt or minting a $1 trillion coin—as risky.

“I’m often asked questions—if the debt ceiling is not raised, what would you do?” Ms. Yellen said Thursday. “And I don’t want to go there and discuss alternatives. There are choices to be made, if we got into that situation. But as you think about each possible thing that we could do, the answer is there is no good alternative that will save us from catastrophe.”

Ms. Yellen reiterated that she would support eliminating or significantly altering the current system under which Congress must authorize increases in the debt limit. She said her view was personal and wasn’t on behalf of the Biden administration. Mr. Biden has said he doesn’t support eliminating the debt limit.

One way to change the process, Ms. Yellen said, would be for the president to inform Congress that the debt limit had been raised—then allowing Congress to block the decision if it wished.

Of the current system, she said: “I don’t think that’s any way to run the government and so, there are a variety of alternatives and my own preference would be not to go through this every couple of years.”

Ms. Yellen is expected to meet next week with the Bank Policy Institute, whose board includes major bankers. The debt limit will be among the topics discussed.

FT : Schroders hits out at Silver Lake’s €2.6bn German tech deal

Schroders hits out at Silver Lake’s €2.6bn German tech deal
Top investor cites conflict of interest as US private equity firms compete for Software AG

The largest outside shareholder in Germany’s Software AG said a planned €2.6bn takeover offer by US private equity firm Silver Lake “materially undervalues the company” and criticised the technology group’s handling of the sales process.

London-based Schroders, which owns 8 per cent of Germany’s second-biggest provider of corporate software after SAP, said Software AG’s apparent unwillingness to engage with other potential bidders could raise conflict of interest issues.

In recent weeks the German group has been at the centre of competing from Silver Lake and rival private equity firm Bain Capital via its portfolio company, US-based Rocket Software.

Software AG’s board has recommended Silver Lake’s offer, at €32 per share, despite Bain’s bid of up to €36 per share, saying it offers more certainty than the latter offer. Both are cash bids.

“This offer does not represent a superior offer and therefore Software AG’s management board and the independent takeover committee of the supervisory board are not in a position to engage,” Software AG said on Tuesday about Rocket Software’s offer.

Schroders said in a statement that while competing bids for the business validate the long-term investment opportunity, “we are surprised that the takeover committee appears unwilling to engage with potentially higher offers from other interested parties.”

The statement added: “It could be seen as raising potential questions regarding conflicts of interest and whether appropriate fiduciary process is being followed to equally protect the interests of minority shareholders.”

Shares of Software AG traded above Silver Lake’s offer price at around €34 per share on Thursday, a sign that investors anticipate an agreement will ultimately be reached at a higher price.

The company’s executives will hear directly from its shareholders at its annual meeting is next Wednesday.

The competition for Software AG comes as private equity firms are under pressure to deploy the large funds that they raised over the past few years and are having to navigate a competitive landscape amid a scarcity of deals.

Silver Lake first backed Darmstadt, Germany-based Software AG in 2021 via a €344mn investment. As part of the deal, two Silver Lake representatives joined the Software AG board, including Christian Lucas, Silver Lake’s co-head of Europe, the Middle East and Africa, becoming the technology company’s chair.

Software AG announced last month that it had entered into a deal with Silver Lake to be taken private at a price of €30 per share in cash.

The company also said that its largest shareholder, the Software AG Foundation, had agreed to sell a quarter of the company’s stock to Silver Lake.

Software AG Foundation was established in the 1990s by Peter Schnell, the company’s co-founder, and has held just over 30 per cent of the shares.

Combined with Silver Lake’s own share purchases, the private equity firm has now secured a more than 30 per cent stake in the company.

In early May, Silver Lake raised its offer to €32 per share after Software AG said it received a competing offer. Silver Lake’s latest offer values the company’s equity at about €2.4bn; Software AG has about net debt of €230mn.

Silver Lake’s improved bid was followed up by Bain’s Rocket Software announcing publicly its own revised offer of €34 per share, rising to €36 per share if Silver Lake and the Software AG Foundation agree to support the deal by selling their holdings.

Software AG has said that Silver Lake’s representatives recused themselves and an independent takeover committee was formed to assess the deal.

The company, which had €958.2mn in sales last year, with an operating profit of €178.5mn, has said that it prefers Silver Lake’s offer because of the certainty it offers on financing and the fact it knew the private equity group well.

Software AG has held conversations with Bain in recent weeks but does not see the synergies to be gained from a merger between Rocket Software and its own business, a person familiar with the matter said.

Bain has also been buying up shares, amassing around a 10 per cent stake in the company.

FT : The City needs to embrace risk

The City needs to embrace risk
Proposals to overhaul listings rules are step in the right direction but much more work needs to be done

It seems the City of London has developed a new passion — commentating on its own demise. The challenges the UK faces are significant and important. The long-term wealth creation capacity of the country is at stake. But the arguments over those challenges have been well rehearsed to the point of becoming cliched.

The Financial Conduct Authority should be applauded for joining the movement for change with proposals for a regulatory overhaul last week. Reforming the listings regime and simplifying related party transactions will make London an easier place to do business.

As importantly, the FCA‘s move recognises that we cannot aspire to a risk-free market in which there are no participants. Understanding the need to take risk to achieve return is a fundamental tenet on which the City was built.

“It’s not enough” has been a familiar refrain in the past few days. Nobody says it is. But it is part of a set of wholesale changes that are now moving swiftly in the right direction. A series of government-sponsored reviews led by Ron Kalifa on fintech, Lord Jonathan Hill on listings and Mark Austin on secondary capital raising have all made important contributions.

The Edinburgh reforms proposed by chancellor Jeremy Hunt for financial services set out an ambitious agenda. The Prudential Regulation Authority is engaging constructively on reforms of the so-called Solvency II for insurance. Nicholas Lyons, the lord mayor of the City of London, is making strides in pushing for the creation of a UK sovereign wealth fund. Regulators, politicians and the wider business community have reached an extraordinary state of agreement. The skies are brightening.

Reform is never comfortable, and we should not expect diehard defenders of the status quo and corporate governance fanatics to lead the charge. Equally, they should not hold us back. The reality is that neither companies nor savers have been better off for their protestations. My own industry, asset management, needs to come to the party wholeheartedly if it wants a vibrant market in which to operate.

This will include some uncomfortable conversations over executive compensation. It is a critical issue. I applaud Julia Hoggett, the London Stock Exchange’s chief executive, for speaking out and sparking that debate by calling for UK executives to be paid more if the country wants to retain talent and deter companies from moving overseas.

No one person, politician, regulator or corporate can answer this question in isolation; it is a question for broader society. Which is more important: limiting the gap between chief executive and worker pay, or accepting that boards need the freedom to attract the best talent to run Britain’s global companies for the best long-term outcomes?

This is just one problem. There is more work to do elsewhere. Asset managers need to support productive growth by allocating finance to those businesses that deserve it. They must also not indulge in tick-box governance — slavishly following proxy agencies instead of investing resources in independent thought. And asset managers cannot continue to apply strict rules to UK companies listed in London but show less rigour elsewhere.

The excellent returns achieved by the huge pooled pension funds in Canada and Australia also provide an important signal for one area the UK should focus on. We need to push for the consolidation of the fragmented defined contribution pensions plans nationwide. Likewise, requirements on local government to pool their pension funds need to be properly implemented. Insurance company regulation needs to permit investment into more growth assets.

Our efforts should be directed towards the opportunities of the future. We should look to capitalise on our national ability to innovate in areas such as life sciences or green technologies. We should be preparing for the continued, rapid growth of private markets. Technology, particularly blockchain, will massively shrink the difference between public and private markets — and London has the opportunity to lead in this.

Seldom has there been such uniform agreement about how financial services can serve the country. Let’s seize the moment. The total pool of global wealth will continue to grow. London’s cultural, legal and timezone advantages remain strong. It is time to stop admiring the problem and — in the words of Canadian ice hockey player Wayne Gretzky — “skate to where the puck is going, not where it is”.

FT : Taiwanese car battery maker bets on Northern France with €5.2bn plant

Taiwanese car battery maker bets on Northern France with €5.2bn plant
ProLogium, which has picked Dunkirk, France, praises Brussels’ EV push

The head of Taiwanese car battery maker ProLogium has praised Europe’s electric vehicle push as a reason for choosing France for a €5.2bn plant, in a boost to Brussels’ efforts to counter the appeal of massive US green subsidies.

Chief executive Vincent Yang said a Brussels-led commitment to ban the sale of new combustion engine cars by 2035 had created a stable backdrop for international battery makers, reducing the risk of policy shifts by individual states.

“Europe is a good place to start business as there is a growing market demand for electric vehicles,” Yang told the Financial Times. “The regulation is neutral in the sense it is supranational and will not be affected by national elections.”

ProLogium, which counts Mercedes-Benz and Vietnam’s VinFast among its shareholders, picked the northern French port of Dunkirk after scouting out dozens of European locations and shortlisting the Netherlands and Germany as possibilities.

Availability of low-carbon nuclear energy in France, as well as state subsidies that kick in up front rather than when production starts like the US tax credits, were other advantages, Yang said.

“In Europe we can have support during the investment phase,” Yang added, declining to disclose the level of subsidies the group was promised.

The investment comes as French president Emmanuel Macron has sought to increase industrial jobs in the former coal mining northern France region. France still lags European neighbours such as Germany with only 10 per cent of its output derived from manufacturing.

Earlier this week Macron, who has faced mass protests over his pension reform, unveiled measures to shorten the time it takes to set up a factory and expand the use of tax credits.

France and other countries in Europe have been feeling the pressure from the US Inflation Reduction Act, Joe Biden’s $369bn green investments package. As a result, Tesla scaled back its plans for a battery factory in Germany in favour of the US.

ProLogium had had “many discussions” around the IRA and was not ruling out a US investment at a later stage, said Gilles Normand, the head of international development.

The company’s Dunkirk plant is the fourth battery plant in development in northern France. China’s Envision Group, French start-up Verkor and ACC, a venture backed by carmakers Stellantis, Mercedes-Benz and oil and gas group TotalEnergies, are also planning battery plants in the region.

ProLogium is focused on solid-state batteries, which developers say are safer and more durable than liquid-based lithium-ion batteries.

The company is aiming to start production by the end of 2026 and reach a capacity of 48 Gigawatts per hour by 2030. It has a smaller-scale pre-production line in Taiwan starting operations later this year.

“Our project goes beyond just a Gigafactory. We would like to localise procurement of key materials in Europe, and have a research and development centre,” Yang said.

Other battery start-ups in Europe have said they have been courted by US government representatives and US states with big incentives, and some, such as Sweden’s Northvolt — Europe’s biggest challenger to Asian battery producers — have called on the region to respond with more subsidies.

Northvolt, which is building a second plant in Sweden, is yet to decide on whether to build a third in Germany or the US.

ProLogium has yet to disclose how it will fully finance its plans. It has raised $700mn so far from investors and is launching fresh fundraising discussions. The group aims to eventually go for a stock market listing.

“In the future we will go for an initial public offering,” Yang said.

>>> US Closing Stock Market Summary


Closing Stock Market Summary

The major indices closed in mixed fashion near their highs of the day, yet the underlying market was quite a bit weaker than index level performance suggested. Growth concerns sparked some flight to safety buying interest in the mega cap stocks, which drove a lot of the index level action. 

Alphabet (GOOG 116.90, +4.62, +4.1%) continued to rally after its Developers Conference yesterday, logging some of the biggest gains for the mega caps. Amazon.com (AMZN 112.18, +1.99, +1.8%), Meta Platforms (META 235.79, +2.71, +1.2%), and Tesla (TSLA 172.08, +3.54, +2.1%) all rose more than 1.0% today while Apple (AAPL 173.75, +0.19, +0.1%) closed with a slim gain. The Vanguard Mega Cap Growth ETF (MGK) rose 0.2%. Coincidentally, the Nasdaq Composite also gained 0.2% while the Nasdaq 100 gained 0.3%.

The Invesco S&P 500 Equal Weight ETF (RSP), though, fell 0.5% today. Decliners led advancers by a greater than 2-to-1 margin at the NYSE and a slightly less than 2-to-1 margin at the Nasdaq.

A sizable loss in Disney (DIS 92.31, -8.83, -8.7%) weighed on general sentiment today, leading the Dow Jones Industrial Average to underperform the other major indices. Disney reported fiscal Q2 results that featured a 2% year-over-year decline in Disney+ paid subscribers.

In addition to growth concerns and disappointing results from Disney, uncertainty about the debt ceiling and ongoing pressure on regional bank stocks loomed over the broader market. PacWest (PACW 4.70, -1.38, -22.7%) saw another sharp decline today after the company said its deposits declined approximately 9.5% for the week ending May 5. The SPDR S&P Regional Bank ETF (KRE) fell 2.5% and the SPDR S&P Bank ETF (KBE) fell 1.6%.

Most of the S&P 500 sectors closed with losses while the communication services (+1.7%) and consumer discretionary (+0.6%) sectors led the outperformers thanks to gains in their respective mega cap components.

Market participants were also digesting some economic data that was relatively pleasing with respect to the monetary policy outlook. The April Producer Price Index showed a moderation in inflation at the wholesale level while weekly initial jobless claims hit their highest level since October 30, 2021. Those readings effectively went the market's way, which is to say each moved in a direction that should leave the FOMC inclined to hold rates steady when it meets again in June.

The 2-yr note yield traded as low as 3.80% following the data, but settled the day unchanged at 3.90%. The 10-yr note yield, at 3.34% shortly after the data, fell four basis points to 3.40%.

Separately, the Bank of England raised its key lending rate by 25 basis points to 4.50%, as expected.

  • Nasdaq Composite: +17.8% YTD
  • S&P 500: +7.6% YTD
  • Dow Jones Industrial Average: +0.5% YTD
  • S&P Midcap 400: +0.1% YTD
  • Russell 2000: -0.9% YTD

Reviewing today's economic data:

  • April PPI 0.2% (consensus 0.3%); Prior was revised to -0.4% from -0.5%; April Core PPI 0.2% (consensus 0.3%); Prior was revised to 0.0% from -0.1%
    • The key takeaway from the report is that producer inflation continued to moderate. On a year-over-year basis, total PPI was up 2.3% versus up 2.7% in March. Excluding food and energy, PPI was up 3.2% versus 3.4% in March.
  • Weekly Initial Claims 264K (consensus 247K); Prior 242K; Weekly Continuing Claims 1.813 mln; Prior was revised to 1.801 mln from 1.805 mln
    • The key takeaway from the report is that initial claims reached their highest level since October 30, 2021, tracking in a direction that reflects a labor market that is becoming less tight.

Looking ahead to Friday, market participants will receive the following economic data:

  • 8:30 ET: April Import Prices (prior -0.6%), Import Prices ex-oil (prior -0.5%), Export Prices (prior -0.3%), and Export Prices ex-agriculture (prior -0.2%)
  • 10:00 ET: Preliminary May University of Michigan Consumer Sentiment survey (consensus 62.9; prior 63.5)

>>> US After Hours Summary: BLBD +26.6%, AMLX +5.2%, NWSA +4.6%, SANM +2.5% higher on earnings; IONQ -12.7%, HROW -9.5%, ANAB -6.1%, WEST -6% lower on earnings

After Hours Summary: BLBD +26.6%, AMLX +5.2%, NWSA +4.6%, SANM +2.5% higher on earnings; IONQ -12.7%, HROW -9.5%, ANAB -6.1%, WEST -6% lower on earnings

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: BLBD +26.6%, AMLX +5.2%, NWSA +4.6%, SANM +2.5% (also authorizes new $200 mln share repurchase program; also to delay form 10-Q), ARLO +1.3%, VTYX +1.1%, HRTX +0.9%,

Companies trading higher in after hours in reaction to news: OUST +8.6% (Motional selects Ouster as provider of sensors for IONIQ 5-based robotaxis; also files for offering by selling shareholders), BALY +1.8% (proposed site plan for Chicago casino approved by city dept; to begin construction in late 2024), VAC +1% (increases share repurchase authorization to $600 mln), PBA +0.9% (all facilities previously shut down due to wildfires have resumed ops), PAG +0.6% (increases dividend), ASH +0.5% (announces $100 mln share repurchase program, also increases dividend), BLDR +0.2% (added to MSCI World Index),

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: IONQ -12.7%, HROW -9.5%, ANAB -6.1%, WEST -6%, RCEL -5.8%, GEN -2.1%, SLF -2.1% (also increases dividend), SOUN -2%, EGHT -1.2%, GETY -0.2%

Companies trading lower in after hours in reaction to news: ANIP -6% (stock offering), MIR -3.4% (announces proposed 7 mln share offering by selling stockholders), MDRX -2% (to delay 10-Q filing), ATXS -1.3% (files $250 mln mixed shelf securities offering), DECK -0.1% (added to MSCI World Index)