Google’s Gemini Sees Developer Requests More Than Double in Five Months
The Takeaway
- Google Gemini API calls more than doubled to 85 billion by August.
- Gemini AI model sales boost Google Cloud revenue and related spending.
- Gemini Enterprise gains 8 million subscribers but receives mixed customer reviews.
Google’s improvements to its Gemini AI models are boosting the company’s top line.
Over the past year, Google’s business selling access to its Gemini AI models has skyrocketed, reflecting the improving quality of those models, according to three people with knowledge of Gemini’s sales. That’s likely to lift revenue from Google Cloud’s core business of server sales, as money customers spend on AI tends to lead to additional spending on other Google products, according to a person familiar with Google’s sales.
And it could also bolster Google’s still-nascent business selling software on top of those models, which has grown quickly in recent months but has garnered mixed reviews from customers.
The improvements are likely to show up in Google’s fourth-quarter earnings, which the company is scheduled to report on Feb. 4. Investors will be looking for signs that Google is making a return on the extraordinary investments it has made over the past year as it competes on AI. Google said last fall that it expected to spend between $91 billion and $93 billion on capital expenditures, including to support its AI business, nearly double the $52.5 billion it spent on capex in 2024. In addition, the company has been hiring specialized talent for Google Cloud and its AI research unit, Google DeepMind (for more on that, see this story).
Google sells access to its models through Google Cloud via an application programming interface. Requests sent to the Gemini API, known as API calls, more than doubled from around 35 billion in March, when Gemini 2.5 was first released, to around 85 billion in August, according to internal data reviewed by The Information.
The big challenge Google still faces is persuading businesses to pay up for sophisticated software it has developed to run on top of its AI models. That software offers it a way to raise the profit margins on its AI business, according to people who have worked at Google Cloud. The strategy’s centerpiece is Gemini Enterprise, which combines access to Google’s Gemini chatbot with the ability to search across company data as well as a platform for building and using AI agents—AI that can complete more complex tasks.
A Google spokesperson said Gemini Enterprise has grown to 8 million subscribers across 1,500 companies, as well as over 1 million subscribers who have signed up online, a sign it is gaining ground. Google is expected to highlight the growth of Gemini Enterprise when it reports earnings in February.
“We are seeing tremendous momentum throughout our Cloud business, particularly our AI applications,” a Google spokesperson said.
But according to interviews with several customers, cloud consultants and employees, customer feedback hasn’t been entirely positive. Simon Margolis, an executive at Sada, a consultant that specializes in advising customers on Google Cloud services, said a slim majority of customers he talked to had favorable experiences with Gemini Enterprise, but “it’s close to 50-50 of customers who like it or don’t.”
In some cases, the success of Google’s Gemini models—which customers use to build their own software—may hinder its ability to sell its software built on top of them, Margolis said.
“Google has always been much more of a builder’s cloud than a ‘buy a product’ cloud,” Margolis said. “You have a customer who could buy Gemini Enterprise or build a bunch of custom agents, and they will probably build a bunch of custom agents. Google makes it so easy to build something like that.”
Gemini Rush
Google’s business selling access to its models had a slow start, as its early Gemini models weren’t particularly well received. But after Google released Gemini 2.5 last spring, to enthusiastic reviews from developers, the API sales took off.
So many customers, including staff at coding tool startup Cursor, wanted to use the Gemini API after the 2.5 release that Google had to tweak how the model was delivered to make it more efficient. That adjustment freed up enough compute to accommodate the additional usage, according to a separate person with knowledge of the situation.
There was another usage surge after Gemini 3 was released in November, also to strongly positive reviews, another of the people said.
Google has worked to improve API margins over the past year. Google’s first Gemini models, Gemini 1.0 and Gemini 1.5, had negative profit margins, meaning they cost more to operate than Google charged, due to its heavy discounting, one of the people said.
Gemini 2 only sometimes had positive margins. Gemini 2.5 had positive margins, as the improved quality of the models meant Google could compete on quality, not just price, according to the person, but even that only accounted for the cost of serving the tokens itself, not any of the costs that went into model development.
As of the middle of last year, Google’s blended Gemini margins—across all models—were barely positive, far below margins on Cloud as a whole, according to another person with direct knowledge of the situation.
However, the success of the Gemini API boosted Google’s business beyond just direct API sales. Google calculated that spending on API calls also increased spending on other Google Cloud products like storage or databases, the person said.
Gemini Enterprise
Where Google still has work to do is in its software AI application suite, Gemini Enterprise. According to Margolis, the product has received mixed reviews all year from customers.
Niko Gruben, head of applied research at Harvey, a legal AI startup, said Gemini Enterprise was useful for him because it connected to company data. He uses it for deep research based on internal data, writing long-form documents and generating images, but he hasn’t used the agent builder.
Mark Shank, who leads consulting firm KPMG’s business selling Google Cloud to its clients, said 83% of KPMG employees are satisfied with Gemini Enterprise, according to internal surveys. He said it hasn’t been hard to drive adoption among KPMG clients.
But according to Margolis, the consultant who specializes in Google Cloud services, Gemini Enterprise isn’t good at building custom applications. Another consultant whose company uses Gemini Enterprise tried to build an agent to summarize his emails, one of Gemini Enterprise’s suggestions, and was unable to do so, according to a screenshot of the chatbot exchange viewed by The Information.
Chirag Mehta, a principal analyst at Constellation Research, said customers told him Gemini Enterprise was good at answering shallow, general-purpose questions based on enterprise data and at generating code based on their code repository, but it struggled when asked very specific questions or instructed to perform specific tasks.
Still, Mehta said, the customers he talked to liked the product enough that they haven’t given up on it yet, unlike with competitors like Copilot.
“People are saying, ‘We’re going to give it a shot,’” Mehta said.
OpenAI’s First Hardware Device Slated to Appear This Year
A top OpenAI executive said the company is planning to introduce its first hardware device in the latter half of 2026.
In an interview with Axios at an event in Davos, Switzerland, Chris Lehane, OpenAI’s chief global affairs officer, said the AI startup is “on track” to show the product later in the year. That timing is consistent with past messages from OpenAI about its first device.
OpenAI’s hardware devices will be the result of a collaboration between the company and Jony Ive, Apple’s former design chief. Last year, OpenAI acquired a device startup that Ive co-founded, io, though Ive still works for his independent design firm, LoveFrom. Lehane declined to discuss what type of device OpenAI’s first hardware product will be.
Why Google Is Winning the Race for Data Center Power
There’s no doubt now that the tech companies driving AI will have to help produce the new electricity needed to power it. The White House and several governors sought Friday to force them to build more plants.
That’s why Google’s $4.75 billion deal in December for Intersect, a developer of renewables and data center infrastructure, is so significant. Google has already been working with partners like Intersect to produce its own power and send some of it back to the grid. It said Friday: “We agree data centers should pay their own way. For us, it is table stakes.”
Recently, I got on the road to see what Intersect is doing and how that positions Google as the politics around power grow heated. I visited a transformer factory in Memphis, Tenn., and drove through the flat, endless Texas Panhandle.
Intersect is one of the largest customers of some of the most sought-after items in the power supply chain, so it has a choice place in line for items with a long lead time, including grid equipment like transformers and U.S.-made solar modules.
Intersect also scouted out giant land tracts over the past decade that could host clean energy plus industrial customers—like a data center. It has already secured grid connections and many needed permits. It has an estimated 8 to 10 gigawatt pipeline in development (equivalent to the power required for eight to 10 medium-size cities), while many AI builders are only now getting in line.
In Memphis, I stood next to—and was dwarfed by—a large power transformer bound for one of Intersect’s sites. Workers at a state-of-the-art factory, where new customers face a four-year wait, had just finished building it. Intersect had more orders underway.
Transformers can convert wind and solar power to voltages that allow it to flow onto the grid or to a big power user such as a data center. The largest ones are literally precious—made in clean rooms by craft laborers who train for years to wind ropes of copper around paths that can’t deviate more than a millimeter. Teams then move the transformer into a cavernous chamber to test its ability to withstand lightning strikes.
The factory is owned by South Korea’s Hyosung HICO Ltd., a subsidiary of Hyosung Heavy Industries. HICO’s U.S. head, Jason Neal, showed me a silver-and-gold rodeo belt buckle that Intersect gave him as a memento of their years working together. It’s on display behind glass in the factory’s lobby.
Earlier this month, I traveled to a future Intersect wind and solar field in Hereford (pronounced HER-ferd), in the Texas Panhandle. Hereford raises more cattle on feed lots than anywhere else on the planet. But there’s still ample space left on these sunny and windy grasslands to build Central Park–size computing campuses. When there’s not enough wind or sun to produce renewable energy, the data center can fulfill its power needs by putting a proverbial straw into three nearby gas pipelines coursing below ground.
Although solar panel frames were still stacked in a fenced yard, this was no ordinary empty field. The 1 GW (city-size) interconnection that Intersect has secured from the Texas grid gives it the option to be a power taker or power giver. Many renewables sites can’t get interconnections to sell their excess power, and these access points are fully sold out until more transmission lines get built, years from now. Last year, Google’s data center energy chief, Amanda Peterson Corio, stated that its projects with Intersect “will bring new generation capacity to the electric grid” instead of “taking capacity away from the grid.”
Intersect’s previous plan was to sell its renewable power to produce hydrogen from electrolyzers. So-called green hydrogen can be used to reduce emissions in heavy industries like steel or fertilizer production. Intersect pivoted the site last year to data center development.
Intersect has done several things differently than most renewables developers. First, it built a lean team and kept its number of projects small, supersizing each site rather than scattering small sites across the country.
Second, it owns its power. Most developers finish their projects and immediately sell them to lower their risks. Intersect held on to its projects, believing that industrial users or utilities would pay up for large amounts of power. As Intersect CEO Sheldon Kimber said in a recent podcast, “Why…sell the coffee beans for such a low price when you could charge people five bucks for a latte?”
The approach helped Intersect this year when renewables lost some tax advantages under President Donald Trump and competitors faced cash crunches. Its already-operating assets, which weren’t part of the Google deal because those assets have other investors and customers, were still throwing off cash to meet debt obligations.
Google is paying a premium for Intersect, especially if you compare the number to what others have paid for power assets. Amazon just agreed to spend $83 million for a distressed 1.2 GW solar project in bankruptcy in Oregon from Pine Gate Renewables. On a per-gigawatt basis, Google may be paying six times more.
But the numbers make sense. Intersect’s estimated 8 GW to 10 GW of power in development could be ready or well underway by 2028. That’s a big number in a short time frame. And it’s in addition to the advantages offered by Intersect’s experienced team and its front-of-the-line spot for transmission gear, plus land, interconnections and regulatory approvals.
Google’s deal to buy Intersect, after partnering with it for a year, highlights two significant facts about energy in the U.S.: First, in sunny and windy regions, renewables are cheaper and faster to install than fossil fuel right now. Kimber told me last year, before he sold to Google, that Intersect is ready to prove that running data centers on solar, wind and battery backup, with on-site natural gas as swing power, is one of the fastest, cheapest and cleanest solutions for AI.
Grid power typically uses 40% gas, but Kimber has previously said Texas could potentially supply up to 70% of power from wind and solar backed by batteries, and he can firm up this power with on-site, small-capacity gas turbines that ramp up and down. This frees Google from the widely lamented wait of five to seven years for much larger gas turbines and significantly lowers its grid-power needs. It also reduces greenhouse gas emissions, a priority for Google.
The other compelling factor here is that Texas, with its unique free-market, stand-alone grid, has become a destination for data centers and renewable energy. President Trump has a harder task jump-starting power plants in the highly regulated Northeast.
Controlling your own destiny out on the range beats waiting on officials in other markets to debate how to ration public power resources and connect you to them. Kimber calls Texas the “Disneyland of Energy.”
“You put it in a petri dish, this is what grows,” Kimber said. “You can put your green hat completely aside—this is the cost-effective, quick-to-market, reliable power solution.”
BioticsAI, which won Disrupt’s Battlefield competition in 2023, gains FDA approval for its AI-powered fetal ultrasound product
TechCrunch Disrupt Battlefield 2023 winner, BioticsAI, announced on Monday that it has received FDA clearance for its AI software that helps detect fetal abnormalities in ultrasound images.
The product was envisioned by founder CEO Robhy Bustami, who was raised in a family of obstetricians, including his mother, aunt and uncle. He spent a lot of time in hospitals growing up, often traveling with his mother as she provided maternal care throughout the U.S.
After learning to code and studying computer science at UC Irvine, Bustami teamed up with Salman Khan, Chaskin Saroff, and Dr. Hisham Elgammal in 2021 to launch BioticsAI.
The technology uses computer vision AI “to support fetal ultrasound quality assessment, anatomical completeness, automated reporting, and seamless integration into clinical workflows,” Bustami told TechCrunch.
He hopes his tech will help the U.S. combat the fact that the U.S. has one of the worst prenatal outcomes for mothers among high-income nations. Black women in particular face a very high rate of maternal deaths,
Bustami said that the prenatal ultrasound has become the “cornerstone” of monitoring pregnancies, but its low-quality images can lead to misdiagnosis.
Bustami said the hardest part was not building his AI models, which were trained on a diverse set of hundreds of thousands of ultrasounds, but ensuring the tech performed reliably in the real world, especially on demographics with the highest risk for a tragic outcome.
“In an environment where disparities in healthcare outcomes are well documented, it was critical to demonstrate consistent performance across patient subgroups, not just in idealized cases,” Bustami continued.
The CEO said it took just under three years to go through the FDA process, including testing and validating the product. The experience taught him and his team how critical it is for engineering, product, clinical, and regulatory work to be tightly aligned from the very beginning. “By designing the product, clinical validation, and regulatory pathway together, rather than sequentially, we were able to move quickly,” he said.
Now with FDA clearance, Bustami said the companies’ next focus is scaling across various health systems nationwide. He also has plans to add more features for fetal medicine and reproductive health.
“We’re positioned to scale both distribution and clinical impact while continuing to deepen the power of our technology,” he said.
Elliott Invests in Hypersonic-Flight Company Stratolaunch
Activist hedge fund also getting board representation at Cerberus-backed company
Elliott Investment Management has made an investment in Stratolaunch, a privately held hypersonic-flight company, according to people familiar with the matter.
The details
Elliott will also gain board representation at Stratolaunch, the people said. Elliott’s investment is worth several hundred million dollars; the exact size couldn’t be learned.
The Mojave, Calif.-based company is owned by private-equity firm Cerberus Capital Management. Cerberus bought Stratolaunch in late 2019 after its founder, the late Microsoft co-founder Paul Allen, died in 2018. It pivoted the business from space launches to hypersonic-flight testing for defense.
Cerberus’s former co-chief executive, Stephen Feinberg, left the firm last year to become the Trump administration’s deputy secretary of defense.
The context
Stratolaunch makes reusable hypersonic test aircraft, which are integral for the Defense Department’s lower-cost tests of aircraft and weapons that travel at least five times the speed of sound.
In March, the U.S. military completed a series of test flights of a reusable hypersonic rocket-powered aircraft for the first time in more than a half-century. It used Stratolaunch’s Talon-A aircraft, which operates autonomously.
Elliott, best-known for its work as an activist hedge fund, is a notable addition to the private-capital rush into startups building hypersonic-speed aircraft and components. The companies are racing to build out the long-range, superfast weapons.
Venture capitalists put more than $2 billion last year into U.S. startups working on hypersonics, according to PitchBook.
The U.S. has tried in fits and starts over many decades to develop hypersonic-speed weapons with minimal success. Meanwhile, China has stockpiled them and Russia used them against Ukraine as recently as this month.
Alarm over America’s deficit led a U.S. defense official to in November name hypersonics on a list of six critical technologies that would “define the future of American military superiority.”
Trump’s $1 Billion-a-Seat Diplomacy Club Takes Aim at the U.N.
Other major powers invited to join the Board of Peace have reacted cautiously so far
- President Trump has expanded his Gaza Board of Peace into a global conflict-mediating body, bypassing the United Nations.
- A permanent seat on Trump’s proposed global body would cost $1 billion, with invitations extended to approximately 60 governments.
- As chairman, Trump would possess broad authority, including veto power over decisions and the ability to appoint or remove member states.
President Trump has expanded the mission of his proposed Gaza Board of Peace into a global body that would take on the role mediating conflicts currently held by the United Nations and carry a $1 billion fee for a permanent seat, according to a charter sent to prospective members.
Trump announced the board last September as part of the Gaza cease-fire deal between Israel and Hamas. The charter doesn’t mention Gaza or the U.N., describing a “nimble and effective international peace-building body” with Trump as chairman and other governments serving as member states.
“Too many approaches to peace-building foster perpetual dependency, and institutionalize crisis rather than leading people beyond it,” the charter’s preamble says, calling for “a coalition of willing States committed to practical cooperation and effective action.”
The White House didn’t respond to a request for comment on the charter.
The expansive mandate underscored Trump’s accelerating push to replace the international system established by the U.S. after World War II, which he has attacked for years as ineffective, with a new structure built around himself that bypasses existing multilateral institutions. Earlier this month he pulled the U.S. out of 31 U.N. agencies and bodies, saying they operated “contrary to U.S. national interests.”
Countries that agree to join the board could serve for a three-year term, but that limit would be waived for countries that agree to contribute $1 billion in cash to the board, according to the charter, which was previously reported by Bloomberg. The charter doesn’t say how the fees will be used.
“It’s hard not to read this as an attempt to establish a precedent in Gaza that could be used elsewhere in terms of saying that Trump is going to be calling the global shots here, and you either fall in line or you’re not part of the process,” said Julien Barnes-Dacey, director of the Middle East and North Africa program at the European Council on Foreign Relations.
The U.N. Security Council authorized the Board of Peace in November to oversee Gaza’s postwar stabilization and reconstruction. But the charter circulated by the White House outlines a far broader mission.
“The Board of Peace is an international organization that seeks to promote stability, restore dependable and lawful governance, and secure enduring peace in areas affected or threatened by conflict,” it says.
China, Russia, France and Britain, the four other major powers that serve permanently on the U.N. Security Council and have a veto over its actions, are likely to be reluctant to replace that body with Trump’s board, analysts said. Many other countries that see the U.N. as the main international forum where they can exercise influence are likely to be at least as dubious.
Around 60 governments have received invitations to join the board, but the reaction from most has been cautious so far. Asked Monday about the Trump plan, British Prime Minister Keir Starmer told reporters: “We’re talking to allies about the terms of the Board of Peace.”
France has been asked to join the board but plans to decline the offer for now because the charter goes beyond responsibility for Gaza and raises questions about the impact it would have on the U.N., according to a French official.
Kremlin spokesman Dmitry Peskov told state news agencies on Monday that Moscow was “studying the details of the offer and hoping to be in contact with the American side to clarify all the nuances,” without addressing the $1 billion fee.
Hungarian Prime Minister Viktor Orbán said on X he had been invited onto the board and had already accepted. Orbán has positioned himself as one of the loudest advocates for Trump’s peace efforts in Ukraine. “We have, of course, accepted this honourable invitation,” Orbán said.
The king of Morocco, Mohammed VI, and the president of Kazakhstan, Kassym-Jomart Tokayev, also announced they would join the board, officials from each country said in social-media posts that didn’t mention the $1 billion fee for a permanent seat.
In an invitation sent Friday to Egypt’s president, Abdel Fattah Al Sisi, Trump described the board as “a distinguished group of nations ready to shoulder the noble responsibility of building LASTING PEACE.” Sisi hasn’t responded to the invitation.
Several Arab countries object to involving the board in other conflicts, saying it should be exclusively focused on carrying out the Gaza peace plan at first, officials said. It is risky to create an alternative global peace and security architecture under Trump’s control, they added.
As chairman, Trump would have wide authority over the new organization, with the power to appoint and remove member states, as well as a veto over its decisions. The charter specifies that the board’s decisions will be “made by a majority of the member states present and voting, subject to the approval of the chairman, who may also cast a vote in his capacity as chairman in the event of a tie.”
It also reserves for the chairman the “exclusive authority” to create other entities to carry out the board’s mission.
The charter specifies that “Donald J. Trump shall serve as inaugural Chairman,” and it appears to outline a succession procedure that ensures he or a handpicked successor would remain in the position indefinitely.
“Replacement of the Chairman may occur only following voluntary resignation or as a result of incapacity,” it says. In that event, “the Chairman’s designated successor shall immediately assume the position of the Chairman.”
French PM to extend tax on big companies to appease the left
Sébastien Lecornu wants to finalise 2026 budget and keep his fragile government in power
French Prime Minister Sébastien Lecornu has yielded to a new raft of demands from the Socialist Party, including a tax increase for the country’s largest companies, as he inches closer to finalising a 2026 budget.
At the helm of a fragile minority government, Lecornu also announced on Monday that he would use special constitutional powers to seek to bypass lawmakers to enact a budget. Forging a compromise with the opposition had proven impossible, he said.
Using the 49.3 clause special powers carries risks, since far-right and far-left opposition parties have promised to hit back with a no-confidence vote in the National Assembly. If that succeeds, Lecornu’s government falls and the budget is scrapped; if it fails, then the government survives and the budget passes.
The Socialists are the key swing voting bloc, although they only have 66 MPs out of the total 577. Party leaders have signalled that they view Lecornu’s new concessions favourably, including victories they obtained for students, working people and retirees after weeks of bitter negotiations.
“The prime minister made announcements that are a step in the right direction and allow us to consider the possibility of the budget not being censured,” Boris Vallaud, a senior Socialist lawmaker, told Le Parisien newspaper.
On Friday, Lecornu confirmed that he had climbed down from a series of proposals — such as freezing government spending outside defence and eliminating tax breaks for retirees — that would have helped lower the deficit. The prime minister also said he would expand the availability of subsidised meals for university students and boost low-income workers’ take-home pay with a benefit scheme.
Lecornu had already made big concessions to the Socialists in December to pass the welfare budget, in effect abandoning the only significant reform of President Emmanuel Macron’s second term — the hard-fought pension reform that increased the retirement age from 62 to 64.
Vallaud’s latest comments suggest Lecornu may have again done enough to secure the abstention of the Socialists in the coming no-confidence vote. But Lecornu did break a promise made to the opposition in October that he would not use the 49.3 clause, but instead search for compromises.
It proved impossible to reach a deal since political parties do not agree on how France should begin narrowing its budget deficit, which stood at 5.4 per cent of national output at the end of last year.
Lecornu has a weak negotiating position because Macron’s centrist alliance no longer has a majority in the assembly and two prime ministers have already been toppled in just over a year.
Since no budget deal has yet been struck, France has been operating since the beginning of the year on a rollover budget from 2025 to keep public spending flowing for everything from pensions to defence.
The government aims to cut France’s deficit to about 5 per cent of GDP this year, but it has not fully detailed how it will pay for the most recent concessions.
It appears that much of the additional spending will be funded from the extension of what the government had promised would be a one-off tax on France’s biggest companies, which raised €8bn last year. Macron’s centrists had initially wanted to keep their promise not to extend the tax, although they later caved in by agreeing only to halve it rather than eliminate it.
But the Socialists won the battle, so the full tax will be maintained, albeit with a reduced set of targets, to hit only roughly 300 of the biggest companies instead of about 450 last year.
The government also broke another promise to companies by not lowering so-called production taxes, which are levied on the “value” companies create in France, not on profit or revenue. Business sees these as damaging to French competitiveness, and Macron had made eliminating them a key part of his economic agenda.
“France needs visibility and stability,” Lecornu wrote in an open letter to business leaders. “A new political crisis would weaken our country and weigh even more heavily on the economy and jobs.”
If fielding one bid is tough, try fielding 12
Online auctioneer ATG has received and rejected a dozen takeover bids made in quick succession by FitzWalter Capital
In the UK, bidders often make a series of approaches before they land on a number that the target’s board likes enough to recommend. Despite the handwaving that can accompany this process — with targets rebuffing “opportunistic” bids and buyers bemoaning the lack of engagement — it is best understood as a method of price discovery, which can involve several to-and-fros when shares are particularly low or volatile.
How many is too many, though? Online auctioneer Auction Technology Group has received and rejected 12 takeover bids from FitzWalter Capital, an investment firm founded by former Macquarie executives, which owns 22 per cent of its stock. The latest attempt, which the company rebuffed on Monday, valued ATG’s equity at £491mn, 48 per cent above its undisturbed share price on January 2.
Ordinarily, offers — even indicative ones — pitched around that sort of premium are hard for boards to dismiss out of hand. It is higher than the average 39 per cent at which UK takeovers were completed in 2025, according to AJ Bell. And ATG looks vulnerable. Its shares had halved in the year prior to the bids being disclosed, as it weathered mishaps including a misjudged acquisition and a profit warning.
But FitzWalter’s strategy has so far not helped its cause. It has made its bids in quick succession since September on concerns that ATG was considering the sale of a major division. With UK rules no longer requiring shareholder votes on even large transactions, FitzWalter apparently wanted to keep ATG in a perpetual takeover process which precludes companies from pursuing frustrating action. That makes the bidder look almost like an activist, intent on changing ATG’s strategy.
The problem is that combining activism with a takeover bid is not easy to do. Hostile offers are tricky. And boards that feel harried and harangued — ATG’s has previously wondered aloud whether FitzWalter is even working towards a recommendable proposal — are probably less likely to greenlight an offer unless it truly is a knockout, which this one isn’t. Despite the eye-catching premium, FitzWalter’s latest approach values ATG at under 12 times next year’s earnings, which seems low given analysts forecast 7 per cent annual revenue growth between then and 2030, according to S&P Capital IQ.
Meanwhile, in its attempt to influence ATG’s strategy, FitzWalter used a blunt, ill-suited instrument — and one with a short shelf life. ATG’s disclosure of the bids triggered the UK’s 28-day “put up or shut up” period. If that expires without a firm offer, ATG will be free to go about its business and sell whatever it pleases.
Whatever the outcome, FitzWalter has done other shareholders a favour by putting ATG’s management in a spot where it must now address the problems that laid it open to attack in the first place. The risk is that chasing two rabbits ends with catching none.