FT : LVMH and Tiffany in talks to cut price of $16.6bn deal

LVMH and Tiffany in talks to cut price of $16.6bn deal
US jeweller willing to consider lower price to avoid court battle with French luxury goods group

LVMH and Tiffany are in active talks to renegotiate their $16.6bn combination in an effort to avoid a court battle in January, four people with direct knowledge of the matter said.

The French luxury goods group had agreed to pay $135 per share in cash for US jeweller Tiffany in November last year, but since the Covid-19 pandemic hit it has been pushing for a price cut. Last month it threatened to walk away from the deal, triggering competing lawsuits in the US commercial court in Delaware.

Tiffany recently signalled that it was willing to consider a new price as long as it was above $130 per share and the French company agreed to close the transaction without further changes, two people said.

LVMH was open to discussing such terms, and the two sides were still in negotiations, said two additional people.

Every $1 per share off the original $135 per share deal equates to a saving of about $120m on the purchase price.

Shares in Tiffany rose 1.5 per cent to $124.71 in early New York trading. CNBC earlier reported that the discussions were under way.

LVMH and Tiffany declined to comment.

BreakingViews : Money talks, UK manager for the rich makes worthy activist prey

Companies that cater to a well-heeled clientele should be adept at handling high-maintenance demands with delicacy. Not so UK wealth manager St James’s Place, which has largely brushed aside a loudmouth complaint by activist shareholder PrimeStone Capital about high expenses. That may be a mistake.

PrimeStone has called for an overhaul at the 5 billion pound wealth group, which offers its investing nous and infrastructure to a network of over 4,000 financial advisers in return for a cut of clients’ fees, to boost lacklustre returns. It has a point. Despite stellar asset growth – on Tuesday Chief Executive Andrew Croft reported 119 billion pounds in funds under management, double the amount in 2015 – St James’s Place shares are slightly lower than where they were five years ago.

Higher outlays are a likely reason for such a jaded performance. Despite SJP’s increased scale, its average operating expenses per adviser have increased by two-thirds since 2014 to 96,500 pounds per year, nearly double the quantum at rivals, according to PrimeStone. And even though Croft managed to grow funds under management by an impressive one-fifth last year, the firm’s expenses were equivalent to 71% of income from fees and commissions. Competitor AJ Bell reported a 2019 cost-to-income ratio of 64%.

Croft’s retort that he is investing for future expansion is only partly justified. It’s true that SJP will need to recruit more advisers to reach its longer-term funds under management target of 200 billion pounds. But a six-year long sally in Asia has produced widening losses with no clear path to profitability: total funds in the region were less than 1% of the group total at the end of 2019.

With shares down one-fifth year-to-date, belt-tightening is an obvious way to boost SJP’s grubby valuation: the stock trades on 20 times forward earnings, a discount to peers on 30 times, according to Refinitiv data. PrimeStone’s mere 1% holding may persuade Croft that he can safely ignore their gripe. Yet, given the stock’s uninspiring run, the activist may well gain the support of more genteel investors.

FT : Waymo strikes self-driving lorry deal with Daimler Trucks

Waymo strikes self-driving lorry deal with Daimler Trucks
Alphabet unit expands ambitions beyond carrying passengers to hauling freight

Waymo is partnering commercial vehicle group Daimler Trucks to power big-rig lorries, as Alphabet’s driverless technology unit moves its technology beyond carrying passengers to hauling freight.

John Krafcik, Waymo’s chief executive, described its first partnership in the trucking sector as an “epic moment”, with its technology being aimed at unlocking “a full suite of driving capabilities, not just highway driving but full hub to hub capability, including the ability to navigate very complicated city environments”.

The two companies said they would work together to build an autonomous version of Daimler’s Freightliner Cascadia, a Class 8 truck currently equipped with driver-assist technology. They plan to make it available to US customers “in the coming years”.

The truck would be level 4 autonomous, meaning it could drive itself without human oversight, but only in predefined areas.

The partnership marks a significant milestone for Waymo, which began life in 2009 as Google’s self-driving car project and is now valued at more than $30bn. Waymo’s focus has been on robotaxis, but it launched a trucking unit in 2017 and branded it Waymo Via earlier this year.

Daimler Trucks is the world’s largest maker of commercial vehicles. The trucking arm of the Mercedes-Benz owner sells half a million units a year, earning $40bn in revenue in 2019.

The partnership is a little unexpected, with Daimler already having purchased a majority stake in the US driverless start-up Torc Robotics in early 2019. 

Martin Daum, chief executive, clarified that Daimler would be following a “dual strategy approach” to offer its customers different choices. It was unclear, however, how deep the partnership with Waymo would go and whether it would create friction with its existing road map for autonomy.

The Cascadia is set to be equipped with the Waymo Driver — a combination of vision sensors, software and computer systems, according to a press release. However, on a call with journalists, Mr Daum said: “We are partnering with Waymo on the chassis part, we are not partnering with Waymo on the software part.” 

A focus on the chassis is meant to send a signal to automotive suppliers to begin building capacity for all the necessary parts required at scale — a development that should speed up production.

“Never underestimate the difficulties we have on that piece of hardware,” Mr Daum said. “Ultimately, that has to perform at a 100 per cent rate, without any fault.”

Mr Krafcik, who a year ago called autonomous trucks “a pressing need” that could “catch on faster” than driverless cars, said he expected Waymo to be able to scale technology it has already built. “The level of invention required from our side is really quite low,” he said. 

Earlier this month, the group’s ride-hailing division, Waymo One, made its fully driverless service open to members of the public in Phoenix, Arizona — a first for the industry.

That announcement followed two years of testing with select passengers, and it remains unclear how quickly it could deploy such operations in the 25 other American cities where it is test-driving with back-up drivers behind the wheel.

CNBC : Coronavirus antibodies decline after infection, study finds, raising ques

Coronavirus antibodies decline after infection, study finds, raising questions about herd immunity

  • Researchers from Imperial College London screened 365,000 people in England over three rounds of testing between June 20 and September 28.
  • Analysis of finger-prick tests carried out at home found that, rather than people building immunity over time, the number of people with antibodies that can fight Covid-19 declined roughly 26% over the study period.
  • The findings suggest that there may be a decline in the level of population immunity in the months following the first wave of the coronavirus epidemic, potentially dashing the hopes of those calling for a controversial herd immunity response strategy.

LONDON — Antibodies against the coronavirus fall as people recover from the disease, according to the findings of a major U.K. study, potentially dealing a blow to those pushing for so-called herd immunity.

Researchers from Imperial College London screened 365,000 people in England over three rounds of testing between June 20 and September 28.

Analysis of finger-prick tests carried out at home found that, rather than people building immunity over time, the number of people with antibodies that can fight Covid-19 declined roughly 26% over the study period.

The REACT-2 study, which has not yet been peer reviewed, found that 6% of those tested had antibodies to the virus when the U.K.’s lockdown measures were relaxed over the summer. However, by the start of the second wave of cases last month, this figure had fallen to 4.4%.

“This very large study has shown that the proportion of people with detectable antibodies is falling over time,” said Helen Ward, one of the authors of the study and professor at Imperial College London.

“We don’t yet know whether this will leave these people at risk of reinfection with the virus that causes COVID-19, but it is essential that everyone continues to follow guidance to reduce the risk to themselves and others.”

What does it mean for herd immunity?
The findings suggest that there may be a decline in the level of population immunity in the months following the first wave of the coronavirus epidemic, potentially dashing the hopes of those calling for a controversial herd immunity response strategy.

Herd immunity occurs when enough of a population is immune to a disease, making it unlikely to spread and protecting the rest of the community, according to the Mayo Clinic. It can be achieved through natural infection — when enough people are exposed to the disease and develop antibodies against it — and through vaccinations.

Health experts estimate that around 70% of the population would need to be vaccinated or have natural antibodies to achieve herd immunity.

Some epidemiologists have suggested that aiming for herd immunity would be a better response to the pandemic than lockdown measures. Many others, however, have sharply criticized a strategy that could require vulnerable people to shield at home while the virus spreads through the young and healthy.

Earlier this month, Dr. Anthony Fauci, the U.S.’s top infectious disease expert, described calls to let the virus rip through the U.S. population unchecked as “nonsense” and “dangerous.”

To date, more than 43.5 million people around the world have contracted the coronavirus, with 1.16 million related deaths, according to data compiled by Johns Hopkins University.

Implications for reinfection
The results of the REACT-2 study showed a downward trend of antibodies in people of all age groups and in all areas of the U.K., but not in health workers. The decline was largest for people aged 75 and above, the study said, while the smallest fall was among those aged between 18 to 24 years old.

Researchers found that the decline in prevalent antibodies may initially be rapid, before plateauing. They cautioned that data on this was only now beginning to emerge.

The study only measured antibodies. The authors said it was not possible to determine whether the loss of antibody positivity would correlate with an increased risk of an individual being reinfected since it was not clear what contribution T cell immunity and memory responses played in protective immunity during re-exposure.

T cells are part of the immune system that defends against specific foreign pathogens.

“Our study shows that over time there is a reduction in the proportion of people testing positive for antibodies,” said Professor Paul Elliott, director of the Real Time Assessment of Community Transmission program at Imperial, and one of the authors of the study.

“Testing positive for antibodies does not mean you are immune to COVID-19. It remains unclear what level of immunity antibodies provide, or for how long this immunity lasts,” he continued.

“If someone tests positive for antibodies, they still need to follow national guidelines including social distancing measures, getting a swab test if they have symptoms and wearing face coverings where required.”

Electrek : Tesla (TSLA) launches new ‘Energy Plan’ to offer low electricity rate

Tesla (TSLA) has launched its new ‘Tesla Energy Plan’ to offer new low charging tariffs to customers in the UK by creating a virtual power plant with solar and Powerwall.




The company aimed to use its ‘Autobidder’ platform to take advantage of distributed energy assets to provide new services.




Now they are officially launching the ‘Tesla Energy Plan’ in partnership with Octopus Energy.


The company describes the plan on its website:


The Tesla Energy Plan is an energy tariff specifically designed for homes with solar and Powerwall installed, offering 100% clean electricity and savings of up to 75% compared to Big 6 tariffs, based on electricity consumption of 8,000 kWh/year. Electricity bills will differ based on usage.


The idea is similar to what Tesla has done with other electric utilities around the world, like in Vermont with Green Mountain Power, by packaging the advantages of energy storage into a bundle with the electric utility.


With enough Powerwalls on the network, it creates a virtual power plant (VPP) that provides services to the grid and lowers cost for customers.


Tesla writes:


“Tesla’s authorised retail partner, Octopus Energy, administers the plan. By joining the Tesla Energy Plan, you will become part of Tesla’s UK Virtual Power plant. Your Powerwall will be managed by Tesla and connected to a growing network of homes across the UK. The plan is designed to help support the energy needs and stability of the electricity grid–while providing you with ongoing savings through the most competitive rates in the market.”


What is different with the new Tesla Energy Plan in the UK is that it directly targets Tesla vehicle owners and not just people who would want or already have a Powerwall and a solar power system.


In fact, Tesla is offering lower electricity rates in the virtual power plant for vehicle owners:


You are eligible for the £0.08/kWh tariff if you have:
• A Tesla vehicle
• Electric Vehicle Charger installed at your home or are able to have one installed
• Solar panels and Powerwall (Or a home suitable for this)
• Residential electricity supply
You are eligible for the £0.11/kWh tariff if you have:
• Solar panels and Powerwall (Or a home suitable for this)
• Residential electricity supply


Tesla claims that these rates could reduce users electricity bills by” up to 75% compared to Big 6 electricity supplier tariffs.”


The company lists all the benefits of the program:


• Power your home and EV with 100% clean energy
• Reduce your electricity bills
• Support the grid when it needs it most
• Reduce reliance on the grid
• Protect your home from power cuts
• Be part of Tesla´s first UK Virtual Power Plan
• Receive introductory offers


Right now, the ‘Tesla Energy Plan’ is only offered in the UK through retailer Octopus Energy.


Anyone with a Tesla Powerwall and solar power can jump on board the program.

Business of Fashion : Is This the End of Fashion’s Creative ‘Mafia’?

Business of Fashion : What Makes a Mall Work in 2020


FT : Spain and Gibraltar seek last-minute Brexit deal

Spain and Gibraltar seek last-minute Brexit deal
Keeping free movement would give British territory closer ties to EU than when it was part of bloc

Spain and Gibraltar are seeking a last-minute Brexit deal to strengthen ties and preserve free movement across their border as they try to avoid reigniting the centuries-old dispute over the territory’s sovereignty.

Arancha González, Spain’s foreign minister, and Fabian Picardo, Gibraltar chief minister, separately told the Financial Times the two sides could reach a “practical” deal that would limit disruption for thousands of cross-border workers between Spain and the territory when the UK leaves the EU’s single market on December 31. 

Both added that such a deal would not address the sovereignty dispute that has continued since Gibraltar, close to Spain’s southernmost tip, was ceded to Britain in the 1713 Treaty of Utrecht.

The talks are particularly sensitive, not just because they affect the economic prospects of both Gibraltar and much of southern Spain, but because the British overseas territory is in effect seeking closer ties with the EU than when it was part of the bloc.

While Boris Johnson’s government wants a Canada-style free trade Brexit deal for the UK itself, Gibraltar would like to become part of Europe’s Schengen free-movement area and eventually the EU’s customs union — to neither of which it has ever belonged.

The issue is becoming increasingly urgent, with negotiators attempting to thrash out an overall Brexit deal by mid-November and the parallel three-way talks between Spain, Gibraltar and the UK aiming to conclude immediately afterwards.

Mr Picardo said: “It is becoming a tighter and tighter timetable and we need to step up a gear . . . We are ready to deliver a deal so long as it is sovereignty neutral and positive for all sides.”

Ms González warned “political will” was necessary to close the deal, which involves a territory that has inflamed passions on all sides.

In 2017, Michael Howard, a former Conservative party leader, suggested Britain could go to war to resist Spanish efforts to increase its influence over Gibraltar. Spanish prime minister Pedro Sánchez threatened to torpedo Theresa May’s newly minted Brexit deal with the EU over the issue in November 2018.

UK officials remain nervous about signing an agreement that could be depicted as watering down sovereignty or reducing British influence over the territory.

Ms González said: “On the big sovereignty issue, we know where things stand — we will not renounce sovereignty, nor will the UK — but, below that, on the things that matter for everyday life, we know that we can make it smoother, we can make it simpler, we can make it less costly [than a no-deal scenario].”

About 15,000 people cross the Spanish border to work in Gibraltar every day, taking up about half the jobs in the territory. Most of the cross-border workers are Spaniards who have relatively few prospects of finding alternative work in the frontier town of La Linea, where unemployment is close to 40 per cent.


The EU negotiating mandate makes it clear that Gibraltar will not be covered by an EU-UK future-relationship agreement. This places the onus on Madrid and London to come up with a deal, with the EU firmly in Madrid’s corner. 

“On the Spanish side, we will leave no stone unturned to get to a deal,” Ms González said. “If we don’t do this . . . the border of Europe [will be] Gibraltar, with all the consequences that this has, but if we invest in a deal, we can create this space of shared prosperity that we have been talking about for a while.”

Mr Picardo has argued for months that under a Schengen-style arrangement many more Spaniards could find work in Gibraltar and in the broader region.

Negotiating enhanced free movement for a British overseas territory is highly sensitive for the UK government, which champions a much harder Brexit deal for Britain itself.

But British officials have indicated that they would not stand in the way of a mutually beneficial deal between Spain and Gibraltar — despite their concerns about how such an agreement could be perceived.

“We remain committed to finding a solution that supports Gibraltar, its people, and its economy,” the UK government said. “The UK and government of Gibraltar continue technical talks with Spain to deliver the shared priority of continued wellbeing and prosperity of people in the region.”

Mr Picardo said: “There are many issues to resolve but the goodwill is there to make a deal possible . . . People want solutions from us, not rhetoric.”

>>> US Gapping down

Gapping down
In reaction to earnings/guidance
:

  • PCH -6.9%, SWK -6.3%, TECK -6%, DXCM -4.9% (guides Q3 revs above consensus; also Chief Commercial Officer to retire), PFG -4.8%, LLY -4.5%, FIX -4% (also increases dividend slightly), CHGG -3.9%, AMKR -2.9%, ROP -1.9%, QURE -1.9%, NVS -1.4%, CAT -1.2%, PKG -0.8%, TWLO -0.7%, MMM -0.7%, CVLG -0.6%, PII -0.6%

M&A news:

  • AMD -1.8% (AMD to acquire Xilinx in an all-stock transaction valued at $35 bln; also reported earnings)

Other news:

  • CATB -64% (Phase 3 PolarisDMD trial primary endpoint was not met)
  • TPTX -3.9% (prices offering of 4,597,702 shares of its common stock at $87.00 per share)
  • MRTX -2.6% (stock offering)

Analyst comments:

  • PRIM -2.5% (downgraded to Sector Weight from Overweight at KeyBanc Capital Markets)
  • SEDG -2.2% (downgraded to Sell from Neutral at UBS)
  • SPWR -1.9% (downgraded to Sell from Neutral at UBS)
  • RUN -1.6% (downgraded to Sell from Neutral at UBS)
  • RIO -0.9% (downgraded to Sell from Hold at Liberum)
  • WM -0.8% (downgraded to Underperform from Neutral at BofA Securities)
  • JKS -0.7% (downgraded to Sell from Neutral at UBS)