Pret A Manger to buy smaller rival Eat and build up vegan offering
UK sandwich-and-soup chain seeks to take advantage of growing ‘flexitarian’ eating
Pret A Manger, the UK-based food-to-go chain, has finalised a deal to acquire its smaller rival Eat and transform the outlets into “Veggie Prets” in an attempt to take advantage of the growing number of vegan and vegetarian diners.
Pret plans to buy all of Eat’s 94 premises and convert “as many of Eat’s shops as possible” into Veggie Prets, which serve exclusively vegetarian options, the group said on Wednesday.
The value of the deal was not disclosed.
Pret opened its first Veggie Pret in 2016 in central London and has since opened two more in the capital and one in Manchester.
Clive Schlee, chief executive of Pret, said that the acquisition was a chance to “to turbocharge the development of Veggie Pret and put significant resources behind it”.
The first Eat shop was founded in 1996 near Charing Cross railway station. The chain was bought in 2011 by private equity firm Horizon Capital with a plan to triple the size of the business to 300 shops.
However, Eat has struggled with the growing competition in the fast-food sector and reported a loss before tax of £17.2m in the year to end of June 2018. In February Horizon Capital announced that it had appointed advisers Spayne Lindsay to oversee a sale process.
Pret, which was bought for £1.5bn by German investment company JAB Holdings in May last year, hopes to cater to the increasing number of vegan, vegetarian and “flexitarian” diners, who aim to reduce their meat intake.
Spending on plant-based food in the UK jumped by nearly a fifth to £315.2m in the year to April, according to data from Nielsen, while overall spending on meat decreased 2 per cent to £8bn. Research undertaken by supermarket chain Waitrose last year found that 21 per cent of the UK population identify as flexitarian, with the majority in urban areas.
Eat’s shops are predominantly focused in London with a small number in other major cities including Birmingham and Manchester and one at the Gare du Nord in Paris.
Pret has more than 500 shops in nine countries.
Andrew Aylwin, chairman of EAT, said: “Pret is a fantastic brand and this transaction represents a strong strategic fit with benefits for all concerned.”
Judge Rules Qualcomm’s Practices Violate Antitrust Law, Orders Changes
Federal judge sides with FTC in antitrust case, saying Qualcomm’s patent-licensing practices ‘strangled competition’
Qualcomm Inc. QCOM 1.47% unlawfully suppressed competition in the market for cellphone chips and used its dominant position to exact excessive licensing fees, a federal judge ruled in a decision that could challenge the company’s business model and shake up the smartphone industry.
The decision by U.S. District Judge Lucy Koh in San Jose, made public late Tuesday night, sided with the Federal Trade Commission, which brought an antitrust lawsuit against Qualcomm in January 2017. The ruling comes one month after Qualcomm struck a settlement in a separate but similar lawsuit brought by Apple Inc., which agreed to continue paying licensing fees.
Judge Koh found that Qualcomm violated antitrust law, charging unreasonably high royalties for its patents and eliminating rivals. She challenged its practice of collecting billions of dollars by charging royalties on a percentage of a smartphone’s price.
“Qualcomm’s licensing practices have strangled competition” in key parts of the modem chip market for years, “and harmed rivals, OEMs, and end consumers in the process,” the judge wrote. She added that the company’s lead in developing modem chips for smartphones using 5G, the new generation of cellular technology, made it likely that behavior would continue.
The judge ordered that Qualcomm negotiate or renegotiate licensing agreements with customers free of unfair tactics, such as threatening to cut off access to its chips. Qualcomm also must license its patents to rival chip makers at fair and reasonable prices, and can’t sign exclusive supply agreements with smartphone makers like Apple that block rivals from selling chips into devices.
Judge Koh said Qualcomm must submit to monitoring for the next seven years to ensure it abides by the remedies.
Qualcomm didn’t immediately respond to a request for comment late Tuesday.
Qualcomm’s stock had soared after its agreement with Apple on April 16, which allayed investors’ worries that a prolonged legal tussle with a much larger tech titan would undermine the San Diego company’s business model. Qualcomm’s share price rose by more than 50% after the deal, though it has lost some of that ground this month.
The judge’s ruling clouds the outlook for Qualcomm, which long has generated more profit from patent licensing than the sale of its chips. The decision could lower costs for Apple and other smartphone makers that have complained Qualcomm’s pricing tactics allowed it to profit off innovations unrelated to its patents such as new displays or cameras.
Judge Koh’s ruling that Qualcomm must license some of its industry-essential patents to rival chip suppliers—something it previously refused to do—means Qualcomm may have to forgo royalties of 5% of the sales price up to $400 on handsets and instead assess fees based on the $15 to $20 cost of modem chips.
In addition to the FTC case, Qualcomm faces a class-action lawsuit from consumers asserting similar antitrust claims and seeking billions in damages.
The ruling also has U.S. policy implications. The Trump administration has held Qualcomm up as vital to U.S. national interests in competing with China for dominance in 5G technology, which is starting to be rolled out in the world’s cellular networks this year.
The Justice Department took the unusual step of wading into the FTC-Qualcomm case early this month, asking for a hearing on any penalty against Qualcomm in a bid to limit damage to next-generation cellular technology the company is developing. Judge Koh, however, said in her ruling that a hearing on remedies wasn’t necessary.
The FTC case focused on Qualcomm’s policy of selling its chips only to companies that agree to pay licensing fees for a group of cellular-technology patents that Qualcomm owns.
Qualcomm is by far the leading supplier of chips that connect phones to wireless networks. The FTC said that dominance gave Qualcomm the leverage to force companies to pay steeper licensing fees than what Qualcomm’s patents are worth. The commission alleged that Qualcomm’s licensing conditions meant that it got paid even when device makers built phones using another company’s chips, a situation that made rival chips less attractive in the marketplace.
Qualcomm said that, since its early days, it has licensed its patented cellular technologies for an upfront fee and used the revenue to invest in research and development. The company said it didn’t change its approach once it grew into a leading seller of chips.
The cellular market is healthy and competitive, Qualcomm argued, noting that its market share has dropped in recent years. And it said its customers—including Apple, Samsung Electronics Co. and Huawei Technologies Co.—were too big and powerful to be pushed around by Qualcomm.
The same issues were at the heart of the bitter, two-year legal battle between Qualcomm and Apple. The iPhone maker’s settlement with Qualcomm included a six-year licensing agreement that analysts estimate will pay the chip maker $8 to $9 per device in licensing fees.
The FTC decision has the potential to increase demand for modem chips sold by rivals like MediaTek Inc. Those chips for years were less attractive, analysts said, partly because smartphone makers who bought them also had to pay Qualcomm’s high patent royalties.
Intel Corp. , another competitor, last month said it would halt efforts to develop 5G modem chips for smartphones because it couldn’t see a path to profitability. The company has been losing more than $1 billion annually on its modem business, according to a person familiar with the operation.
Judge Koh pointed to numerous suppliers who had exited the modem market because Qualcomm made it difficult for them to win supply agreements with smartphone makers. She said rivals that remain in the market like MediaTek have been hobbled by Qualcomm’s practices.
Qualcomm is likely to appeal Tuesday’s ruling. If it does, the case would go to the Ninth U.S. Circuit Court of Appeals, based in San Francisco.
FT : Deutsche Bank anti-money laundering software hampered by glitch
Systems fault prevented flagging of potentially suspicious payments for nearly a decade
Deutsche Bank employees discovered a software glitch late last year in the lender’s anti-money laundering software that for almost a decade prevented the flagging of some potentially suspicious clients’ payments to law enforcement authorities, it emerged on Wednesday.
The revelation, which was first reported by Süddeutsche Zeitung, comes a day ahead of a potentially tumultuous shareholder meeting, where some investors will call for the ousting of Deutsche Bank chairman Paul Achleitner after the bank’s share price this week fell to a new all-time low.
A Deutsche Bank spokesman said that one of the bank’s several anti-financial crime systems was affected. The software, which was put in place around 2010, was designed to retrospectively to look for suspicious patterns of payments processed by clients of the corporate and investment bank.
“Two of 121 parameters of this IT system were not properly calibrated,” said the bank in a statement issued on Wednesday morning, adding that the fault was discovered by employees of its anti financial crime unit after it started to improve its internal processes last autumn.
“The bank is working on fixing the issue as quickly as possible and is in a close dialogue with regulators about it,” it said.
A person familiar with the matter told the Financial Times that the lender is currently assessing the potential fallout of the software glitch and so know does not know how many, if any, suspicious transactions were not flagged to authorities. As the bank has several overlapping systems in place, it is possible that dubious transactions missed by one were still caught by another.
Last September, German banking watchdog BaFin publicly rebuked Deutsche Bank for poor anti-money laundering systems. In an unprecedented step, the regulator appointed an independent auditor to check the lender’s progress in improving its internal processes for three years.
In February, BaFin widened the auditor’s remit and commissioned him to also look into Deutsche’s role in the Danske Bank Estonia money laundering scandal. Danske is under investigation for processing €200bn of money that flowed through its Estonian unit on behalf of non-resident customers from Russia and other former Soviet states between 2007 and 2015. Deutsche Bank was one of several correspondent banks used by Danske’s Estonian branch, with the German lender clearing more than €160bn of potentially suspicious cross-border payments for the unit.
Deutsche’s chief regulatory officer Sylvie Matherat is likely to be replaced over the coming months, people close to the lender’s supervisory board told the Financial Times.
The former French central bank official has a contract until 2023 but she has been under pressure due to the lender’s ongoing issues in that area. Replacing Ms Matherat “is just a question of when, rather than if”, according to one person close to the supervisory board.
EE pulls Huawei phones from UK 5G launch
Network excludes Chinese group’s handsets as Google pulls Android licence
Britain’s largest mobile phone network has pulled Huawei’s phones from its 5G launch after Google said it would comply with a US ban and stop supplying its Android operating system to the Chinese group.
EE, part of BT, unveiled its plan to launch 5G services next week with 5G phones from Samsung and OnePlus. It had planned to offer Huawei phones but decided to “pause” the launch due to the uncertainty around the use of the Android operating system in the future after Google pulled its licence over the weekend.
Marc Allera, chief executive of EE, said the company had “paused” the launch of Huawei’s 5G phones as it did not have the “surety of service” it needed to offer long term contracts. “We’ve had to hold that back,” he said.
The company will however continue to use Huawei, alongside Ericsson, for the radio equipment for its 5G network despite the political debate around the use of the Chinese company’s equipment and its supply chain issues following the move by US authorities to put it on to the “entity list”.
Mr Allera said that it has tested its 5G network using Huawei technology and has had “no indications” from the UK government to change course. He said that the supply chain restrictions were a concern but that the UK would not benefit from a lengthy delay to 5G launches while the situation is being resolved.
“There are so many scenarios and we don’t have any clarity. But we can’t stand still,” he said. “Nothing is crystal clear but we have to work within that ambiguity,” he said.
The debate around Huawei has overshadowed the launch of 5G services in the UK as networks have lobbied the government not to ban the Chinese company from 5G network builds.
EE has battled to be the first to launch 5G networks against Vodafone which goes live in July. EE will charge a premium for the faster network of around £5 and has partnered with Google and Niantic, the company behind Pokémon Go which has developed a Harry Potter-themed game, for the launch.
It will initially launch 5G in six cities which will rise to 50 by next summer as it looks to upgrade 100 sites a month.
The initial version of 5G will be the equivalent of an enhanced 4G network offering speeds 10 times faster than today’s smartphones. Its full 5G network will be launched in 2022 with ultra low latency services available in 2023.
Mr Allera said that the launch of 4G paved the way for the rise of Netflix and Uber and 5G could have a wider effect. “We take it for granted now but it changed our behaviour. So what new services will rise on this new network? We don’t know, but our job is to build that network,” he said.
Avon Products Nears Sale to Brazil’s Natura Cosmeticos
Deal would mark the end of the independence of an icon of 20th-century business
Avon Products Inc. AVP 1.91% is nearing a sale to Brazil’s Natura Cosmeticos SA, NATU3 0.36% according to people familiar with the matter.
The boards of the two companies have approved the deal, which has been in the works for months, and it is expected to be announced Wednesday—assuming there isn’t a last-minute glitch, one of the people said. The price couldn’t immediately be learned.
London-based Avon’s shares, which are listed in New York, closed at $3.20 Tuesday, giving the company a market value of about $1.4 billion.
The deal would mark the end of the independence of an icon of 20th-century business, which has fallen on hard times as consumer tastes and buying habits have shifted. Avon, known for its sales representatives who peddle its cosmetics door-to-door, has been under pressure from the rise of online beauty sales, which it was late to embrace.
The Wall Street Journal reported in September that Natura and other parties had approached Avon. In March, the Journal reported that Avon directors had discussed a sale to Natura, including a scenario in which Natura would buy the North American business, a separate, private company, in addition to the publicly-traded operation that is based in London and operates elsewhere around the world.
In April, Korean consumer-goods company LG Household & Health Care Ltd. agreed to buy the North America business, controlled by private-equity firm Cerberus Capital Management LP, for $125 million. Cerberus also has a big stake in the international business that Natura is buying.
Natura is Brazil’s largest cosmetics company with its own direct sales force in several Latin American countries and France. It also owns U.K. cosmetics retailer the Body Shop. The company, with a market value of 24.4 billion reais ($6 billion), was founded in 1969 by Luiz Seabra, who is currently co-chairman and forms part of a group of controlling shareholders.
Buying Avon would give Natura a bigger footprint in Brazil and elsewhere in Latin America, Europe and Asia. Given Natura’s ownership of the Body Shop, it would also give Avon a new bricks-and-mortar distribution channel.
U.S. stock futures slipped and European contracts were little changed alongside Asian equities as traders digested the latest U.S.-China confrontations over technology. Treasuries were little changed before minutes from the Federal Reserve’s last policy meeting.
Japanese shares hit session lows and U.S. futures dipped after reports that the Trump administration is deliberating blacklisting China’s surveillance firms. Shares in South Korean and Hong Kong fluctuated, and Australian stocks remained near an 11-year high. They fell in Shanghai. U.S. stocks closed higher Tuesday after the U.S. decided to grant limited relief for consumers and carriers that do business with Huawei Technologies Co.
US After Hours PSTG -18%, JWN -9% indicated lower following earnings
Nikkei +0.05% Hang Seng +0.03% CSI -0.73% Shanghai -0.76% Shenzen -0.92%
Eur$ 1.1154 CNH 6.9331 CNY 6.9061 JPY 110.49 GBP 1.2689 CHF 1.0118 TRY 6.0731 WTI$ 62.52 -0.97%
S&P -0.15% EuroStoxx -0.12% FTSE +0.29% Dax -0.125 SMI -0.09%
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