Elliott Management builds stake in Global Payments in wake of Worldpay deal
Payment processing group’s shares lag behind rivals after investors took umbrage at $24.2bn acquisition
Activist hedge fund Elliott Management has built a sizeable stake in Global Payments as the payment processing group looks to win back investors after its $24.2bn acquisition of Worldpay caused shares to plunge to a 10-year low, said people familiar with the matter.
The investment comes as the Atlanta-based payments group plots its future after buying Worldpay earlier this year in its biggest acquisition to date as it tries to grow its core business of processing payments for merchants.
The three-way, cash-and-shares acquisition with private equity group GTCR and financial technology company Fidelity Information Services came as a surprise to investors. It jarred with pledges from Global Payments’ management including at its 2024 investor day to focus on divestments and returning cash to shareholders.
Elliott’s demands and the size of its stake could not be established.
When the Worldpay deal was announced in April, shares in Global Payments fell 17.5 per cent on the day.
Although the stock has since rallied, its market capitalisation of $19bn means the company is trading at 7 times earnings, among the lowest levels across the industry. Shares in Global Payments jumped 5.2 per cent in after-hours trading on Tuesday.
Conversely, shares in rival FIS, which exited its 45 per cent stake in Worldpay and bought Global Payments’ issuer solutions business for $13.5bn as part of the deal, soared on the day.
In order to fund the deal, Global Payments trimmed its capital returns target between 2025 and 2027 from $7.5bn to $7bn, reversing course on its promise to prioritise share buybacks and dividends. But the company has said it will boost its capital returns from 2028 onwards. It also announced plans to take on $7.7bn worth of debt financing just as fears of an economic slowdown grow.
Elliott cannot block the deal before it closes because the structure of the three-way agreement means it does not require a shareholder vote.
But, as a large investor, the fund could seek to influence how management and the board go about integrating Worldpay into the wider business.
Elliott and Global Payments declined to comment.
Global Payments is among the payment processing companies with legacy technology systems that have been worst hit by competition from software-focused rivals such as Stripe, Adyen and Toast.
As part of a wave of consolidation across the sector in 2019, Global Payments and rivals Fiserv and FIS each struck their own megadeals, spending more than $90bn between them.
But investor sentiment around most of those acquisitions soured, leading several of the deals to be unwound. Fiserv’s $22bn all-stock acquisition of First Data stands out as a rare example of a deal investors welcomed.
Elliott, with $72.7bn of assets under management, is Wall Street’s best-known activist hedge fund, having unveiled high-profile investments at groups including BP and Hewlett Packard Enterprise this year.
The fund, founded by billionaire investor Paul Singer, has invested in a large number of technology stocks, including fintech companies such as PayPal and FIS, according to regulatory filings.
At an investor conference in May, Global Payments’ chief executive Cameron Bready blamed the poor reaction to the Worldpay acquisition on the deal landing in the immediate aftermath of US President Donald Trump’s tariff policy upending markets.
“Certainly it’s not lost on us that the timing, perhaps from a market standpoint, wasn’t ideal,” Bready said.
He added: “There’s not a scenario that I contemplate where we’re not better off by doing this transaction than we were obviously continuing forward with our standalone plan.”
Investors rage over Vietnam’s alleged breach of power contracts
Cuts to renewable energy subsidies risks country’s credibility and power shortages, state utility warns
A dispute between the government of Vietnam and renewable energy developers over subsidies is threatening to disrupt power supplies, a move that could hit manufacturers that have moved to the country in droves from China.
Vietnam has become a critical link in global supply chains in recent years as manufacturers, including Apple, Samsung and Intel, relocated as part of a “China plus one” strategy to hedge their operations against geopolitical risk. But the country’s electricity supply has struggled to keep pace with a boom in demand, leading to blackouts and shortages.
A government decision to abruptly roll back subsidies for renewable energy from January has hit power producers, cutting payments from Vietnam’s state utility EVN for electricity they supply to the grid. Developers allege this is a breach of contracts signed from 2017 for a period of 20 years.
The cancellation of subsidies “may lead to force majeure, meaning that power plants may have to stop supplying electricity to the national grid, seriously affecting the security of power supply in 2025 and the following years”, EVN warned in a letter in May to Vietnam’s ministry of industry and trade seen by the Financial Times.
In a follow-up letter to the ministry in July, EVN reiterated its concerns about impacts to national power supply, “especially in the coming period when the country sets a high economic growth target”.
In the letters, which have not been previously reported, EVN said lower purchasing prices would restrict the developers’ cash flow, which it warned would result in delayed maintenance, missed loan obligations or even bankruptcies. The letters summarised meetings with foreign investors and submissions from business groups.
The withdrawal of the subsidies could harm Vietnam’s appeal as a destination for foreign investment, clouding its economic outlook at the same time that it begins grappling with higher US tariffs.
A total of 173 solar and wind projects, built at a cost of $13bn, would be affected by the policy change. Of those, 75 were backed by foreign investors, mainly from south-east Asia including Acen from the Philippines and Thailand’s Super Energy and B Grimm Power.
“They [Vietnam] have demonstrated without a question that the contract from the main offtaker is not reliable,” said a foreign investor in the solar industry who asked to remain anonymous. “There is not a chance in hell of any serious funds being attracted into Vietnam’s power sector.”
EVN warned the ministry that foreign investors could see the policy change as a breach of their power purchasing agreements and take legal action against the state utility, including international arbitration, if Vietnam persists with the reduced subsidies.
“In case of reduced confidence in the stable investment environment in the energy sector, foreign investors as well as capital suppliers will shift their investment to other countries in the region,” EVN wrote in July.
The dispute underscores the challenges to Vietnam as it seeks to rapidly built out infrastructure to serve the expansion of power-hungry manufacturing sector.
In 2023, factories were hit with rolling blackouts in northern Vietnam during the peak summer season, as a drought affected hydropower. The government has since then accelerated development of power generation and transmission lines.
Last year, it also allowed big companies to purchase power directly from producers rather than rely on the grid, and EVN asked users to be economical to avoid shortages.
The current dispute stems from a 2017 policy under which EVN would buy renewable energy at above-market prices to supply the national grid. The incentives were critical to the rapid expansion of renewables in Vietnam, which now leads south-east Asia in clean energy adoption.
However, Hanoi decided to scrap the favourable pricing scheme after an audit found some of the projects were missing a certificate showing construction had been completed. Energy developers allege this documentation was not required when the purchase agreements were signed. Since January, producers have been paid as little as half of what they received previously for power.
The utility has aked the ministry to apply the rollback retroactively, but only for the period when producers lacked the inspection documentation. This means investors would have to return part of the funds they received for that period, but not for the rest of the contract. The proposal is intended to avoid lawsuits and safeguard Vietnam’s investment reputation.
More than 40 foreign and Vietnamese companies with a combined capacity of 6.38 gigawatts have petitioned the government to review the decision.
“The current situation poses serious and immediate risks to investor confidence, financial stability, and Vietnam’s long-term energy and climate objectives,” the investor group said in a May letter to the government.
EVN and the ministry of industry and trade did not respond to requests for comment. Super Energy and Acen declined to comment. B Grimm did not respond to a request for comment.
How a British private equity firm became a $100bn tech success
Hg spent two decades taking Visma to the brink of London’s biggest tech IPO in years. Can it repeat the trick with bigger, newer funds?
When €19bn software group Visma last month chose London as the venue for its future initial public offering, it signalled a success for the UK capital in more ways than one.
The decision was an obvious boost for the UK’s beleaguered capital markets, where IPOs have become vanishingly rare — let alone ones of multibillion-pound tech companies.
However, it was also a milestone for Visma’s British backer, Hg: the London-headquartered private equity firm that has quietly built itself into a specialist software investor and is on track to surpass $100bn in assets under management this month. That is bigger than better-known US buyout rivals such as Advent and Warburg Pincus and cements its position as the second-biggest British private equity group behind CVC.
Hg offers a rare tale of success in the otherwise underwhelming European technology sector. But it has thrived in an era of cheap money and limited competition in Europe from other technology investors. Now, having attracted a deep well of capital, Hg’s dealmakers must prove they can repeat the trick with its bigger, newer funds in a period where the conditions that facilitated its rise no longer hold.
“They’ve grown up as the pre-eminent software investor in Europe,” said one investor in Hg’s funds. But they noted that selling companies, not buying them, was now the firm’s biggest challenge. “The larger companies get, the harder they become to exit . . . The IPO window has to be open.”
European IPOs have slowed to a trickle over the past three years. Each time dealmakers believe the window of opportunity on the continent’s capital markets is about to reopen, a new hair-trigger abruptly shuts them again. In Frankfurt, IPO hopefuls including Stada and Brainlab pulled their floats at the last minute in recent months. In London, groups raised just £160mn through IPOs in the first half of the year, according to data from Dealogic, the worst showing for the stock exchange in data going back 30 years.
By listing Visma in London, Hg will have to learn to withstand the scrutiny that will come with being the sponsor of one of London’s biggest IPOs in years. That will be all the more intense for the lacklustre performance of recent tech IPOs such as Deliveroo, and the troubled record of some previous private equity-backed offerings, such as Permira’s float of footwear portfolio company Dr Martens.
Hg started out as a more traditional private equity firm, founded in 1990 as Mercury Asset Management and then absorbed into Merrill Lynch Asset Management a few years later. By 2001, when its now senior partner Nic Humphries joined, its partners were newly independent again. But by 2007 when Humphries took over the reins, technology still only accounted for half of the firm’s deals by number.
That was Hg’s sliding doors moment. “We could have chosen to be a multisector, generalist mid-market firm,” Humphries told the Financial Times. But that would have left the firm in “10th or 11th place”, with non-specialist rivals such as EQT and CVC already expanding across Europe.
Others were starting to follow a similar path: Vista in the US was already leading in software, and Thoma Bravo was switching to focus on the then-niche sector. “It was a huge debate as I was proposing to turn half the firm on its head,” Humphries said. He won, turning Hg into a specialist private equity group and alighting on a strategy that would eventually take it to the threshold of $100bn.
Hg declined to comment on the firm’s fundraising activities.
It was Humphries who landed almost two decades ago on Visma, the business that would grow into Hg’s defining portfolio company. The Norwegian payroll and accounting software group was battling a takeover attempt from UK-listed enterprise software group Sage, and Hg was Visma’s white-knight acquirer.
After the traditional private equity hold period of four years, some at Hg pushed for a classic full exit. But Humphries told them, “If this was a Nic Humphries pension fund, I wouldn’t sell one penny.”
That decision to stay invested in Visma has come to be one of the defining characteristics of Hg: its desire to roll over investments in assets by shuffling them between funds rather than cashing out entirely. Now a commonplace private equity technique, at the time it drew mockery. “Their competitors used to make fun of them,” said one of the firm’s advisers, “saying is this one where Hg sells to Hg?”
Private equity dealmakers selling assets between their own funds is controversial because of the possible conflict of interest when they are on both the buy- and sell-side. Some fear that they could put their finger on the scales to drive the price higher or lower — whichever suits them best on that deal — to the detriment of fund investors on one side.
Hg has repeatedly reinvested in Visma. Typically some of the old Hg fund and external investors have cashed out stakes to a newer Hg fund and other new, independent backers.
Multiple Hg fund investors said the involvement of external groups, such as Singapore’s GIC, gave them confidence in the pricing and that they would have been unhappy if Hg had lost out on the upside by exiting Visma too early.
The same fund investors said they kept flocking back to Hg because of its impressive internal rates of return, a measure used by the industry as a proxy for performance.
Between 2008 and 2023, Hg and Thoma Bravo had more funds with first-quartile internal rates of return than other groups studied by research company The Fund Review — although the analysis was based on self-reported and thus incomplete data and does not distinguish between realised and unrealised gains.
Where Hg did encounter pushback from investors was on the amount of cash it was distributing, or more accurately, the lack of it. The Teacher Retirement System of Texas, one of its backers, told Hg about a decade ago that the firm needed to hurry up, and it set about trying to improve its cash distributions to investors — so-called DPI, or distributions relative to paid-in capital.
Most of the British firm’s older active funds, which managed about £7bn at launch, have now distributed at least 2 or 3 times investors’ cash, according to documentation seen by the FT. “They have been phenomenally good at generating DPI,” said one Hg fund investor.
The improvement in Hg’s overall distributions has in part been helped by a clever trick, however. Hg was among the first firms to accelerate distributions by borrowing against some of the assets in their funds, the industry’s use of which has attracted criticism from some investors.
A partner at Hg said the firm’s borrowing to return cash was “a tactic, not a strategy” to ensure timely distributions, that its use was not premeditated and that “if our broader clients ever really don’t want us to use these, then we won’t — their opinion matters the most here”. They added that the firm would only ever use borrowing to return at most a fifth of originally invested cash.
Borrowing, including from Blue Owl Capital and Carlyle’s AlpInvest, has accounted for around five per cent of the firm’s overall distributions in the past decade. But that shoots up to about half for the proceeds that Hg has sent back to investors so far from its 2020 large-cap fund, according to people familiar with the matter.
That leaves open a question about whether the model that worked so well on Hg’s smaller, older funds still holds at the scale at which the group is now operating.
Hg’s newer funds, launched since 2020, are generally much bigger than its older vehicles, together managing almost £25bn at launch. But it has become harder to inconspicuously source gems than when Hg first started investing in European software.
“There’s no question it’s more competitive today than it was,” said one of the firm’s advisers, with Advent and EQT formidable competitors.
As for selling assets, two Hg funds that started deploying five years ago have returned half or less of investors’ cash. They do not have long left to meet Hg’s ambitious target of returning all invested money before a fund’s fifth birthday, though a person familiar with the firm said it was normal to only start selling assets in a fund’s fourth year and that the target was usually met during year five.
The Visma IPO, expected to take place next year, will mark the start of a new chapter for the firm.
Hg explored an IPO for Visma several times in the past but retreated instead to private recapitalisations. Now, however, with the company potentially too big to keep private, the success of its planned listing will test whether Hg can prosper as one of the world’s biggest private equity firms.
“What began as a regional business has become Europe’s largest private equity-backed software company,” Humphries said of Visma. “This proves our ability to scale as industries transform over decades.
“We have a culture and strategy that positions us at the heart of [the] technology-driven workplace transformation,” he added. “That’s what makes the next 25 years just as exciting as the last.”
Proteins in human body reveal warning signs for Alzheimer’s and Parkinson’s
Analysis of large biological dataset uncovers clues that could help detect and combat neurodegenerative conditions
An international probe into the human body’s proteins has revealed new clues about ageing and how to track and treat destructive neurological diseases such as Alzheimer’s and Parkinson’s.
Research on the largest-ever protein library is helping bring humanity “closer than ever to the day when a diagnosis of Alzheimer’s disease stops being a death sentence”, said billionaire philanthropist Bill Gates, who part-funded the work.
The findings published in several Nature Medicine papers on Tuesday are part of an escalating effort to combine big biological datasets with artificial intelligence-enhanced analysis to find early predictors that can help detect and combat notoriously hard-to-treat conditions.
Researchers used the data to identify a signature protein — or biomarker — associated with carriers of a genetic variant known to raise the risk of Alzheimer’s. They also examined how levels of proteins that correlate with cognitive function changed with age, and uncovered patterns in protein level changes for various neurodegenerative conditions.
“The most immediately exciting part is that the patterns of protein abnormality that predict neurodegenerative diseases reveal new insights into the biology of how these conditions develop,” said Charles Marshall, a professor of clinical neurology at Queen Mary University of London.
“This paves the way for drug discovery work that could ultimately lead to new treatments,” he said.
The work is part of an initiative set up in 2023 known as the Global Neurodegeneration Proteomics Consortium (GNPC). It brings together research institutions with the backing of Johnson & Johnson and Gates Ventures, the private office of the Microsoft co-founder.
Simon Lovestone, global head of discovery and translational research at the pharmaceuticals company Johnson & Johnson, said that after decades of gradual incremental progress, the field of neurodegeneration was rapidly accelerating.
“The scale and depth of the dataset, combined with harmonised clinical data, make it an extraordinary resource with the potential to transform how we study, detect and treat neurodegenerative diseases,” he said.
The consortium has built a dataset of about 250mn unique protein measurements and 35,000 biosamples from 23 participant groups in the US and Europe, plus other anonymised clinical information. It is being made available to researchers and other interested parties for free online.
Neurodegenerative diseases are estimated to affect over 50mn people worldwide and the number is projected to double by 2050, driven in part by population ageing. Cases of Alzheimer’s, the most common cause of dementia, and Parkinson’s, which affects movement and other faculties, have increased particularly rapidly compared with other conditions.
The papers highlighted the importance of using large datasets when investigating neurodegenerative diseases, said Amanda Heslegrave, principal research fellow at the UK Dementia Research Institute Biomarker Factory at UCL.
The work exploring the “overlapping biology” between Alzheimer’s and Parkinson’s could boost emerging efforts to jointly tackle the conditions, said Simon Stott, research director for Cure Parkinson’s. The charity is partnering with its counterpart Alzheimer’s Research UK to assess drugs that could be mutually beneficial.
“Biomarkers are crucial for improving not only our understanding of the underlying biology of these diseases, but also for our clinical trials that seek to correct them,” Stott said.
“[They] allow us to monitor patients during clinical trials and determine if the experimental drug being tested is having its desired effect.”
Brussels moves to placate Paris over South American trade deal
EU proposes protections for agriculture as it aims to finalise agreement with Mercosur bloc in December
Brussels has drawn up political “safeguards” to appease France’s farming lobby and win Paris’s backing for a trade deal with the Mercosur bloc of South American economies.
The EU is targeting final approval for December of the Mercosur deal, which would create a shared market of 700mn consumers by combining the EU with Brazil, Argentina, Uruguay and Paraguay.
Two decades in the making, the agreement won preliminary assent last December as part of a renewed push in Brussels to diversify its trade partnerships, fuelled by the election of US President Donald Trump and his protectionist worldview.
However, France has said it would oppose the deal, which still needs final approval from the EU’s 27 member states, if it did not include safeguards to ease the concerns of its politically powerful agricultural sector. It threatened to lead a blocking coalition that would oppose a final signature.
That demand for safeguards will be answered in a formal proposal set to be shared with EU capitals, four officials familiar with the negotiations told the Financial Times. This would include a “political protocol” that spells out “circuit breakers” to protect EU producers should imports of some products breach certain limits.
The safeguards would apply to the volume and prices of beef, chicken and sugar, two of the people said, in a sop to Paris that could be used to placate French farmers, who are concerned about unfair competition.
The deal can be blocked by a coalition of four or more EU states representing at least 35 per cent of the EU’s population, which gives oversized importance to the position of France, the EU’s second-largest member.
“There are many member states which are not happy with the agricultural part of the Mercosur agreement. That’s why they need a safeguard clause that is credible,” said one of the people.
Two officials in Mercosur countries told the FT that they were aware of discussions on new agricultural proposals from Brussels related to the agreement but had no details.
The concession to secure France’s support for the deal would enable the commission, which runs trade policy on behalf of the EU’s member states, to formally agree the deal at a summit to mark the end of the Brazilian presidency of Mercosur in December, the officials told the FT.
However, any additional limits on farm exports from Mercosur countries are likely to face strong resistance from South American nations. “We have not seen a proposal but new safeguards would affect the balance of the agreement,” said one senior diplomat from a Mercosur nation. “They can label it however they want but, if it affects trade flows, we would consider it a reopening of the talks.”
Brazil’s President Luiz Inácio Lula da Silva has long championed the Mercosur trade deal with the EU, and tried to convince President Emmanuel Macron during a visit to France last month to drop his country’s opposition.
The commission declined to comment.
France, which has been backed in its criticism of the deal by Poland, Austria and other countries that fear for their agricultural sectors, has claimed it would cause environmental damage and subject EU farmers to unfair competition.
One quarter of British households are late paying energy bills
Industry figures show sharp rise in non-payment, despite wholesale prices falling in recent years
Almost one in four British households are late paying their energy bills, according to new figures that shows how families are struggling to pay despite global prices falling over the past two years.
Some 24 per cent of households are currently past their energy bill payment due date, figures compiled by consultancy Baringa show.
This has risen from 18 per cent in December 2024, though is lower than the rate of 29 per cent who were behind in May 2022, after wholesale prices surged in the wake of Russia’s full-scale invasion of Ukraine.
It found that the average debtor who does not have a repayment plan in place owes £1,700. Some 71 per cent of domestic energy debt is from households who do not have repayment plans, while a total of £2.3bn of energy debt is now more than a year overdue, it added.
Baringa’s analysis is based on its access to debt books of seven major energy suppliers covering about half of British households. Partner James Cooper said the debt levels were creating a “downward spiral” for the industry.
“It’s critical that more urgency and focus is placed on finding solutions to the challenge,” he said. “We need a better balance that both cures the debt challenge and helps prevent further debt build up for households.”
Baringa analysis contrasts with regulator Ofgem’s approach towards the way it calculates energy debt.
Ofgem said it only classed energy debt as payments that were at least 90 days late, rather than a single missed payment. Under its approach, only 6.5 per cent of households were in debt, Ofgem said.
Baringa argued that its approach reflected a more accurate picture of household debt.
The figures are likely to raise alarm about the health of the market several years after the surge in wholesale energy prices, starting in late 2021, that led to the collapse of several suppliers and saw the government eventually step in to offer blanket financial support for households.
Although government support was gradually unwound as prices eased, typical household energy bills are still hundreds of pounds higher than before the energy crisis.
Energy suppliers have also signed up to tougher rules that dictate when they are allowed to forcibly install pre-payment meters, after a temporary ban imposed following concerns about the targeting of vulnerable people.
Andrew Ward, chief executive of Scottish Power’s household energy supply business, added: “We’re approaching a winter with debts increasing every day and no solution.”
Ofgem allows companies to recoup a level of bad debts from all customers’ energy bills. Baringa’s analysis found average customers are paying £64.67 in their annual energy bills to cover the costs of bad debt, compared with roughly £40 in the summer of 2022.
Under their code of practice signed in 2023, the industry must not force pre-payment meters on homes with children under two years of age or people with severe health issues.
Philippe Commaret, UK managing director for EDF, said the policies were “absolutely fair and protections should remain for those who are vulnerable but do not want to pay”.
But he warned it was “creating loopholes for those who are not vulnerable but do not want to pay, which is increasing everyone else’s bills including for those who really are vulnerable.”
Ofgem said: “We’ve introduced tougher rules to make sure energy companies do more to spot the signs when a customer may be struggling and step in quickly to offer support, including offering affordable payment plans or providing emergency credit to reduce the risk of self-disconnection.”
It added: “We’re working with government and industry on plans to introduce a new debt relief scheme that could serve as a lifeline for millions of households struggling with unmanageable debts and to reform the rules around how people in debt are supported.”
After Hours Summary: BHF +8.4% higher on WSJ report that Aquarian in talks to acquire BHF; VCTR +5.2% to join S&P SmallCap 600; HWC -1.6%, JBHT -1.2% lower on earnings
After Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: PNFP +1.6%, OMC +1%, FULT +0.3%
Companies trading higher in after hours in reaction to news: BHF +8.4% (Aquarian in talks to acquire BHF, according to WSJ), GPN +5.4% (Elliott Mgmt builds stake in wake of Worldpay deal, according to FT.com), VCTR +5.2% (to join S&P SmallCap 600), TLS +2.2% (Xacta achieves FedRAMPauthorization at highest level), JBSS +1.9% (declares $0.60/sh special dividend), NYMT +1.5% (acquires the remaining 50% ownership interest in Constructive Loans), BDX +0.9% (issues voluntary recall notice), DOV +0.5% (partnership with Bottomline), AMCR +0.4% (files mixed securities shelf offering), KBDC +0.1% (invests in SG Credit Partners), CYH +0.1% (CMS proposes new rules for hospital payments)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: KMTS -2.4%, HWC -1.6%, JBHT -1.2%
Companies trading lower in after hours in reaction to news: HPP -6.2% (stock offering by selling shareholders), KALV -4.4% (UK MHRA approves EKTERLY), AVAV -1.6% (to join S&P MidCap 400), POWL -0.5% (to acquire Remsdaq), CACI -0.2% (chairman passes away; names new chair), FARO -0.2% (FARO shareholders approve acquisition by AME), FTI -0.1% (awarded a significant contract by Equinor), AXL -0.1% (shareholders approve proposed combination)
Donald Trump asked Volodymyr Zelenskyy if Ukraine could hit Moscow, say people briefed on call
US president encouraged Ukrainian leader to step up deep strikes on Russia
Donald Trump has privately encouraged Ukraine to step up deep strikes on Russian territory, even asking Volodymyr Zelenskyy whether he could strike Moscow if the US provided long-range weapons, according to people briefed on the discussions.
The conversation, which took place during the July 4 call between the US and Ukrainian leaders, marks a sharp departure from Trump’s previous stance on Russia’s war and his campaign promise to end US involvement in foreign conflicts.
While it remains unclear whether Washington will deliver such weapons, the discussion underscores Trump’s deepening frustration with Russian President Vladimir Putin’s refusal to engage in ceasefire talks proposed by the US president, who once vowed to resolve the war in a day.
The conversation with Zelenskyy on July 4 was precipitated by Trump’s call with Putin a day earlier, which the US president described as “bad”.
Two people familiar with the conversation between Trump and Zelenskyy said the US president had asked his Ukrainian counterpart whether he could hit military targets deep inside Russia if he provided weapons capable of doing so.
“Volodymyr, can you hit Moscow? . . . Can you hit St Petersburg too?” Trump asked on the call, according to the people.
They said Zelenskyy replied: “Absolutely. We can if you give us the weapons.”
Trump signalled his backing for the idea, describing the strategy as intended to “make them [Russians] feel the pain” and force the Kremlin to the negotiating table, according to the two people briefed on the call.
A western official, who had been informed of the call, said the conversation reflected a growing desire among Ukraine’s western partners to supply long-range weapons capable of “bringing the war to Muscovites” — a sentiment echoed privately by American officials in recent weeks.
The White House and Ukraine’s presidential office did not respond to requests for comment.
The discussion between Trump and Zelenskyy led to a list of potential weapons for Kyiv being shared by the US side with the Ukrainian president in Rome last week, according to three people with knowledge of it.
During a meeting with US defence officials and intermediaries from Nato governments, Zelenskyy received a list of long-range strike systems that potentially could be made available to Ukraine via third-party transfers.
The arrangement would allow Trump to circumvent the current congressional freeze on direct US military aid by authorising weapons sales to European allies, who would then pass the systems on to Kyiv.
The Ukrainians had asked for Tomahawk missiles, precision strike cruise missiles with a range of around 1,600km. But the Trump administration — like the Biden administration — had concerns about Ukraine’s lack of restraint, said a person familiar with the list shared with Zelenskyy.
During a meeting in the Oval Office with Nato secretary-general Mark Rutte on Monday, Trump announced a plan to provide Ukraine with Patriot air defence systems and interceptor missiles but did not disclose any shipments of other weapons systems.
The US president said he was “very unhappy” with Russia and its president over the lack of progress towards a deal to end its war. “I’m disappointed in President [Vladimir] Putin, because I thought we would have had a deal two months ago.”
Dmitry Medvedev, deputy chair of Russia’s security council and a former stand-in president for Putin, shrugged off Trump’s decision. “Trump issued a theatrical ultimatum to the Kremlin . . . Russia didn’t care,” Medvedev wrote on X.
Two of the people briefed on the call between Trump and Zelenskyy and familiar with US-Ukraine discussions on military strategy said that one weapon discussed was the Army Tactical Missile System, or Atacms.
Ukraine has used US-supplied Atacms missiles with a range of up to 300km (186 miles) to strike targets in Russian-occupied territory and, in some cases, deeper inside Russia. The Atacms can be launched from HIMARS rocket systems that the Biden administration delivered to Ukraine. But they do not fly far enough to reach Moscow or St Petersburg.
Russia has repeatedly threatened to attack western targets in response to western supplies of advanced weaponry to Ukraine, but has yet to do so.
After Ukraine first used the Atacms system to strike military targets inside Russian sovereign territory last November, Putin said the war had “taken on elements of a global nature” and responded by test-firing the Oreshnik, an experimental intermediate-range missile, on the city of Dnipro.
The Russian president said Moscow was entitled to “use our weaponry against military facilities of countries that allow their weapons to be used against our facilities, and in the case the aggressive action escalates, we will respond just as decisively and symmetrically”.
Following the Atacms strikes, Russia also published an updated version of its nuclear doctrine that lowered the threshold for potential use. The changes could envision a Russian nuclear first strike against the US, UK and France — Nato’s three nuclear powers — in response to Ukraine’s strikes on Russia with weapons such as the Atacms and Storm Shadow missiles.
Washington has at times warned Ukraine off using them to strike deep inside Russia, but those constraints appear to be loosening now.
Ukraine has mostly used its own domestically-produced long-range drones to strike military targets deep inside Russia that help fuel its war machine.
Its most audacious attack came in early June, when Ukraine’s SBU security service launched swarms of suicide drones hidden inside prefabricated homes that it smuggled into Russia and attacked the country’s fleet of strategic bombers. The planes had been used in Moscow’s bombardments of Ukrainian cities throughout the war. At least 12 aircraft were heavily damaged or destroyed in what Kyiv dubbed Operation Spiderweb.