- Sir Philip Green files an application to appoint administrators, show court records
- Mike Ashley’s Frasers Group £50m loan rejected by stricken Arcadia
- FTSE 100 flat as European markets head for best month ever
- Lloyds Bank poaches HSBC’s Charlie Nunn to be new boss
- Moderna shares set to soar as covid vaccine maker plans regulatory submission
- Billionaire Issa Brothers swoop on ailing Caffè Nero
- S&P Global buys London-based IHS Markit in $44bn deal
- Ambrose Evans Pritchard: We are dangerously close to repeating the austerity errors of 2010
- Sign up here for our daily business briefing newsletter
Sir Philip Green's stricken retail empire has crashed into administration, leaving thousands of pension savers at risk of a brutal hit to their retirement income and putting 13,000 jobs at risk.
Administrator Deloitte said that there will be no immediate redundancies and trading will continue.
Experts warned that an estimated 10,000 savers could lose up to a fifth of their income if Arcadia goes bust and the pension scheme is forced into an industry lifeboat.
The collapse could spark a bidding war for the firm's most valuable brands. Sir Philip's longtime rival Mike Ashley is thought likely to make an offer, with Arcadia sources claiming that online retailers Boohoo and Asos are also interested in parts of the stricken company.
Administrators were waiting in the wings after the retailer failed to secure an emergency loan of £30m. The firm also rejected a £50m lifeline from Mr Ashley on Monday afternoon.
We're wrapping up the blog for the day, while still expecting Arcadia to announce it has gone into administration soon. Keep your eyes peeled on the website for any further updates.
Otherwise, here are some of our top stories of the day:
- Billionaire Issa Brothers swoop on ailing Caffè Nero
- Moderna shares jump as Covid vaccine maker plans regulatory submission
- S&P Global buys London-based IHS Markit in $44bn deal
- Lloyds Bank beefs up digital credentials with hire of Charlie Nunn
- Chinese North Sea oil giant faces US blacklist
Thank you very much for following, and Louis will be back in the morning!
GlobalData: Break up of Arcadia’s brands is the only way to survive
Senior retail analyst at data and analytics company GlobalData, Chloe Collins, said:
“Arcadia’s brands have been losing relevance for years and have suffered from a lack of innovation and investment - especially in digital, with this weakness being particularly exposed during the pandemic. The group’s downfall has been a long time coming, and the best chance of survival for any of its brands is for them to be acquired separately, with each given the attention and investment needed to stand out in the competitive UK market."
- TopShop and Topman will attract the most interest from buyers, though they have lost market share to agile retailers like Boohoo and Asos.
- The Boohoo group will likely be keen to snap them up, but that would likely result in the closure of stores.
- Next and M&S have shown interest in bidding for some brands, particularly Dorothy Perkins and Burton which would appeal most to their demographics.
- Wallis and Evans could find themselves without a buyer.
Chinese North Sea oil giant faces US blacklist
Chinese state-owned oil giant CNOOC faces being put on a blacklist by the Trump administration over alleged military links.
My colleague Rachel Millard reports:
A Chinese state-owned oil giant whose subsidiaries are responsible for more than a quarter of the UK’s annual oil production is set to be blacklisted in the US over alleged military links, according to reports.
The Trump administration is poised to add China National Offshore Oil Corp (CNOOC) to a list of companies designated as owned or controlled by the Chinese military, Reuters reported.
Trump signed an executive order this month banning US investors from buying securities in those on the list - which includes Hikvision, China Telecom and China Mobile - from November 2021.
Citi's Jane Fraser warns of 'K-shaped' Covid recovery
Citi's incoming chief executive Jane Fraser, Wall Street's first ever female boss, has said she fears a "K-shaped recovery" coming out of the coronavirus crisis.
My colleague Lucy Burton reports:
The model, an alternative to the “V-shaped recovery” where the economy as a whole starts growing again, is based on the idea that the wealthy will quickly recover while those who earn less will bear the brunt of redundancies.
"We're certainly seeing it in consumer [banking]: you've got the 'haves' and you've got those who are really struggling," she told Bloomberg.
Ms Fraser will take charge of the $107bn (£84bn) bank next February, a major milestone for Wall Street which has been criticised for years for having an overly macho culture and failing to promote enough women to senior positions.
Sir Philip Green applies to court to call in administrators
Breaking - our retail correspondent Laura Onita reports that Sir Philip Green has filed an application to appoint administrators for one of his businesses, according to new court records.
Others named on the application are Ian Grabiner, chief executive of Arcadia, and Siobhan Forey, HR director of Arcadia. The name of the company being placed into administration has not yet been released.
Call for pensions regulator to protect Arcadia staff
Stephen Timms, Chair of the Work and Pensions Committee, has written to the Pensions Regulator about protecting the interests of Arcadia's pension scheme members.
He asked for clarity on the status of the £385m package previously agreed by the regulator, Arcadia and the group's owner Lady Green, as well as what is being done to protect members from pension scammers.
Mr Timms said:
"This is a crucial moment for the Regulator to show that it has learned the lessons of previous corporate collapses, such as those of BHS and British Steel."
"While staff will be worried about possible job losses, the Pensions Regulator must take firm and decisive action to protect them from fraudsters".
- Read the letter here
- Read more coverage on Arcadia from our reporters: Fears Arcadia could be ‘Carillion of retail’ with suppliers left on the hook for £250m
Unilever completes Dutch-UK merger
Unilever - the FTSE 100 owner of Marmite and Ben & Jerry's - confirmed it has moved its legal base to London, finally abandoning its dual-headed Dutch-UK structure after almost a century.
It had asked the High Court earlier this month to approve the unification, despite the threat of a departure tax from the Netherlands.
My colleague Hannah Uttley reports:
Analysts at Barclays said the success of unification was a credit to chief executive Alan Jope after unsuccessful attempts by predecessors.
In 2018, it was forced into an embarrassing U-turn on a previous proposal to switch its HQ from London to Rotterdam following widespread shareholder anger.
Nils Anderson, chairman of Unilever, said: "This is an important day for Unilever and we would like to thank our shareholders for their strong support of our unification proposals, which give us greater flexibility for strategic portfolio change, remove complexity and further improve governance".
Mike Ashley is after Philip Green's high street crown, writes Ben Marlow
Sports Direct tycoon Mike Ashley is a longtime pretender to the retail throne, but there is no guarantee his tactics to topple Philip Green will pay off, writes City commentator Ben Marlow.
Sign up to Ben's City Intelligence newsletter here for more incisive business analysis delivered straight to your inbox every weekday.
Arcadia rejects lifeline from Mike Ashley
Sir Philip Green's retail empire has rejected a £50m lifeline from Mike Ashley's Frasers after a 24-hour ultimatum expired, with the future of 13,000 employees hanging in the balance.
Frasers said in a statement that its unsecured loan was turned down without "any reasons" and "any engagement" from Arcadia.
Chris Wootton, the finance chief, wrote to Arcadia's board on Sunday afternoon to put forward the cash after Sir Philip failed to secure £30m in emergency funding to keep the business afloat. He urged the retailer to "carefully consider" the offer during a 24-hour window.
Sources close to the process said Arcadia could formally appoint administrators this afternoon.
WPP launches £100m bid to seize control of its Australia and New Zealand arms
Advertising giant WPP has launched a £100m bid to seize control of its Australia and New Zealand arms.
My colleague Ben Woods reports:
The FTSE 100 firm behind a vast web of advertising agencies already owns 61.5pc of WPP AUNZ, but wants to increase its stake to 100pc to help simplify the business.
The cash offer is worth $0.55 Australian cents per share, a 34pc premium of WPP AUNZ's closing share price on Friday.
However, WPP said the offer had not been put to the WPP AUNZ shareholders and there was no certainty the deal would go through.
Chief executive Mark Read has been attempting to jump start growth at the £9bn company through a colossal restructuring.
He has merged agencies and 180 offices, alongside selling WPP's £3.5bn controlling stake in data company Kantar.
WPP announced in October that revenues fell by 7.6pc to £2.4bn on a like-for-like basis for the three months to Sep 30 - better than the 15.1pc drop in the second quarter.
BAE wins £2.4bn munitions contract from MoD
BAE Systems has agreed a 15-year, £2.4bn contract with the Ministry of Defence to supply the UK military with ammunition ranging from rifle bullets to tank shells.
My colleague Alan Tovey reports:
Under the agreement, the blue-chip defence business will produce 39 different types of munitions, and each year will make 70m bullets, 140,000 large and medium-calibre rounds and 75,000 mortars.
The Next Generation Munitions Solution replaces a similar long-term contract held by BAE and the company said the new agreement would safeguard 1,260 jobs across the company at five UK sites.
A further 1,500 roles in the defence company’s supply chain will also be maintained. Starting in 2023, the new contract will deliver about half of all the MoD’s munitions requirements.
BAE aims to create £400m of economies to the MoD over the life of the contract, with the company incentivised to receive a share of savings.
Petropavlovsk names new chief executive
Troubled FTSE 250 gold miner Petropavlovsk has hired Denis Alexandrov as chief executive as it seeks to stabilise the business following boardroom turmoil.
My colleague Rachel Millard reports:
He takes over from interim boss Maxim Meshcheryakov who has been in charge since August following the ousting of long-serving chief executive Dr Pavel Maslovskiy and several other directors in a shareholder vote.
The new board has hired KPMG to investigate past deals between Petropavlovsk and related parties. Meanwhile, Mr Meshcheryakov is under investigation in Russia over claims he forced his way into the company’s office, and former deputy chief executive Alya Samokhvalova is suing the company for unfair dismissal.
Mr Alexandrov is described as a “highly experienced” executive in mining and natural resources. He was chief executive of Russian gold producer Highland Gold Mining.
Pound holds moderate gains against dollar
The pound remains mildly higher against the dollar on Brexit hopes and a slight general weakening for the US currency. Some more moves for sterling might be expected this week, with a Brexit outcome (apparently) looming – though we have heard that plenty of times before.
G4S bidder extends deadline amid tepid interest
A “derisory” level of shareholder acceptances for GardaWorld’s 190p-a-share hostile bid for G4S has driven the Canadian suitor extend its offer for a second time.
My colleague Alan Tovey reports:
GardaWorld has given investors in FTSE 250 security company G4S until December 16 to reconsider its offer, which values the company at £3bn.
The extension comes after just 0.17pc of shareholders accepted the offer - just 0.01pc more than backed it at the previous deadline on November 8, which was then extended by another three weeks.
G4S has dismissed its smaller rival’s approach and advised investors to do the same.
Issa brothers launch bid for Caffè Nero
The Issa brothers, the billionaire owners of the UK’s largest petrol forecourt operator, have launched a takeover bid for beleaguered coffee shop chain Caffe Nero.
My colleague Hannah Uttley reports:
Mohsin and Zuber Issa, who agreed to buy Asda for £6.8bn in September, are understood to have written to Caffe Nero’s founder and owner Gerry Ford over the weekend with a takeover proposal, Sky News reported.
A source close to EG Group said the offer was a significant improvement on creditors’ plans to launch a company voluntary arrangement, an insolvency procedure that would enable it to negotiate rent deals with landlords and shut shops.
Under the Issa brothers’ offer, it is understood landlords would be fully reimbursed for any arrears owed by Caffe Nero during the pandemic and the deal would be funded with existing cash reserves rather than debt.
Jacobs buys 65pc stae in PA Consulting for £1.8bn
Jacobs, the American technical professional services company, has bought a 65pc stake in London-headquartered PA Consulting for £1.825bn.
The remaining 35pc will be held by PA’s employees, following the exit of Carlyle Group, the current majority shareholder.
Jacobs said the deal:
Transforms PA to a global player at scale; accelerating their growth plan through access to Jacobs client base and global platform, particularly in the US.
Its chair and chief executive, Steve Demetriou, added:
Our partnership with PA forms a unique offering in the market that combines strategic front-end consulting and deep domain knowledge across key sectors with next generation science and technology expertise.
The deal is expected to be completed early next year, Jacobs said.
Moderna jumps after unveiling plan to gain vaccine clearance
Shares in pharma group Moderna have popped 10pc in pre-market trading this morning, after the company announced plans to request clearance for its coronavirus vaccine in the US and Europe.
The announcement follows a new analysis, which showed the treatment was effective against Covid-19 and had no serious safety problems.
The new results put the Cambridge, Massachusetts-based biotechnology company on track to have one of the first Covid-19 vaccines to be cleared in the U.S. A similar vaccine from Pfizer Inc. and BioNTech SE was submitted to US regulators earlier this month and is scheduled to be reviewed ahead of Moderna’s shot.
S&P Global and IHS Markit tie-up confirmed
The $44bn takeover of IHS Markit by S&P Global (see 8:17am post) has been confirmed.
Announcing the deal, the groups said:
The transaction brings together two world-class organizations, a unique portfolio of highly complementary assets in attractive markets and cutting-edge innovation and technology capability to accelerate growth and enhance value creation.
Douglas Peterson, president and chief executive of S&P Global, will be CEO of the combined company. Lanca Uggla, chairman and chief executive of IHS Markit, will stay on as an adviser for a year after the transaction closes.
Mr Peterson said:
Through this exciting combination, we are able to better serve our markets and customers by creating new value and insights… We are confident that the strengths of S&P Global and IHS Markit will enable meaningful growth and create attractive value for all stakeholders. We have been impressed by the IHS Markit team and look forward to welcoming the talented IHS Markit employees to S&P Global.
JD Sports pops on second thoughts over Debenhams takeover
JD Sports is leading risers on the FTSE 100 today, after reports over the weekend that the retailer is having second thoughts about its plans to take over stricken department stores Debenhams amid Arcadia’s looming collapse.
As my colleague Oliver Gill reported on Saturday:
JD Sports is backing away from talks with Debenhams administrators after an exclusivity period ended without an agreement to salvage the department store.
Arcadia is the department store’s biggest concession holder and its potential collapse next week has cast a shadow over discussions to save Debenhams, according to City sources.
Despite JD Sports no longer being in exclusive discussions, sources close to the FTSE 100 retailer insisted it had not withdrawn completely from the process.
- Read more: JD Sports backs away from Debenhams talks
Shore Capital’s analysts wrote the situation with Arcadia “is, in our view, integral to the Debenhams outcome”.
Taxman could be left short-changed if Arcadia collapses today
Taxpayers could miss out on claiming millions of pounds if Sir Philip Green’s Arcadia Group collapses today.
My colleague Simon Foy reports:
A move into administration on Nov 30 could prove controversial as it comes a day before the reintroduction of Crown preference, abolished in 2003, which puts the HMRC at the top of the queue for taxes owed by bust companies such as VAT and employee PAYE.
The reintroduction of Crown preference means taxes collected by collapsed companies must be paid off before any funds can be repaid to banks that have given loans backed by a floating charge over assets such as cash or stock.
Sectors such as retail, automotive, agriculture and construction are expected to be some of the most severely affected by the changes, along with firms that have built up tax liabilities after reaching Time to Pay agreements with HMRC during the pandemic.
By a quirk of timing, Arcadia’s potential administration could coincide with the rule change, as first reported by The Telegraph.
Amanda Brooks named lead UK-US trade negotiator in reshuffle
Amanda Brooks has been named as the UK’s new lead negotiator on the US trade deal as Joe Biden prepares to take control of the White House.
Ms Brooks will take over from Oliver Griffiths, who is moving to become the first chief executive of the Trade Remedies Authority, a new body aimed at protecting British industries from unfair trade practices.
She had previously been interim director-general for Trade Relations and Implementation.
The Department for Trade also announced Graham Zebedee will be the UK’s new chief negotiator to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, after finishing his work as lead on the UK/Japan trade talks, and that Jo Crellin will take Ms Brooks’ former role.
International trade secretary Liz Truss said:
With these appointments, we are bringing top quality expertise and experience to key roles as we strike new trade deals and re-establish the UK as an independent trading nation.
Households paid down debts ahead of second lockdown
UK households paid down their debts by a net £0.6bn in October, with credit remaining weak ahead of England’s second lockdown.
The reduction was driven by credit-card spending, with £0.4bn of such debts repaid, similar to September’s levels. The BOE said:
Since the beginning of March, households have repaid £15.6bn of consumer credit. As a result, the annual growth rate fell further in October to -5.6pc, a new series low since it began in 1994.
Mortgage approvals reach fresh 13-year high
UK home purchase mortgage approvals rose to 97.5k last month, marking a fresh post-financial-crisis record.
The jump on September’s reading of 92.1k neatly cleared economists’ expectations for an 84k reading.
The Bank of England, which gathered the data, said:
This was the highest number of approvals since September 2007, 33pc higher than approvals in February 2020 and around 10 times higher than the trough of 9,400 approvals in May. Approvals for remortgage (which only capture remortgaging with a different lender) were broadly unchanged in October, at 32,900, and remain around 40pc lower than in February 2020.
Tokyo Stock Exchange boss steps down over system failure
The head of the Tokyo Stock Exchange has resigned after an unprecedented full-day outage last month.
Akira Kiyota, the head of Japan Exchange Group Inc, which owns the exchange, will also take over as head of the TSE, replacing Koichiro Miyahara who stepped down on Monday as president and chief executive.
Miyahara appears to be the first CEO to resign following a run of outages at major exchanges in Australia, Europe and New Zealand this year. Japan’s financial regulator ordered the TSE and Japan Exchange Group to improve practices at the bourse.
Pets at Home buys Vet Connection for £15m
Pets at Home shares have risen slightly after the retailer announced it has acquired The Vet Connection, Britain’s biggest independent veterinary “telehealth” provider.
The deal, at £15m in cash, is being financed through PAH’s cash reserves. The FTSE 250 group said TVC has an “established and successful track record” of providing round-the-clock remote veterinary health advice, conducting over 90,000 consultation a year.
Peter Pritchard, chief executive of the pet supplies retailer, said:
The acquisition of TVC marks an important next step in the development of our digital capabilities providing trusted advice and even more convenient pet care services.
Shore Capital’s Greg Lawless said the purchase looked like a “sensible bolt-on acquisition” against the pandemic backdrop, adding:
This acquisition will further enhance Pets’ capabilities and allow them given the scale of their vets business to further develop their digital capabilities.
Here are some of the day’s top stories from the Telegraph Money team:
- More than a million older workers delay retirement due to pandemic: More than a million older workers have delayed their retirement because of the damage the pandemic has wrought on their finances, new research has suggested.
- Relief for first-time buyers as 90pc mortgages trickle back: First-time buyers have been given fresh hope they will be able to get on to the property ladder as banks have slowly relaunched 90pc mortgages.
- How to make sense of the contradictory house price headlines: How can house prices be both up and down at the same time? Here's what you need to know about the numbers.
HSBC names Nuno Matos as new wealth and personal banking boss
Following news that senior executive Charlie Nunn has been poached by rival Lloyds (see 7:50am post), HSBC has named Nuno Matos as its incoming chief executive of wealth and personal banking, the role Mr Nunn is leaving.
Mr Matos is currently chief executive of HSBC’s non-ring-fenced UK bank, and CEO of HSBC Europe.
Kevin Martin, the chief operating officer of the wealth unit, will act as CEO until the move is complete.
S&P Global in talks over $44bn IHS Markit takeover – Bloomberg
Ratings giant S&P Global is in “advanced talks” to buy IHS Markit for $44bn, merging two of Wall Street’s top data providers in one of the year’s biggest deals, Bloomberg reports.
The news service says:
An announcement could come as early as Monday, according to a person familiar with the matter, declining to be identified because the information isn’t public. Representatives for S&P Global and IHS Markit didn’t immediately respond to requests for comment.
The tie-up will draw comparisons to the London Stock Exchange Group Plc’s $27 billion agreement last year to acquire financial data provider Refinitiv. Shifts in how traders and investors process information have created opportunities for huge firms to seize on, if they can convince authorities to allow it. The LSE is still negotiating with European Union regulators over the deal.
Regular readers will best know London-based IHS Markit for its monthly purchasing managers’ index (PMI) surveys, which are among the closest-watched and quickest indicators of private sector activity.
Frasers Group confirms £50m loan offer to Arcadia
Mike Ashley’s Frasers Group has confirmed that is offered Arcadia a loan of up to £50m, as Sir Philip Green’s retail empire teeters on the brink of collapse.
In a statement, Frasers – which owns Sports Direct – said:
The Company can confirm that it has made an offer and provided draft terms to the Arcadia Group for a loan of up to £50 million and is now awaiting a substantive response.
Should the Company and the Arcadia Group’s efforts to agree an emergency funding package fail and the Arcadia Group enter into administration, the Company would be interested in participating in any sale process.
A swathe of reports this morning say Arcadia could call in administrators as soon as today, as the group – which owns brands including Burton and Topshop – faces going bust, with 13,000 jobs at risk.
As my colleagues reported yesterday:
The company’s pension fund has a blackhole that could be as large as £350m. Additionally, around £250m worth of invoices from suppliers could go unpaid should Arcadia collapse, according to estimates from insurance firm Nimbla.
On Sunday, Sir Philip faced calls from Stephen Timms, the work and pensions committee chair, and from the Labour Party to use his personal fortune to meet the pension shortfall, as he belatedly did after BHS went bust in 2016.
Lloyds names HSBC’s Charlie Nunn as next chief executive
Lloyds Banking Group has poached HSBC’s Charlie Nunn as its new chief executive.
Mr Nunn, currently chief executive of wealth and personal banking at HSBC, will take over from current CEO António Horta-Osório at some point in the coming year, Lloyds said. A former employee of Accenture and McKinsey, he joined HSBC in 2011.
Mr Horta-Osório said:
Charlie will find a warm welcome at Lloyds Banking Group and a deep commitment from all of our people to deliver on our purpose and to help Britain recover. I am sure that he will find his time here as fulfilling and fascinating as I have done and I wish him the very best.
The new CEO’s start date will hinge on HSBC: Lloyds said Mr Nunn is “subject to agreement with his current employer where his contract of employment contains a six month notice period and up to six months' post termination restrictions”
It said that should Mr Horta-Osório – who led the bank through much of the tough post-financial crisis period – step down before Mr Nunn can join, Lloyds chief financial officer William Chalmers would likely serve as acting chief executive officer.
Mr Nunn will be paid a basic salary of £1.125m a year, plus a fixed share award of up to £1.05m. He will also get flexible benefit funding of 4pc of his basic salary, pension at 15pc of salary and be eligible for a performance award of 140pc of basic salary. Lloyds added:
In addition, to acknowledge that Mr. Nunn will lose his expected bonus awards from HSBC for the 2020 performance year, a 'lost opportunity' bonus award will be made on hire or as soon as reasonably practicable thereafter.
Agenda: UK moves to approve vaccines
Good morning. The FTSE 100 is set to fall at the open despite the UK pushing to approve the Pfizer vaccine this week, reports suggest.
It is also a big day for the high street as The Arcadia Group's 13,000 staff across 550 stores await news on the fate of the business.
5 things to start your day
1) Fears Arcadia could be ‘Carillion of retail’ with suppliers left on the hook for £250m: On top of that, MPs have called for Sir Philip Green to use his own fortune to top up the pension fund, which faces a deficit of as much as £350m.
2) Rescue experts land at easyJet to deal with debt: The budget airline is struggling with more than £1.4bn worth of debt and has called in AlixPartners to assist with cash flow forecasting
3) Former Little Chef owner readies swoop on pubs: Buy-out fund RCapital is understood to be among the suitors for 42 locations being auctioned off following Stonegate's takeover of Ei Group
4) Weight Watchers slims down with plans to shed coaches: Forced closure of workshops through the pandemic hit the brand
5) Nuclear looks to hydrogen in a bid to secure its future: Global demand for hydrogen is predicted to soar over the coming decades – and nuclear plants may have a part to play in producing it
What happened overnight
World shares paused to assess a record-busting month on Monday as the prospect of a vaccine-driven economic recovery next year and yet more free money from central banks eclipsed immediate concerns about the coronavirus pandemic.
Helping sentiment was a survey showing factory activity in China handily beat forecasts in November, and the country's central bank surprised with a helping of cheap loans. That left blue chips up 1.3pc on the day and 7.4pc for the month.
The MSCI measure of world stocks is up 13pc for November, while the S&P 500 has climbed 11pc to all-time peaks.
Early on Monday, MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.4pc, to be up almost 11pc for the month in its best performance since late 2011.
Japan's Nikkei 225 eased 0.4pc, but was still 15.4pc higher on the month for the largest rise since 1994.
Coming up today
Interim results: Civitas Social Housing, Discoverie, Draper Esprit, Victoria
Economics: Mortgage approvals and lending, consumer credit(UK); unemployment (Japan); official purchasing managers’ indices (China); inflation (Germany, Italy, Spain); pending home sales (US)