Tuesday 19/03/19

  1. In POLITICAL NEWS, May hits a Bercow-shaped roadblock for Brexit
  2. In RIDE-HAILING NEWS, Lyft targets a chunky IPO and Gett wants to get on the bandwagon
  3. In INDIVIDUAL COMPANY NEWS, Worldpay goes to a US rival for $43bn, Marriott pledges more hotels and JD Sports buys Footasylum
  4. In OTHER NEWS, I bring you the most ridiculous spin class ever. For more details, read on…



So Bercow scuppers May’s Brexit plans…

Commons Speaker delivers fresh blow to May’s Brexit deal hopes (Financial Times, Henry Mance and George Parker) highlights the latest (and possibly insurmountable) hurdle to May’s Brexit plans as John Bercow said he wouldn’t allow another vote on the deal unless it was substantially changed, which would mean that May will have to go back to Brussels again to try and eek out some kind of concession(s). He cited a parliamentary precedent from 1604 (!) that does not allow the same measure to be voted on twice in the same parliamentary session. May’s

team are now scrabbling around for ways around this – solicitor-general Robert Buckland has even suggested “crashing” the current session and getting the Queen in to open a new one! * SO WHAT? * May is due to go to Brussels on Thursday and is expected to seek an extension to the Article 50 exit process. If she gets Parliamentary backing for her deal, the extension will be likely to last until June 30th, but if she DOESN’T get MPs to swing in behind her deal, the delay could be for much longer (which is likely to result in a softer Brexit). It does seem rather ridiculous that the Speaker of the House can do this – by citing a ruling made over 400 years ago – and defy the Prime Minister! It does makes you wonder what kind of muppets Theresa May is getting her advice from if she didn’t see this coming. The drama (unfortunately) continues…



Lyft seeks out a chunky valuation in its IPO and Gett wants some similar action…

Lyft seeks valuation of up to $23billion in IPO (Wall Street Journal, Maureen Farrell) highlights the next over-hyped company to come to market seeking a stellar valuation and legging over anyone who buys the shares because they’re worth it. It’s looking for a whopping $21-23billion valuation (equivalent to between $62 and $68 for a share) as it kicks off its marketing roadshow ahead of its flotation on Monday on the NASDAQ. This will follow the trend of tech companies that have dual categories of shares – so Lyft’s founders John Zimmer and Logan Green, who have 7% of their company’s shares, will have 50% of the voting rights as their shares will receive 20 votes each versus all the other mugs whose shares will only get one vote each. It’s all about having your cake and eating it! * SO WHAT? * I must say that the more of these IPOs I see the more I think “It’s a stag!” (a phrase used to describe the act of buying shares in an IPO and selling them almost immediately as retail investor frenzy powers the shares up for a nice little virtually-risk-free gain). Lyft is the younger, less-obviously vilified version of Uber but also loses money like Uber. The chunky valuation it is giving itself for the valuation relies on promises of rapid growth over the next few years as it concentrates on its core US and Canadian markets. From what I can see, Lyft can afford to make losses for a number

of years while it keeps growing because investors seem to be content just throwing money at it – but the problem will come at some point where stakeholders start to call in their chips. If Lyft has nothing to offer at that point, things could go downhill very quickly. Or it could sell itself.

Well whaddaya know? Gett looks to join taxi-hailing rush to IPO (Financial Times, Peter Campbell) shows that taxi-hailing company Gett is looking jealously stateside at the whole Lyft/Uber hype and obviously wants a piece of the action. Gett differs from both of these companies because it offers rides via established taxi operators (like black cabs in London or yellow taxis in New York) rather than minicabs, but is now considering a listing in either London or Tel Aviv. Its more up-market approach has helped it to earn almost half of its revenues from business accounts as 20,000 companies use it as its taxi-booking service. Its corporate sales rose by 54% last year alone. So far, the company’s European business made a loss of $2.4m but it is expected to make a profit by the end of the year. * SO WHAT? * If you want to get into ride-hailing, I would have thought Gett would be a more conservative choice than the giant American loss-makers given that it has a more “legit” business model that is scaleable in an area where you can probably make better margins (being the provider of choice to companies wanting to ferry their employees around). Yes, it’s smaller, but given the bad publicity that minicab drivers have received over the years (and this is a worldwide phenomenon) versus that of licensed taxi drivers you would have thought that demand would be less volatile and subject to negative news stories.



Worldpay is bought for $43bn, Marriott pledges more hotels and JD Sports buys Footasylum…

Payments group Worldpay to be acquired by US rival in $43bn deal (Financial Times, Nicholas Megaw, Arash Massoudi and Sarah Provan) highlights Fidelity National Information Services’ (aka FIS) acquisition of Worldpay, which is the UK’s leading payments processor. This is the latest deal in a flurry of M&A in this sector as payments providers continue to consolidate in order to chase scale in a world where card or online payments are increasing at a rapid pace. The most recent deal in this space was US payments processor Fiserv’s acquisition of rival First Data for $39bn in January. FIS develops an array of tech from core banking platforms that power retail lenders’ systems to asset management software while Worldpay specialises in services that enable digital payments. * SO WHAT? * This sounds like a good deal strategically as payments processing needs scale in order to compete with big banks.

In Marriott plans to open over 1,700 hotels (Wall Street Journal, Allison Prang) we see that the hotel chain plans to add between 275,000 and 295,000 rooms by 2021 that will bring in $400m in fee revenue and that it will embark on a chunky share buy-back programme over the next three years. It expects 44% of the new rooms to be in North

America while the remainder will be split between Asia-Pac, EMEA, the Caribbean and LatAm. * SO WHAT? * This sounds pretty punchy to me and signals a certain confidence in the US and global economy as hotels rely on economic “good times” to keep on rolling. Businesses send their execs around more and everyone else goes on more holidays or spends more on them when things are going well but obviously this all slows down when the economy hits the skids. The share buy-back thing also says to shareholders that there will be a floor in any potential weakness in the share price for the next few years as it’s allocating between $7.6bn and $9bn to underwrite any subtantial falls. Shareholders love a share buyback programme as it makes them feel all snuggly and warm, safe in the knowledge that any potential losses will be limited.

Who said nepotism is dead? Footasylum family to cash in after JD offer (Daily Telegraph, Julia Bradshaw and Charlie Taylor-Kroll) shows that nepotism is alive and well as the children of Footasylum co-founder, David Makin (the “D” in JD Sports), will share in £50m as JD Sports just offered to buy the struggling shoe retailer for £90m. Clare Nesbitt, (the older sis and chief exec of Footasylum), and younger bro Thomas Makin and sis Amy Mason will be sharing in the payout which comes only weeks after JD Sports bought an 8.3% stake in the troubled company. Although the workers will no doubt be looking at an uncertain future in a very crowded market, it’s good to know that daddy will bail out his kids who nearly ran the company into the ground.



And finally, in other news…

I thought I’d leave you today the most ridiculous (and, I think, pointless) spin class I have ever seen in This gymnastics spinning class will have you defying gravity and burning 600-700 calories an hour (Inside Edition, Stephanie Officer https://tinyurl.com/y2a8rlpk). Call me old-fashioned, but this looks like a recipe for disaster and a whole load of lawsuits! Impressive, yet ultimately pointless…

Some of today’s market, commodity & currency moves (as at 0832hrs green is up, red is down). THIS IS INTENDED AS A ROUGH GUIDE ONLY!

FTSE 100 *Dow Jones *S&P 500 *Nasdaq *DAX *CAC-40 *Nikkei **Shanghai **
7,299 (+0.98%)25,914 (+0.25%)2,833 (+0.37%)7,71411,657 (-0.25%)5,413 (+0.14%)21,567 (-0.08%)3,091 (-0.18%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

(markets with an * are at yesterday’s close, ** are at today’s close)