CITY Companies in the news,December 2020

CITY Companies in the news,December 2020

 Salesforce/Slack: cloud solution Working from home has meant boom times for cloud computing in 2020, said the FT. Fittingly, the year has ended with a mega-deal. Salesforce, the world’s third-biggest software firm, has agreed to buy Slack, the office collaboration app, for $27.7bn, “setting up a battle with Microsoft for pole position in one of the tech market’s hottest corners”. Slack’s product has a “cult-like following” of 12 million users, said The Economist, but its share price has lagged during the pandemic – partly because of poor marketing, and partly because it lacks videoconferencing. Like many alliances, this one is “about power and feuds”. Slack piqued Microsoft a few years back, when co-founder Stewart Butterfield promised to wipe out email – threatening Microsoft’s Outlook and Exchange programs. MS shot back with a Slack-like product, Teams (with added videoconferencing), and the two have been slugging it out ever since. Teams has now chalked up 115 million users, said David Streitfeld in The New York Times. But as a result of the deal, Slack has the $225bn heft of Salesforce behind it. Intriguingly, the latter’s founder Marc Benioff also has history with Microsoft. Five years ago, he nearly sold Salesforce to Bill Gates’s behemoth. Now he’s primed to compete directly, even if he is being teasingly coy about it. “What’s that company?” he said last week. “How do you spell it?”

Business rates relief: hide and seek Tesco’s decision to hand £585m of business rates relief back to the Treasury has triggered a domino effect, said Sam Chambers in The Sunday Times. Other “essential” retailers allowed to trade during lockdown – including Morrisons, Sainsbury’s, Asda, Aldi, Lidl, and B&Q-owner Kingfisher – have followed suit, taking repayments of the pandemic tax break to £2bn. “A game of hide and seek” is under way, said Dominic O’Connell on BBC Business. “Tesco was the first to be found” (the UK’s biggest supermarket could hardly hide when it was promising to pay £900m to shareholders), but there are some notable holdouts – including M&S and John Lewis, both of which say they have no plans to repay the Government. “Well done Kingfisher,” said Nils Pratley in The Guardian. But what news of Travis Perkins, owner of Wickes and Toolstation, which also “enjoyed the DIY fun” during lockdown? The company is using the “M&S/ John Lewis defence” – pointing to troubles in other parts of its business. That position is just about “defensible” for now. But the business rates question isn’t going away.

Hipgnosis: seductive tune Bob Dylan’s decision to sell his back catalogue to Universal Music for around $300m is bang on trend, said the FT. “Music rights have soared in value with the rise of streaming apps such as Spotify.” The pioneering FTSE 250 company Hipgnosis plans to raise a further £1bn from investors for its Songs Fund, said Patrick Hosking in The Times. There’s a “seductive buy case” for juicing the returns from “evergreen” songs via “hardnosed negotiations” with streamers, film studios and ad agencies. The Song Fund’s annuity-type returns are “fabulously appealing” when interest rates are zero or negative. But there are red flags too. “Songs are extremely difficult to value” – and Hipgnosis’s valuations may prove optimistic. With a flood of capital heading for song funds, “it may not be rock ’n’ roll to urge caution, but investors shouldn’t get too ‘hipgnotised’”.

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