Twitter heads for Stock Market by filing for IPO
Social media giant Twitter confirmed last week their intention to float on the market. This was revealed on their website. Twitter is said to be worth at least £6.32 billion according to GSV Capital. Profits last year was valued at $350 million and is expected to increase this year. The filing was confidential which is allowed by The Securities and Exchanges Commission under the JOBS Act. The act allows firms which have less than $1 billion in annual revenue to register a public share sale without publishing details of the application. The JOBS (Jumpstart Our Business Startups) Act passed in 2012 requires a company under US law to go public if it has more than 2000 investors.
Royal Mail Privatisation
On Thursday, the government formally began the floating process for Royal Mail on the London Stock Exchange. It is argued to be the most ambitious privatisation since the privatising of the railways in the 90s. The Royal Mail privatisation is said to be worth £3 billion and the initial public offering is to take place in the coming weeks. It faces staunch opposition from the Communications Workers Union. Even though the government has promised 150,000 postmen and women a 10% stake in the company worth £2000 each, the union is still opposed to the privatisation. The CWU is committed in disrupting the sale process and has also rejected a 8.6% pay rise over three years.
Michael Dell buys back company he founded for $25bn
The struggling business, Dell has been brought by its founder Michael Dell. The shareholders backed his offer of $13.88 a share. Activist investor Carl Icahn fought a deal to buy Dell but was defeated by Michael Dell. This comes as traditional PC companies are struggling to make money, with figures showing that PC sales will be overtaken by tablets for the first time-84.1 million tablets will be shipped in the fourth quarter of 2013 compared to 83.1million PCs. IDC, an research group has said that tablets will outsell all PCs by Christmas and by 2015 they will overtake PCs as consumers prefer tablets.
Vodafone and the Kabel Deutschland deal
Vodafone has taken control of Germany’s largest cable company, Kabel Deutschland. The 7.7 billion Euros takeover of Kabel, is part of Vodafone’s new strategy to be selling mobile phone subscriptions as well as television, broadband and home telephone services. The telecoms giant Vodafone secured 75% support from the shareholders. The Kabel shareholders accepted Vodafone’s £73.23 share offer, this also includes an 2.50 Euros dividend to Kabel Deutschland’s investors. The deal gives Vodafone access to 7 million cable subscribers in Germany. Kabel’s television service includes 100 digital channels which is sold via contracts with customers or house corporations and landlords. Kabel hoped to get a higher price from Vodafone, which raised concerns that the deal would fall last minute. The US hedge fund Elliot Capital put up its stake in Kabel to 10.9% in the run up to the deal.
Carney and Inflation
The governor of Bank of England, Mark Carney has told the Treasury Select Committee (TSC) that inflation is a priority for the Bank of England. Carney warned that unemployment may fall more slowly than markets expect. This is because the recession caused a large number in the people out of work for a long period. Under Carney’s forward guidance policy, the Bank of England will only raise interest rates when unemployment falls to 7%. Additionally, the Bank will only consider raising rates if it forecasts inflation above 2.5% in 18 to 24 months time.
There are fears that there will soon be a debt fuelled housing bubble after Rightmove tripled its growth forecast for prices of home this year. The UK property website, Rightmove at the start of year forecasted that the average national asking prices would rise by 2pc over 2013. They are now predicting it will rise to 6pc. These figures raise concern and have put pressure on the Government. Vince Cable, the Business Secretary, has warned the increase in the value of property could be detrimental to the economic recovery. This brings into question the Government’s plan to extend its Help to Buy initiative. The Deputy Prime Minister, Nick Clegg, has suggested there is no need to panic as the Government and the Bank of England will prevent a housing bubble before it becomes a risk. The Government argues that the property market, is a long way off becoming a bubble and plans to continue with the policy of providing support to first time buyers.