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Commercial News Update - March 2018
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<blockquote data-quote="Coralin96" data-source="post: 422" data-attributes="member: 15"><p>Update time!</p><p></p><p>25/03/2018</p><p></p><p><strong>Brexit transition and financial services</strong></p><ol> <li data-xf-list-type="ol"><strong>The Story</strong>: The EU countries signed off on a 21 month transition period for Brexit as Theresa May agreed to pay an exit bill of between £35-39 billion. Many expect the more detailed negotiations will only start next March. That means the actual exit won't be until the end of 2020. Financial services were also mentioned in the draft guidelines for the first time. This is said to be thanks to Luxembourg who have a lot of links to London when it comes to financial services. This is in contrast to France who doesn't want to give the UK a special deal for financial services.</li> <li data-xf-list-type="ol"><strong>Impact on law firms: </strong>The wording makes clear that financial services in London will get the same access as any other non-EU country. This suggests banks and companies won't get the same passporting rights that they had before Brexit or any special provisions. The European Central Bank is still assuming a worst case scenario and so telling banks they need to prepare and do contingency planning. Some companies are preparing for the loss of passporting rights, investment banks Deutsche Bank and Goldman Sachs has already started moving people out of London. Law firms will need to help these companies relocate and restructure.</li> </ol><p><strong>Business with Russia</strong></p><ol> <li data-xf-list-type="ol"><strong>The Story: </strong>Despite all the political chaos going on between the UK and Russia, companies in both countries don't seem to have much problem trading with each other. Gazprom recently issued a $750m eurobond in London and the Russian government issued a $4bn bond in London. There's also 57 mainly Russian companies are listed on our stock exchange, the most for any country outside Moscow. and a number of MPs have also taken positions working for or acting on the boards of Russian companies. Fun fact - last year, the wife of the former deputy finance minister of Mr Putin also paid £160,000 to play tennis with Boris Johnson!</li> <li data-xf-list-type="ol"><strong>Impact on law firms: </strong>Lawyers are cautious about how the political climate will affect their Russian clients. Many think things will the crisis will sort itself out. But some banks have limited Russian business and investors have become cautious about the impact on wealthy Russian clients. If they move this could impact private client type work and also a law firms business in Russia where some have offices.</li> </ol><p><strong>More problems for Facebook</strong></p><ol> <li data-xf-list-type="ol"><strong>The Story</strong>: $60bn was wiped off Facebook's market value last week and a huge amount of wealth from Mark Zuckerberg in a sign of how damaging the Cambridge Analytics scandal has been. Investors have been worried about fines and the loss of users which show privacy fears are costing users. Elon Musk has deleted the Facebook pages for Tesla and SpaceX in protest. Sonos pulled advertising from Facebook, Instagram, Google and Twitter for a week. Mozilla and Commerzbank also put advertising on hold. Investors have also withdrawn from tech stocks and there was a big sell off.It has become clear how Facebook has control of so much personal data and that it allowed advertising to get out of control by pursuing profits. Many have called for tougher regulation which could affect Facebook's business model.</li> <li data-xf-list-type="ol"><strong>Impact on law firms: </strong> Some are now looking at regulators who failed to act, for example the Irish data protection commissioner received 22 complaints from a law student in 2011 alleging it was in breach of EU data protection law. It's possible Ireland was quite lax in its regulation because it wants companies like Facebook to stay there. Many regulators in the EU and US are looking at how to regulate data companies but Europe looks more likely. In 2014 Europe fined Facebook for importing data from whatsapp. Last month it also ordered Facebook to stop tracking people who don't use Facebook as they browse the web! In addition to the GDPR in May, the EU is discussing an e-privacy directive which if passed would signifiacntly restrict the tracking of users' behaviour online. Some things in the US are actually illegal in the EU which shows the difference between their policy approaches. For example Facebook's Messenger for Kids (due to age restrictions) would not be allowed in the EU. Many fear companies with similar data on users could be targeted for more regulation. Google and Facebook's value is largely based on the use of huge amounts of personal data. If this follows to other data companies, data protection teams may help advise these companies to stay in line with the regulation or they could face stricter enforcement measures. They also need to think about how they use data as it looks like this will continue to be a hot issue.</li> </ol><p><strong>Update to Melrose bid for GKN</strong></p><ol> <li data-xf-list-type="ol"><strong>The Story: </strong>Elliot Advisers, the UK part of a hedge fund that owns over 3.8% of GKN said it plans to vote in favour of Melrose's offer to buy GKN for £8bn. They called for other shareholders to do the same. David Cumming, chief investment officer at Aviva, said has also backed the bid. There is four days left before the shareholders have to decide. Melrose is a company that buys up underperforming businesses and sells them in 3-5 years, GKN is one of the oldest British engineering companies.</li> <li data-xf-list-type="ol"><strong>Impact on law firms: </strong>This has been called the most hostile takeover since the war. A lobby group has called on the government to block the takeover. Now Melrose has public support of roughly 10% of GKN's shareholders so it will be interesting to see whether they get enough votes. Others have called on the regulators to intervene and asked the government to legislate to protect British businesses and offer protections against businesses. This comes as Unilever moved its headquarters from London to Rotterdam as Dutch law offers more protection. Law firms will be involved in these foreign takeovers and lawyers for the British companies will have to think about how they can protect companies from being bought up.</li> </ol><p><strong>GlaxoSmithKline withdrew its $20bn bid for Pfizer's consumer healthcare business</strong></p><ol> <li data-xf-list-type="ol"><strong>The Story: </strong>The British pharma company, GSK along with its rival Reckitt Benckiser pulled out of the auction to buy the US pharma giant, Pfizer's consumer healthcare business. Reckitt Benckiser withdrew first leaving GSK in a good position to buy the unit that sells painkillers and vitamins but it decided to pull out.</li> <li data-xf-list-type="ol"><strong>Impact on law firms: </strong>Large GSK investors were said to be concerned about the acquisition and the impact on dividends which shows the influence of shareholders on company decisions. It's unclear if any businesses are left to buy it so Pfizer's lawyers will need to think about restructuring or selling the business or advising Pfizer to keep it. GSK's share price has fallen since the new chief executive, Emma Walmsley, took over last year as the market is cautious over what direction she is taking. This is part of the pharma debate. Pharma companies do a lot of M&A and the dilemma is whether they should buy up diverse companies like consumer healthcare to hedge against the risk of investments in newer medicines. Some have said this is a success as GSK would also get key information about Pfizer, its competitor, during the due diligence process!</li> </ol><p><strong>Trump's tariffs on China</strong></p><ol> <li data-xf-list-type="ol"><strong>The Story: </strong>Trump's advisers originally came up with $30 billion of tariffs to target China. In Trump's usual fashion he ordered them to double it - so now there is going to be $60 billion worth of annual tariffs. Its a move against China for alleged intellectual property theft and many are worried that this will cause a trade war. China said they don't want a trade war but they will fight back and they've prepared retaliatory tarrifs on 128 US products. China has faced internal pressure to go even tougher and target US soybeans, aircraft and cars but it remains to be seen what their next steps are.</li> <li data-xf-list-type="ol"><strong>Impact on law firms: </strong>Japan was seen as the first tragedy of the US-China trade war as Japanese stocks fell and the yen rose. Trump decided not to exempt Japan from tariffs aimed at China and it could significantly damage Japanese profits as companies are dependent on exports. It also affected stocks - US stocks had their worst week in more than two years and European shares fell sharply. The news particularly hit banks and stocks like airlines which do a lot of global trade. Deutsche Bank hit their lowest level since late 2016 and Boeing has seen shares fall 10% as its heavily reliant on supply chains in China. Lawyers may advise companies to slow down on investments and consider their supply routes between the US and China. It could also have a global impact, for example 30% of Australia imports go to China so restructuring may be needed.</li> </ol></blockquote><p></p>
[QUOTE="Coralin96, post: 422, member: 15"] Update time! 25/03/2018 [B]Brexit transition and financial services[/B] [LIST=1] [*][B]The Story[/B]: The EU countries signed off on a 21 month transition period for Brexit as Theresa May agreed to pay an exit bill of between £35-39 billion. Many expect the more detailed negotiations will only start next March. That means the actual exit won't be until the end of 2020. Financial services were also mentioned in the draft guidelines for the first time. This is said to be thanks to Luxembourg who have a lot of links to London when it comes to financial services. This is in contrast to France who doesn't want to give the UK a special deal for financial services. [*][B]Impact on law firms: [/B]The wording makes clear that financial services in London will get the same access as any other non-EU country. This suggests banks and companies won't get the same passporting rights that they had before Brexit or any special provisions. The European Central Bank is still assuming a worst case scenario and so telling banks they need to prepare and do contingency planning. Some companies are preparing for the loss of passporting rights, investment banks Deutsche Bank and Goldman Sachs has already started moving people out of London. Law firms will need to help these companies relocate and restructure. [/LIST] [B]Business with Russia[/B] [LIST=1] [*][B]The Story: [/B]Despite all the political chaos going on between the UK and Russia, companies in both countries don't seem to have much problem trading with each other. Gazprom recently issued a $750m eurobond in London and the Russian government issued a $4bn bond in London. There's also 57 mainly Russian companies are listed on our stock exchange, the most for any country outside Moscow. and a number of MPs have also taken positions working for or acting on the boards of Russian companies. Fun fact - last year, the wife of the former deputy finance minister of Mr Putin also paid £160,000 to play tennis with Boris Johnson! [*][B]Impact on law firms: [/B]Lawyers are cautious about how the political climate will affect their Russian clients. Many think things will the crisis will sort itself out. But some banks have limited Russian business and investors have become cautious about the impact on wealthy Russian clients. If they move this could impact private client type work and also a law firms business in Russia where some have offices. [/LIST] [B]More problems for Facebook[/B] [LIST=1] [*][B]The Story[/B]: $60bn was wiped off Facebook's market value last week and a huge amount of wealth from Mark Zuckerberg in a sign of how damaging the Cambridge Analytics scandal has been. Investors have been worried about fines and the loss of users which show privacy fears are costing users. Elon Musk has deleted the Facebook pages for Tesla and SpaceX in protest. Sonos pulled advertising from Facebook, Instagram, Google and Twitter for a week. Mozilla and Commerzbank also put advertising on hold. Investors have also withdrawn from tech stocks and there was a big sell off.It has become clear how Facebook has control of so much personal data and that it allowed advertising to get out of control by pursuing profits. Many have called for tougher regulation which could affect Facebook's business model. [*][B]Impact on law firms: [/B] Some are now looking at regulators who failed to act, for example the Irish data protection commissioner received 22 complaints from a law student in 2011 alleging it was in breach of EU data protection law. It's possible Ireland was quite lax in its regulation because it wants companies like Facebook to stay there. Many regulators in the EU and US are looking at how to regulate data companies but Europe looks more likely. In 2014 Europe fined Facebook for importing data from whatsapp. Last month it also ordered Facebook to stop tracking people who don't use Facebook as they browse the web! In addition to the GDPR in May, the EU is discussing an e-privacy directive which if passed would signifiacntly restrict the tracking of users' behaviour online. Some things in the US are actually illegal in the EU which shows the difference between their policy approaches. For example Facebook's Messenger for Kids (due to age restrictions) would not be allowed in the EU. Many fear companies with similar data on users could be targeted for more regulation. Google and Facebook's value is largely based on the use of huge amounts of personal data. If this follows to other data companies, data protection teams may help advise these companies to stay in line with the regulation or they could face stricter enforcement measures. They also need to think about how they use data as it looks like this will continue to be a hot issue. [/LIST] [B]Update to Melrose bid for GKN[/B] [LIST=1] [*][B]The Story: [/B]Elliot Advisers, the UK part of a hedge fund that owns over 3.8% of GKN said it plans to vote in favour of Melrose's offer to buy GKN for £8bn. They called for other shareholders to do the same. David Cumming, chief investment officer at Aviva, said has also backed the bid. There is four days left before the shareholders have to decide. Melrose is a company that buys up underperforming businesses and sells them in 3-5 years, GKN is one of the oldest British engineering companies. [*][B]Impact on law firms: [/B]This has been called the most hostile takeover since the war. A lobby group has called on the government to block the takeover. Now Melrose has public support of roughly 10% of GKN's shareholders so it will be interesting to see whether they get enough votes. Others have called on the regulators to intervene and asked the government to legislate to protect British businesses and offer protections against businesses. This comes as Unilever moved its headquarters from London to Rotterdam as Dutch law offers more protection. Law firms will be involved in these foreign takeovers and lawyers for the British companies will have to think about how they can protect companies from being bought up. [/LIST] [B]GlaxoSmithKline withdrew its $20bn bid for Pfizer's consumer healthcare business[/B] [LIST=1] [*][B]The Story: [/B]The British pharma company, GSK along with its rival Reckitt Benckiser pulled out of the auction to buy the US pharma giant, Pfizer's consumer healthcare business. Reckitt Benckiser withdrew first leaving GSK in a good position to buy the unit that sells painkillers and vitamins but it decided to pull out. [*][B]Impact on law firms: [/B]Large GSK investors were said to be concerned about the acquisition and the impact on dividends which shows the influence of shareholders on company decisions. It's unclear if any businesses are left to buy it so Pfizer's lawyers will need to think about restructuring or selling the business or advising Pfizer to keep it. GSK's share price has fallen since the new chief executive, Emma Walmsley, took over last year as the market is cautious over what direction she is taking. This is part of the pharma debate. Pharma companies do a lot of M&A and the dilemma is whether they should buy up diverse companies like consumer healthcare to hedge against the risk of investments in newer medicines. Some have said this is a success as GSK would also get key information about Pfizer, its competitor, during the due diligence process! [/LIST] [B]Trump's tariffs on China[/B] [LIST=1] [*][B]The Story: [/B]Trump's advisers originally came up with $30 billion of tariffs to target China. In Trump's usual fashion he ordered them to double it - so now there is going to be $60 billion worth of annual tariffs. Its a move against China for alleged intellectual property theft and many are worried that this will cause a trade war. China said they don't want a trade war but they will fight back and they've prepared retaliatory tarrifs on 128 US products. China has faced internal pressure to go even tougher and target US soybeans, aircraft and cars but it remains to be seen what their next steps are. [*][B]Impact on law firms: [/B]Japan was seen as the first tragedy of the US-China trade war as Japanese stocks fell and the yen rose. Trump decided not to exempt Japan from tariffs aimed at China and it could significantly damage Japanese profits as companies are dependent on exports. It also affected stocks - US stocks had their worst week in more than two years and European shares fell sharply. The news particularly hit banks and stocks like airlines which do a lot of global trade. Deutsche Bank hit their lowest level since late 2016 and Boeing has seen shares fall 10% as its heavily reliant on supply chains in China. Lawyers may advise companies to slow down on investments and consider their supply routes between the US and China. It could also have a global impact, for example 30% of Australia imports go to China so restructuring may be needed. [/LIST] [/QUOTE]
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