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May 20, 2022

The week in investor relations: Shares plunge over recession fears, JPMorgan chases German mid-caps and McDonald’s exits Russia

This week’s other IR-related stories that we didn’t cover on

– Billions were wiped off the FTSE 100 on Thursday as investors around the world reacted to fears of an inflation-fueled recession, reported Sky News. The blue-chip index slumped 1.8 percent, joining a rout in global markets. Royal Mail led the fallers, down by 12 percent, after it warned of a battle to control soaring costs. Unilever, Diageo, Reckitt Benckiser and British American Tobacco saw drops of between 1.7 percent and 5.3 percent, while supermarket chain Tesco plunged nearly 4.1 percent. The sell-off comes near the end of a brutal week that saw the worst losses for US stock markets since June 2020.

Reuters (paywall) via Yahoo Finance reported that JPMorgan Chase & Co plans to make further inroads into Germany by targeting more of the medium-sized firms that form the backbone of Europe’s largest economy, executives at the US bank said. The move is a challenge to established lenders such as Commerzbank, UniCredit’s HypoVereinsbank and Deutsche Bank, which have dominated a crowded market for Mittelstand companies for decades. JPMorgan, whose EU hub is in Frankfurt, has become one of the largest advisory banks in Germany in recent years, with an average 14 percent market share in M&A for German firms from 2016 through 2021, double its share over the previous six years.

The Wall Street Journal (paywall) reported that McDonald’s Corporation said it would leave Russia and sell its business there over the country’s invasion of Ukraine. McDonald’s said in March that it was temporarily closing its 847 restaurants in Russia, while continuing to pay the 62,000 people it employs there. On Monday, it said continued ownership of its business in Russia was no longer tenable nor ‘consistent with McDonald’s values’. McDonald’s said it would pursue the sale of its entire portfolio of restaurants in Russia to a local buyer. It said those restaurants would no longer use the McDonald’s name, logo, branding or menu.

– Billionaire Leo Koguan, who claims to be the third-largest individual shareholder of Tesla stock, called on the carmaker to announce a $15 bn stock buyback as the company’s share price continues to fall, CNBC reported. In a tweet to Martin Viecha, Tesla’s senior director of IR, Koguan said the company should immediately announce its plans to buy back $5 bn of Tesla shares this year and $10 bn next year. He added that Tesla should use its free cashflow to fund the buyback and it shouldn’t affect its existing $18 bn cash reserves. The company’s stock has fallen more than 30 percent this year.

The Register reported that Intel shareholders voted to reject the compensation packages for the chipmaker’s top executives, according to regulatory documents filed with the SEC, although the vote was non-binding on the company. The Intel Form 8K submission to the SEC dated May 12 shows about 1.78 bn votes were cast against Intel’s executive compensation of its listed officers, with about 921 mn votes cast in favor, nearly a two-to-one ratio against the packages. Last year’s compensation measures also failed to gain shareholder approval. Intel said it takes its investor feedback very seriously, and the company is committed to engaging with investors and addressing their concerns.

Bloomberg reported that Boeing Co’s biggest airline customer in China removed more than 100 of the US manufacturer’s 737 Max jets from its near-term fleet plans, citing uncertainty over deliveries. China Southern Airlines Co chairman Ma Xu Lun said at an investor briefing that Boeing’s updated best-selling aircraft would be excluded from fleet deliveries through 2024. The carrier expects to take delivery of 78 aircraft in total over the period, down from 181 in a previous forecast in March. China Southern said in its annual report in March that 39 were due to arrive this year, building toward a total of 103 deliveries through 2024.

– In other airline developments, JetBlue Airways said it plans to launch a hostile takeover attempt for discount carrier Spirit Airlines after Spirit rejected JetBlue’s $3.6 bn offer in favor of an existing deal with Frontier Airlines, the WSJ reported. JetBlue is appealing directly to Spirit’s shareholders by launching a tender offer for their shares, in hopes of pressuring Spirit’s management to re-engage in negotiations, JetBlue said. At the same time, JetBlue said it is urging Spirit shareholders to vote against Spirit’s planned merger with Frontier Group Holdings on June 10 to send a message to Spirit’s board.

– Emirates Telecommunications Group announced it had acquired a 9.8 percent stake in Vodafone for about $4.4 bn, one of its largest investments in more than a decade, the Financial Times (paywall) reported. The state-controlled investment group, whose chief executive spent 17 years in senior positions at Vodafone, voiced unreserved support for the company’s management and strategy. The surprise arrival of the UAE group to pole position on Vodafone’s shareholder list ‘gives management a bit of breathing space,’ said a top-20 investor in the London-headquartered company. Vodafone’s CEO Nick Read ‘will probably be given at least this year to show he can turn round the business,’ the investor added.

The TRADE reported that technology will shape the trading strategies of the world going forward, and firms that don’t adapt to this will get left behind, according to a global buy-side perspective panel at TradeTech in Paris, in a discussion on which trading strategies should be prioritized to best adapt to another year of market uncertainties. Matt McLoughlin, head of trading at Liontrust, stressed: ‘You have to keep the end client in mind, and that focus is really important. But those firms that can offer liquidity and differentiate [themselves] are the ones that will stand out. The future is going to be all about technology, and that’s going to be crucial in navigating the liquidity landscape.’

James Beech

James Beech joined IR Media Group as editor-in-chief of IR Magazine and Corporate Secretary in January 2022. He was a multimedia journalist, editor, client relationship manager, awards host and public speaker at Campden Wealth, for and about the...