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Etihad Airways Submits Bid For Jet Airways, RIL Loses 'Most Valuable' Tag, CCI to Investigate Antitrust Case Against Google's Android, Uber's Shares Fall c. 9% in Debut et al.

Professor of Financial Economics and Part-time Value Investor, Transfin.
May 11, 2019 2:07 PM 5 min read

Etihad Airways submits bid to acquire additional minority stake in Jet Airways. RIL loses ‘most valuable’ tag as it loses INR1L cr in mcap in under 5 days. Competition Commission of India to investigate antitrust case against Google’s Android. Uber's shares fall nearly 9% in their debut. US-China trade talks end without a deal. Trump orders raising tariffs on all remaining imports from China.


Moving on to the top Business news of the day.


RIL loses ‘most valuable’ tag as it loses INR1L cr in mcap in under 5 days. Thyssenkrupp-Tata Steel deal collapses as European Commission blocks the proposed JV. Etihad Airways submits bid to acquire additional minority stake in Jet Airways.

New King: Reliance Industries Ltd lost its top position as the country’s most valuable company by market capitalisation on Thursday with Tata Consultancy Services (TCS) regaining the spot for the first time since January 10.

The development comes as RIL lost nearly INR1L cr in market value in the past five sessions, as the stock was pulled down c. 11% on back of nervous mood in the market and bearish commentary from some brokerages.

Worst Hit: Analysts noted that foreign portfolio selling in the past three days has weighed down the market. Reliance, which has the highest weightage on the Sensex and Nifty50 indices, subsequently, has been one of the worst hit.

You Have Hit A Block: Thyssenkrupp-Tata Steel deal collapses as European Commission blocks the proposed joint venture. Tata Steel will now explore new options after the fallout. 

Big Plans: Tata Steel and ThyssenKrupp had signed definitive agreements in June 2018 to combine their steel businesses in Europe to create a 50-50 pan European joint venture company which would be the continent's second-largest steel company after Lakshmi Mittal's ArcelorMittal.

The Commission opened an "in-depth" investigation into the proposed merger in October last year amid concerns that a deal between the two steel majors may reduce competition in the supply of various high-end steels.

Eleventh Hour Bid: Etihad Airways, which holds 24% stake in Jet Airways on Friday submitted a binding bid to acquire additional minority stake in Jet Airways in the bank-led resolution plan. Lenders had put 75% stake of Jet Airways on sale.

Conditions Apply: Etihad, which has put several conditions before the lenders including a waiver from making a mandatory open offer, is the only candidate which submitted the binding bid among the four short-listed bidders selected earlier through the Expression of Interest (EoI) process. The others were TPG Capital, Indigo Partners and National Investment & Infrastructure Fund (NIIF).



Competition Commission of India to investigate antitrust case against Google’s Android. SEBI questions Mindtree’s hefty dividend payout policy. 
Troubled Waters: The Competition Commission of India (CCI) had last year started probe into a complaint, which is similar to one Google faced in Europe which alleged that Google had abused its dominant position in the market to block rivals and had resulted in a $5bn fine on the company.
In mid-April, the CCI decided that there was merit in the accusations made and ordered its investigation unit to launch a full probe. 
Ulterior Motives: In a recent letter, markets regulator Securities and Exchange Board of India (SEBI) has questioned Mindtree about its hefty dividend payout plan.
On 18 April, while declaring the annual results for fiscal 2019, the Mindtree Board announced total dividend of 270% or INR27 per share. This includes a special dividend of 200%, a final dividend of 40% and an interim dividend of 30% for fiscal 2019.
The dividend package, the highest in the firm’s two-decade-long history, will fetch the promoters around INR60cr for their 13.32% stake.
Something's Fishy: While Mindtree said that the special dividend was a way to celebrate the $1bn it had earned in revenue in fiscal 2019 and mark the company’s 20th anniversary, the record dividend was also seen as a tactic to ward off the hostile L&T takeover.
Facebook Co-Founder suggests breaking up the social media giant. Apple loses $75bn amidst the ongoing trade war.
Break Up Now!: In an editorial published in The New York Times, one of the co-founders of Facebook, Chris Hughes suggested that the social media behemoth be broken up, warning that the company's head, Mark Zuckerberg, had become far too powerful.
Hughes noted that Zuckerberg's "focus on growth led him to sacrifice security and civility for clicks," and warned that his global influence had become "staggering." Zuckerberg not only controls Facebook but also the widely-used Instagram and WhatsApp platforms. Hughes also added that Facebook's Board works more like an advisory committee than a check on the Chief Executive's power. More on this here.
A Big Bite: Apple is likely to be headed for its biggest weekly decline this year as the tech giants profits are seen as vulnerable to the escalating trade war, particularly given its reliance on China for production and sales. China also accounted for nearly 20% of its 2018 revenue, according to data compiled by Bloomberg.
Apple’s shares were down as much as 9% for the week. It has shed about $75bn of market value since last Friday, a slide that takes it even further away from the $1 trillion valuation it appeared close to reclaiming earlier this month.
Uber's shares fall nearly 9% in their debut.
A Weird Start: Uber Technologies Inc's shares fell nearly 9% in their debut on May 10.
The stock's opening at $42 undermined Uber's strategy to price its oversubscribed IPO conservatively at $45 per share to avoid a repeat of rival Lyft Inc's stock market struggles following a strong debut in March.
The lackluster market response comes perhaps against the backdrop of a spike in trade tensions between the US and China and increased investor skepticism about the company's ability to turn profitable soon enough.
3 reasons why Uber had such a 'weird' and terrible IPO, according to a portfolio manager would wouldn’t buy the stock here.

US-China trade talks end without a deal. Trump orders raising tariffs on all remaining imports from China.
Dead End: US and Chinese trade negotiators come to an end without a deal.
President Trump said that the newly imposed 25% US tariffs on $200bn in Chinese imports would remain in place pending future negotiations. But he called the talks “candid and constructive” and said his relationship with Chinese President Xi Jinping “remains a very strong one and conversations into the future will continue.”
Spare No One: As per US Trade Representative Robert Lighthizer, President Donald Trump has ordered his top officials to begin the process to raise tariffs on almost all the imports from China, amounting to about $300bn. This is in addition to the Chinese imports worth $200bn on which Trump increased the import duty from 10% to 25%, beginning Friday.
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