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    Opposition Against ArcelorMittal’s bid for Essar Steel, Apple Products Lose Steam et al.

    Professor of Financial Economics and Part-time Value Investor, Transfin.
    Nov 20, 2018 1:39 PM 3 min read

    Good evening reader,

     

    Consider this: Lehman Brothers collapsed in Sep 2008, marking a contagion defining global economic slowdown for the next decade or so.

     

    Probable Cause: The Excesses of Wall Street. 

     

    Result: Financial Markets, Investment Banking, and High Finance transformed overnight from a must-go destination for the best, to an industry in turmoil. 

     

    Post 2008 was starkly different for the fortunes of others. With Facebook gaining strength and Apple having launched its first iPhone, social media and smartphones exploded...creating unprecedented excitement around the world of technology. The word "technology" itself became synonymous with Silicon Valley, attracting the best talent and granting it an aura of intelligence, innovation, ethics, and if we dare self righteousness.

     

    The aura has lately been demystified. From concerns around user privacy and fake news to the addictive nuances of screen time - technology companies are now on the back-foot, depending on disingenuous justifications bordering on spin to maintain the status quo. 

     

    Probable Cause: Once bells and whistles around the 'need to connect this world' or 'create the best possible user experience' abates, capitalism shows its colours. 

     

    Result: For now as one tech CEO says, they're at war.

     

    Moving on to today’s Top 6 Business Stories through our End Of Day Wrap Up:

     

    Tata Sons might seek ‘non-compete’ agreement against Jet promoter.

     

    According to a Business Standard report, as the company looks to buy a stake in the waning airline, Tata Sons may seek a ‘heavy’ non-compete agreement.

     

    Perspective: Tata Group wants to merge Jet Airways with its full-service carrier Vistara to gain a larger market share in India.

     

    What You Need To Know: A non-compete clause will bar Naresh Goyal, Jet Airways’ promoter, from the travel and trade business to restrict future competition.

     

    Shapoorji Pallonji Group to seek $1bn investment; stake and asset sale on cards.

     

    Shapoorji Pallonji Group, owned by Pallonji Mistry, plans to raise c. $1bn by bringing in investors and selling almost 30% in its solar engineering unit.

     

    Up Close: The funds are to be raised by a pre-listing stake sale followed by a public offering. Proceeds would be used to reduce the company's debt.

     

    GAIL and GETCO oppose ArcelorMittal’s bid for Essar Steel, move NCLT.

     

    GAIL (India) Ltd. and Gujarat Energy Transmission Corporation (GETCO) have moved the National Company Law Tribunal (NCLT) seeking rejection of ArcelorMittal’s bid to buy Essar Steel, asserting that they have claims of INR907cr and INR897cr against Essar Steel respectively.

     

    But, Why: GAIL and GETCO are operational creditors, which have been excluded in ArcelorMittal's proposal.

     

    Recap: Essar’s Committee of Creditors had approved ArcelorMittal’s proposal to pay INR42,000cr to the company’s financial creditors.

     

    ICICI Bank plans to raise INR25,000cr for on-lending, as NBFCs face cash crunch.

     

    With a plan to issue non-convertible debentures (NCDs) to raise money, ICICI Bank has recently sent a proposal to its shareholders. The bank aims to provide funding for road, power and infrastructure projects that were initially dominated by Non Banking Financial Companies (NBFCs), which are facing a cash crunch.

     

    Zooming out: NBFCs have been facing a liquidity crisis post defaults of IL&FS. Usually, NBFCs fulfill 60% of their funding requirements from banks. However of late, banks have reduced their lending to NBFCs as their own NPAs grew.

     

    US/INTERNATIONAL

     

    Apple slashes production of new models over lower-than-expected demand.

     

    Zoom Out: The cut in production has hit iPhone XR, the new low-price model hardest as the company faces tough competition from Chinese products.

     

    Apple’s decision to offer more models has raised concern in suppliers as they question the company’s ability to gauge demand.

     

    Google News may shut shop if EU’s ‘link tax’ goes ahead.

     

    Google may have to shut down Google News if the EU decides to go ahead with a tax to charge search engines for displaying links of news stories.

     

    Up Close: Link tax is designed to compensate news publishers and content creators for including synopsis of stories and even links to articles.

     

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