BBC Business News April 30, 2018
Hello. You with business live from BBC News is Sally Vonda and Maruyama, shiri Sainsbury's. And Asda, confirmed, plans, to merge but will the deal get the regulatory approval, that it needs we're live we're in London and that's our top story today Monday, the 30th of April. The, big supermarkets. Shake up with the promise of no store closures, and no job, losses Walmart. Is offloading, control of Asda in the UK teaming, up with, Sainsbury's. Will talk you through what is, at stake also. In the programme after, years of courtship, America's, third and fourth biggest mobile phone companies, are finally, walking, down the aisle in a twenty six billion, dollar, deal and European. Markets are trading like this Sainsbury's, shares at the open of 16 and a half percent. And. Will. Be getting the inside, track on how the billboard, industry, remains a, multi-billion. Dollar business and today. We want to know is Sainsbury's, and as to confirm, they hope to combine, are, you loyal to a particular brand of supermarket. Let us know just use the hashtag BBC. Biz life. A. Very. Warm welcome to the. Program and it's a very busy. Start to a brand-new business week and we begin with the US retail, giant, wal-mart merging. Its UK unit, Asda, with, the supermarket chain Sainsbury's. In. A shares and cash deal Walmart, will gain a minority, stake in the. New company, 42%. And it will receive just, over 4 billion dollars, in cash, for the deal the, combined, group will maintain both the Sainsbury's, and Asda, brands, it'll have. 2800. Stores and will make up more than 31, percent, of the total grocery. Market in the UK so that puts it slightly ahead of current. Leader, Tesco. And in, early trading this morning Sainsbury's, shares were soaring at one more one, point almost 20 percent or, speaking in the last out of the BBC the boss of Sainsbury's defended. The company's belief that, there will be no closures. Of stores. As part, of this, deal. Well. I stand by our statement, we, will not close any stores as a result of this transaction, and the, nature, of the UK market is incredibly, competitive and, customers, have a huge, amount of choice and they exercise that choice and. We believe by bringing these businesses, together we can lower prices, nor for better ranges, for our customers, as, well as making sure that we do a great job, creating. Opportunities, for our colleagues in both businesses. So we think it's a great deal around, Simon. Jack our business editor joins, me now so I know you've been looking, through, this. Latest. Thing. From Sainsbury's their, publication. On what's, happening from sales to now one of the things that we heard from Mike coupe who will be the CEO of the new company, is him, saying there won't be any. Store closures, and no job losses within stores. Simon interesting, he doesn't say anything about what's coming up happening outside so I think worth unpacking, these comments a little bit he's saying no store closures, as a result, of this merger no retailer, in their right mind would say that if market, conditions, changed, they might want to store closed stores in the future they say as a result of this deal no, store closures that in itself a pretty bold claim but, he's saying no job losses in stores, that still leaves, warehousing, logistics. Senior. Management, head office buying functions. And they will inevitably be. Job losses in those functions, because that's the only way they can seriously get these so-called synergies, they talk about which, make this deal makes sense so a bold, claim on those store closures but don't expect that to mean no job losses anywhere, in the business so why do saying that now then when you in it's so clear then it you, know it's highly likely that's going to happen well he thinks that you know as, their appeals to a very different customer, than Sainsbury's, appeals to they, can run the two brands.
Side-by-side. A lot of people I speak to you think that's going to be a challenge, you walk into you know you've got Sainsbury's. On one side you've got acid on the other side of the street you now know that the same person has bought the beans for, both stores, are they gonna be exactly the same beans in this one are they gonna be the same price in this one as that one what happens if Sainsbury's where people are used to paying a little bit more for their groceries feel, that they're getting ripped off compared to Asda now it may be the identical, items will have two identical prices, that, remains to be seen what, will be interesting is they said that regularly, bought items could, fall as much as 10% and, it's that promise that they will be taking to the competition authorities. Who, will worry they're, taking to medium-sized, players are making one giant, player will reduce, competition, reduce, competition often means high prices they're promising it'll mean to lower prices if they want to make sure and the CEO didn't his interview with BBC said. That it will be ten percent in both Sainsbury's. And Asda, but they start at different, price levels don't they and also Sainsbury's, I think doesn't, it want to appeal to a different kind of shopper doesn't want to kind of appeal to someone who want something different to them when they're going to ask this I think that's right I think it's that the days of when we used to only be a Sainsbury's or a Tesco or or as the person and people would just go to the same supermarket all the time that's, changed, lots of people do do a shopping a little a little shopping at Waitrose at both ends of the if you like the, the value offer so. I think people a bit more promiscuous so there's room for more brands in there I, think it is going to be interesting how they do. That present. Those two brands of course the reason this caught us all on the hop is that Sainsbury's, just bought Argos, worm, the business, recently have been rolling it out in their stores, a lot of people thought there was a brand clash there you, could argue the Argos. Asda, marriage. Actually makes even more sense so I think that what you're seeing in the share price this morning quite remarkable. Jump in the share prices is a people. Think that this deal is a good fit people. Think that be the, competition, authorities, will, let it through with some remedies they may have to sell off some stores, and they think that this idea of rolling out I'll goes into all the Asda stores is also good and that. In, a world, where you've got the competition, from Aldi and Lidl and let's not forget Amazon, this, is a way of Amazon, proofing, your business that's what everyone is trying to do as they, ponder. Their next move this makes defensive. Sense and there are some opportunities here ok Simon good to get your point of view thank you very much indeed our business editor. So. We mentioned Sainsbury's, shares shooting, up 20% at the open Tesco, shares down around 2 and a half percent at the moment let's have a look at some of the other business, Soret stories, the chairwoman, of Australia's. Largest listed, wealth manager a MP, that's Catherine Brenner has, resigned following alleged, misconduct revealed.
By A Royal, Commission the, inquiry was told the firm charged. Thousands, of clients for advice they never, received and Pease legal counsel has also resigned and as separately. In, a separate case a financier, is backing a class-action, lawsuit, against, the firm, The. Jockey Club which operates 15 race courses including, Aintree chuff forum and Newmarket, has posted record annual, turnover for, 2017. Revenues. Were up 5.2%. To. 277. Million, dollars, with, operating, profits before prize money also up to 62, million dollars. The. Marvel Studios superhero. Movie Avengers infinity war, has set a new record for global, box office sales on his opening, weekend, industry, observers say, it took in. 630. Million dollars, the takings in North America, alone amounted, to 250. Million dollars a record. For, the region. And something. I found out today is barium is a massive, amaru that I think, movies, are amazing, I've seen genuine. Fan as opposed to me complaining, what makes it also Cricut being forced to go yes absolutely, I will go I will go and watch it soon now moving on words because t-mobile, and, Sprint are, planning, to combine in a mega merger that would create one of America's, largest mobile. Phone carriers, yes. Sprint is owned by Japan's Softbank, whose billionaire, founder master. Yoshi son has been in talks over a potential, deal since. 2014. Speak, to KT silver, she's in Singapore with. The details, KT, tell us more about softbank's. Involvement, here. That's. Right so as you say it's a big day for the companies and if, it passes the regulators in Washington it, will really change the US telecommunications. Industry, but, in terms of here in Asia so as you say Sprint, is owned by Softbank which is as you say founded, by the Japanese billionaire, messieurs Sun now. This deal goes. Back for many years originally, Sprint was the beer company and it would have had the majority stake but, since then times have changed and mr.. Mark mr. Sun rather has ended up having to relinquish some of his power such, as for example in terms of seats on the board now, Softbank, will only have four of the 14 votes while, t-mobile will have nine this. Was a sacrifice, but overall it's being billed as a big win for him it's, going to give him a real foothold, in the US market, and he's been trying to secure this since at least 2012.
But, Of course it's all subject, to regulatory approvals, and this, is by no means a done deal now mr.. Sun has been trying to get into the US market with, big stakes and other companies, such as uber, and the, office space company we work he's, also made forays into private equity on Wall Street but, Sprint has definitely, been his most high-profile. Venture, and if. The deal goes through its, gonna really create them. A company, that they can really take on people, like ating at companies rather like AT&T, and Verizon, and they hope to get to be the biggest in the 5g, space all. Right Katie thanks very much indeed of. Course that's a really, big story we'll see how that's interpreted later, when Wall Street starts, trading the t-mobile, and Sprint aim. To, tie up. So we got an, unusual set of balls today because Japan's closed for a public holiday and so was China earlier today so this is the indian markets that's hong kong of course that's. The dow on friday, so prayer, it fairly robust session in asia investors. Are trying to sort of work through all the earnings news the ongoing earnings news around the world but also of course the geopolitics, of course on friday we had that historic. Meeting of the, leaders of North and South Korea, so, the lots of thoughts still on that and what that means for Asia let's look at European, markets, all, about, the retailers today Sainsbury shares are rocketing test goes down Morrison. And M&S shares, down slightly, 0.6, of a percent not a big reaction there in France quite as interesting, listed in Paris Carrefour, shares up casino. Shares up today a lot, of activity, in the retail space on financial, markets in Europe let's look ahead then to the day on Wall Street is over to Kim gitelson for that it. Promises. To be a busy week, here on Wall Street and it will get off to an early start even. Before markets, open we're going to get the latest reading from the Federal Reserve's preferred, measure of inflation now, if you stay with me here it's called the core personal, consumption expenditure. Index and it's expected to show that prices, in the United States, rose at an annualized, rate of 1.8%. That's. Closer, to but not quite at the feds 2% target, after, that, we'll get earnings from McDonald's, where we're expecting profits to rise Americans. It seems like their latest value, meal and then, that won't be it for investors, we have a busy, week ahead we'll, see corporate earnings from, Apple, to Pfizer, the, Federal Reserve will release its latest interest rate decision, on Wednesday, and on Friday we will get the latest US jobs report. Now. Let's talk to Jessica ground who's UK equities fund management with Schroeder's Jessica morning, Jessica nice this morning let's talk about Sainsbury's, first home because its share price huge.
Rises, On the London market for. This company who's announced, plans to merge with Walmart. Owned Asda, what is the the rise, and share price tell us about how shareholders, view this deal well I think they're, positive. Response they've announced half. A billion in cost savings to be delivered over the next two years so I think that's a really, positive step the share alike the other thing that they, were like is, the, pension, liabilities. Are staying with Walmart and actually. Because as has got quite a lot of its own properties, the balance sheet looks quite, strong, so in, terms of the ability you know for, the. Merger to deliver. Long term value when we know you need to reinvest in online the offering, take, out costs from being competitive. I think people obviously feeling what's been outlined in broad terms is compelling, is this something we saw coming I mean I know in lots of industries you talk about you, know possible, consolidation. This one eyeing that one I know in pharmaceuticals. For example it's the constant, conversation, but did we see this coming well I think we knew that Walmart, was a a weak owner of Asda. They've, got some significant, issues in their us, business. Which shareholders. Are really asking to put pressure on diversity, issue, isn't it for them in the stands is a huge issue so so pressure on them to maybe focus. On that Brazil, and the u.s. look, to be the areas, where they would look, to divest so that, point isn't isn't that surprising let's, move on to Asia, I know you've been recently, haven't you whereabouts did you go so I was in Hong Kong and Singapore which, was great but there's, so much worried about the trade wars really what they're saying about it well I think they're worried naturally because they export, a lot to the US and that's fueled, so much of their growth they are very worried about retaliation and. The. Tone. Of things whereas. Of course you. Know near-term, in Europe I think we're more worried about you. Know how sustained, will will the recovery, be and. They. Have had a long part of expansion, that has been fuelled by exports, so of course they don't want to come back to come to an end interesting. Interesting, Jessica. Thank you for now Jessica, will return and we'll talk some more about some, of the stories out there some of the stories in the papers as well absolutely, but still to come we'll tell, you about one firm that's spending big on billboards. You with business live from BBC News. Now. Less, than a year to go until four exits one, in three, businesses, affected by the UK's change, in customs, arrangement, with the EU still. Aren't prepared that's according to the British Chambers of Commerce who. Along with the Port of Dover have, compiled, a survey of over 800. British, businesses. Anastasiya, a bellyache over their head of trade policy, is, with us now. Anastasiya. Good, to have your own business live so, just tell us a bit more about, what you found so there, are search that we conducted, with Port of Dover and. By the way Port of Dover and yura tunnel those. Two places is where one-third of our goods trade with the EU goes, through what. Our research has showed is that companies. Even though many of them operate, a just-in-time, model, even, though many of them are sensitive, to changes in customs, procedures they're. Worried, about congestion at ports many. Of them are not planning, for what is going to come in, our future trading relationships, with the EU which, means that when there are changes down the line many, of them could be very badly affected but. Is it not fair to say anastasiya that many of them have not necessarily prepared. Because they're not sure what they're preparing for it's. Very fair to say that and actually, the political, situation now, particularly. The endless, discussions, about whether or not we're going to be in, a customs, union with the EU in the future or not are really, not helping matters and, the. Additional, issue with the focus, on the customs union is that many other questions, particularly. Whether they're going to be checks, on, chemicals. Or medicines, on products. Containing animal parts. At, the, border whether, these checks are going to take place that's not being addressed and far. Too much attention, is being put. On issues. Relating. To the customs and not addressing others, that are very critical for companies, all, right we'll have to leave it there but thank you very much anastasiya bellyache. Over the head of trade policy at, the chambers of commerce. British chambers of commerce of course with. Regards, to customs union and where we're headed in the UK and without bread having, resigned that's a whole nother month, website.
Quickly Sainsbury's, of course is all over the website but we have had some other news in to serve the, construction, and support services, firm has reported its results today which have been lost in the Sainsbury's. Excitement, an extremely. Poor year last year for inter serve pre-tax. Losses with 244. Million pounds, for the group plenty of more, stories on our website just go to BBC com forward slash business. Your. With business live odds top story today the US retail giant wal-mart, is merging its UK operations, Asda, with the, supermarket chain Sainsbury's it's. A share and cash deal yes it hopes to Walmart, will gain a minority, stake in the, new company 42, percent and it will receive just over 4 billion dollars in cash for the deal if it goes through quick. Look at Marcus just to say we. Haven't, mentioned this yet so, far in the program but the Home Secretary, in the UK amber red late last night announced, her resignation there's. Not been a big reaction in pound, sterling, so may have thought it could have moved off the back of that news because of course it does cause. A lot of questions with regards to the, government. And its policy with regards, to Boer, exit and the makeup of Teresa Mays cabinet, to keep an eye on that story yes do now first let's go to our inside. Track story today because as the digital online, advertising, market grows, at breakneck speed, many. Traditional, mediums like print are struggling to keep up well, the internet juggernauts, Google, and Facebook together, now control a whopping 25 percent of the total global advertising, market. But, despite the competition from online the outdoor, billboard, market is proving. Remarkably. Resilient it's growing at around 5% a year and is estimated, to reach more than 45 billion, dollars, in global sales by 2021, the UK firm wild stone is just one company which is positive, about, the future in this industry it's on a 1.3. Billion dollar acquisition spree. Buying, a billboard sites across, the UK and Europe and, the world is in its sights joining. Us now is Damien Cox who's the founding partner of Wilde stone Damien first of all tell me exactly what. While stone does you go around looking for places to put billboards on right I suppose, sort of and the company started as a consultancy, in 2010, and primarily, following the recession, lot of local authorities and private landlords were finding it difficult to maintain, their own budgetary, requirements so we found we, had an opportunity to help them unlock revenue, from Birla derelict building a car. Park and so on and so forth so they could make you. Know a revenue. Per annum from a billboard site in 2015. We the company moved more into the acquisition, side so we actually now use our ancillary, cash and indeed we signed a large deal with an American company a year, and a half ago to. Deploy. About a billion, pound. Sterling into the European markets to buy billboard, assets and these are digital. Billboards. So it's no longer the man with the broom changing. The poster anymore or the woman with the broom for that matter that the, board can be changed, very very quickly to suit, the advertiser definitely. With the emergence of the internet and advertising, pump through to you at every single Avenue you, know gone are the days of the man up the ladder they still are paper and paste what we call paper and paste billboards in the market but last year 50%, of all the revenue from, the out of home advertising market, came from digital it's a growing market and it allows advertisers the opportunity, to reach their audience, at a much, faster pace you're not five o'clock they can advertise their biscuits are cheaper than they were at four o'clock which, is a huge advantage to advertisers what where's, the line between you know getting, that message across to people advertising.
And Bombarding. People with too much in terms, of sensory overload when, they're trying to drive along a road, and just having advertising, billboards, everywhere constantly. All the time it's. Like any market, supply and demand if there were billboards at every street corner then, they have to have does market wouldn't retain value it's in the industry's interest, to make sure that its specific, advertising in specific areas so, we're with you on that we don't want to see Las Vegas and we promote, that Lots with local authorities you, know it's not in our interest as an industry to have it plastered, left right and center and how, do we know what impact they have fooled, the advertiser, because, obviously, the. Driver is, looking out the, window you would hope out the windscreen but most, other passengers, may well be looking at, another screen, which is the one in front of them their tablet their smart device whatever that may be fewer, looking out the window these days on. Trains, as well or whatever there and, moving in and it with driverless cars coming to the fore that, will become even more prevalent won't it I think it's a really valid point there, is a statistical. Data, used in the market called route that analyzes people, their facial movements when they pass billboards and each billboard, has a route score with. The emergence of programmatic buying which is taking away necessarily. From some of the agencies I an individual. Working out what billboards are going to buy as part of a campaign I think you're gonna see more and more of the industry moving towards data but why do you think your, industries, remain pretty resilient, when others have really, really struggled, like you know traditional, advertising. In print mediums that kind of thing of really battled, whereas the billboard just keeps, growing, I think the Billboard remains, it's an ultimate cut through you know you don't have to buy a magazine from a shop you can if you decide to billboards.
You Know if you drive down the road and there is a billboard on the side of the street you have to see it it's very difficult not to notice it so I think it's purely, and simply that okay. Dana Cox founding, partner at Wilde stone very good to talk to you thank you very much thank you now. In a moment we're going to have a look at some other stories in the business pray pages, but first of all here's how to stay in touch. Stay. Up-to-date with all the day's business news as it happens on the BBC's business, live page there's, insight, and analysis from our team of editors right, around the globe and we. Want to hear from you to get. Involved on the BBC's business, live web page at BBC, comm. Slash, business, on Twitter. Were at BBC business, and you. Can find us on Facebook at BBC, Monday business. Live from, TV. What you need to know when, you, need to know. Time. To look at the business pages and Jessica ground from Schroeder's joins us back again. Welcome back now let's talk about Sainsbury's, it's all over the business pages isn't at this story a, lot of them are asking okay so we've seen you, know that what this deal is about now, this morning but, what about the competition watchdog. What is going, to happen there is it going to get the go ahead what are the main stumbling blocks here definitely, well Booker. Tesco, got the go ahead without any remedy but, we, now have a new head of the CMA who's, a, tough, very, tough talking former, MP. So it's definitely under, a lot of scrutiny now. It will only be the fact that the combined, group will have 31 percent, national market share they, really, will drill down and look at individual, markets, and. Individual, areas, as closely, as possible we, heard. From Mike coop earlier the CEO of Sainsbury's, that will soon become the CEO of this newly formed company and he was saying for, customers you will really benefit because he's promising a 10 percent fall in prices on essential, items so we asked you earlier where. You shop and why and we've had quite a big response haven't yes James has. Tweeted to us saying Amazon, fresh they have the best prices, and service that is a big thing as an Amazon you. Who says aster is nearest to home keenest, price wise whilst Tesco, gives Club Card points what makes it worth the effort to shop with them so, it's an Asda and Tesco mix for us we've got Ronnie I am mainly loyal to aster because it's my go-to ever since I was a little girl and Ian says loyal only to a card o for the main food shop but I also use Morrison's, as its the nearest big supermarket, an Aldi, pound, shop for the bulk stuff no one retailer, has all the best deals and that's the key isn't it that ian has really, hit them now on the head it's not just about one retailer for a lot of people it's the fact that everyone just wants convenience, nowadays, it's not just big stores definitely. And huge, I mean the wreaths the, discounters, have taken have doubled their market share recently in the UK and it's interesting that a number of people name, check them as well now, if you're an apple shareholder it's, a win-win for you isn't it it would seem Apple, expected to be shareholder, returns by at least a hundred billion dollars, really. Interesting, though yes some of the questions is are they giving the money back because there seems to be less investing, and it's getting tougher, you know, we're all holding onto our iPhones for longer and that renewal cycle there, have also been some interesting things coming up from their supply chain or some of their suppliers having a tougher time so, I think a lot of people will be looking at the detail those results, with a lot of scrutiny but this is an example isn't it of a big big American, corporation.
Repatriating. Money, is that the Trump tax, reforms, it's all those things rolled into one here isn't it's the consequences, of that exactly, an Apple for a long time had a lot of cast cash, on its balance sheets so this. Isn't so. The fact that it's distributing, to shareholders, is definitely. Waiting. For this Julie well there's been quite a lot of outside pressure on them as well to do, this but, I think it's important that they continue to reinvest. For. Growth you know we've talked about all this tech disruption. You, can't rest on your laurels, okay. Jessica so good to talk to you thank you very much joining us now plenty. Of all the latest business stories, are on our website including the latest from, that sainsbury's, and as debt merger do go on there to have a look if you want more information and do keep tweets, coming in on our Twitter question on your favorite supermarket group interesting. We've got one here from Robert I believe this will be harmful, to both them as the public, I'll, look at the market again as a consequence, of these two companies teaming, up thanks for all your views see, you soon. Hello. There we've got plenty. Dry and bright weather across the UK today but, for some of us the weather is going to be atrocious. Down to water South East of England some. Heavy rain some strong winds and certainly. Disruption. Likely right throughout the day today it's all because, this area of low pressure you, can see this weather front associated with it it's, just gonna stick with you across the Far East of England went, into the afternoon further north and west something, drier and brighter but, as I mentioned atrocious. Conditions down towards the southeast some, localized flooding possible, with some strong winds around coastal, areas in particular there, could be some coastal overtopping, further, west well there'll be some sunny spells towards, Southwest England and across, at West Wales as well but. Really. With all this cloud there's rain temperatures, no best better, than about, five to seven Celsius, further, off from west they won't get those temperatures up into the double figures there'll be some sunny spells northwest, England up into Scotland Northern, Ireland perhaps the odd shower in the far northwest of Scotland and temperatures. About, 9 to 14 degrees Celsius so these sort of temperatures, are. Pretty disappointing. For the time of year bear in mind we're almost in May, as. We go through tonight this area rain will continue to clear away now might just linger on of, course parts of Norfolk, and Suffolk, into the after into, the early morning otherwise, that with clear skies it's gonna be quite a chilly night so there'll be some Frost particularly. In northern parts temperatures, here getting, below freezing but if many started off on a sunny note on Tuesday. That, sunshine will continue across southern and eastern, areas, but further west we'll see, this cloud and rain moving, its way in towards western Scotland through West Wales temperatures. Much better towards the southeast a big difference, big jump 11. 14, 15, degrees now. Going through Tuesday, night into Wednesday we've, got this weather front which is moving its way eastward but, actually most of the rain will clear through through, the overnight period so while still, be there across so, lincolnshire east anglia the southeast during Wednesday morning it will continue, to clear away that, Ballou showers, coming into northern western parts of those could be heavy on, Wednesday. Otherwise. They will be dry with some sunshine and, temperatures. About. 10 to, 14 degrees so still below the average but I can offer some fairly good news in terms of those temperatures because going into the end of the week they, are going to rise 19. Celsius in London by Friday. Even in ellebra and Belfast that temperatures, in the mid to high-teens bye-bye.