LONDON’S BUSINESS NEWSPAPER
DEADLINE LOOMING LONDON IRISH MUST PROVE FUNDS BY JUNE OR RISK POSITION P20 TUESDAY 16 MAY 2023
ASTON MARTIN NEW SUPERCAR MARKS END OF AN ERA P18
CITYAM.COM
ISSUE 3,980
FREE NO DEAL
Apollo spikes £1.7bn bid for Wood Group GUY TAYLOR
GREEDFLATION ROW HEATS UP
EX-RATE SETTER SAYS PROFITEERING NOT TO BLAME FOR PRICE SURGE AS WATCHDOG STEPS UP SCRUTINY OF FOOD AND FUEL PRICES JACK BARNETT AND GUY TAYLOR “GREEDFLATION” is not to blame for prices surging in the UK, a former Bank of England rate setter said yesterday, arguing that companies are instead pushing up prices in response to soaring costs. Michael Saunders, who is now senior economic adviser at consultancy Oxford Economics, said isolated incidents of rising profits “do not reflect the overall picture” of the UK economy. Speculation that companies have been exploiting the inflation crisis by unfairly
lifting prices to beef up profits, a process known as “greedflation”, has gathered momentum in recent weeks. Supermarkets have been criticised for not passing on the reduction in commodity and transport costs as quickly as they raised prices after those costs soared. But Saunders rejected assertions supermarkets are participating in greedflation. “The bulk of UK food price inflation reflects cost increases from the international surge in prices for agricultural commodities and energy,” he said in a note
to clients yesterday. His comments came as the Competition and Markets Authority (CMA) stepped up its review of the grocery sector due to ongoing concerns about high prices. CMA chief executive Sarah Cardell, however, said she recognised “that global factors are behind many of the grocery price increases” adding that it has seen “no evidence at this stage of specific competition problems”. Andrew Opie, director of food and sustainability at the British Retail Consortium, said: “When cost pressures
facing retailers do eventually ease, retail prices will follow fast as they fiercely compete for market share.” But in an update to a separate study into fuel prices at supermarket petrol forecourts, the CMA said the evidence shows “while the majority of fuel price increases are due to global factors, such as the Russian invasion of Ukraine, indications are that higher pump prices cannot be attributed solely to factors outside the control of the retailers”. £ CONTINUED ON PAGE 2
SHARES in John Wood Group plummeted nearly 35 per cent yesterday after US private equity firm Apollo Global dropped its £1.7bn takeover bid for the oil and gas engineering firm. Apollo’s decision not to make an offer for the Aberdeenheadquartered firm came just two days before the 17 May deal deadline to make a firm bid or walk away. Following Apollo’s announcement, Wood Group said the board “remains confident in the firm’s strategic direction and longterm prospects” and believes that after a strong year, and with new executive leadership, it was “well placed to deliver substantial value for shareholders”. Wood Group first revealed in February that it had rejected three unsolicited approaches from Apollo, saying at the time that each bid “significantly undervalued the repositioned group’s prospects”. But after rejecting another bid, it decided to consider a fifth bid for 240p a share in cash, which valued Wood Group at around £1.66bn. Last week, Wood Group maintained its annual forecasts as it revealed turnover for the first quarter of around $1.45bn. (£1.25bn).
Restart game? EU approves Microsoft’s $69bn Activision bid after UK blocked deal JACK MENDEL MICROSOFT’s $68.7bn (£54.8bn) bid for Activision Blizzard was approved by EU regulators yesterday, just weeks after the UK’s competition agency blocked the deal. The European Commission decided to approve the deal as it was satisfied
with the measures the firms had put in place to address competition concerns. The UK’s Competition and Markets Authority (CMA) blocked the deal last month, sparking furious reactions from both firms, with Activision saying “the UK is clearly closed for business”.
The US Federal Trade Commission has also moved to block the deal. Following the Commission’s decision, CMA chief executive Sarah Cardell said the agency stood by its decision, which both companies are challenging. She said Microsoft’s proposals, which were accepted by the
Commission, “would allow Microsoft to set the terms and conditions for this market for the next ten years”. “They would replace a free, open and competitive market with one subject to ongoing regulation of the games Microsoft sells, the platforms to which it sells them, and the conditions of sale. This is one of the
reasons the CMA’s independent panel group rejected Microsoft’s proposals and prevented this deal,” she said. “While we recognise and respect that the European Commission is entitled to take a different view, the CMA stands by its decision,” she added.
INSIDE FISCAL DRAG TO CATCH OUT MILLIONS P3 UK LOOKS TO UNIVERSITY SPINOUTS P10 THE FIRM THAT COULD TRANSFORM THE METALS MARKET – FOR GOOD P11 OPINION P16