TTesla shareholders’ hearts must sink every time Elon Musk takes on another pet project. At least that’s its own money, which wasn’t the case when the automaker spent $1.5 billion on bitcoins last year, but a 9.2 percent stake in Twitter has the potential to become a serious distraction from day-to-day work .
The nearly $3bn (£2.3bn) purchase was structured as a passive investment, but one doubts Musk intends to buy and hold forever. That’s not his style. Possible storylines include a request for a board seat or even a full takeover bid in a timely manner, analysts speculated, not unreasonably. He can afford the latter.
Musk hasn’t said anything about his intentions, but it was impossible to miss the big excitement ahead of time. He flirted with the idea of launching his own social media platform and conducted an unscientific Twitter poll asking if the platform “rigorously adheres to the principles of free speech.” He sounds like a man on some sort of mission, not just one fraught with past run-ins with US financial regulators over his tweeting activity.
Tesla’s independent directors will likely never restrict Musk’s extracurricular activities, especially this one: the boss’s high profile has saved the company a fortune in advertising dollars over the years. However, it’s also hard to see any benefit to the company from Musk being dragged into toxic battles over the role of social media in the US political landscape. Leading the electric vehicle revolution is hard enough without unnecessary detours.
Ted Baker shouldn’t be afraid to reject private equity
There were two directions Ted Baker could have taken following founder Ray Kelvin’s departure in 2019. One would have included drifts and more profit warnings – we’ve seen this script a few times in the fashion industry after the founders left. Alternatively, the company could reorganize and focus on murky day-to-day tasks, such as
Fortunately, the latter seems to have happened under CEO Rachel Osborne, who arrived as finance director and found herself catapulted into the top job in no time. A massively dilutive £105m share placement at 75p in June 2020 to correct the balance sheet means the old £20+ share price will never return, but operationally Ted Baker appears to be getting a few fundamentals right. Sales rose 35% last year and the damage to the brand appears to be minimal.
The interest of private equity is therefore not surprising. With a market cap of around £270m, Ted Baker makes an interesting bet. The balance sheet is clean these days, the international presence is developing and UK e-commerce sales have already reached half of total sales for the last six months. The post-lockdown trend towards smarter kits is also having a positive impact on the company.
The board had already rejected approaches from New York-based Sycamore Partners at 130p and 137.5p. Now it has received an improved offer from the same source and at least one other potential bidder has surfaced. In these circumstances, moving to a formal sales process that means not being tied to standard bid timelines is a legitimate way to proceed.
However, assessing fair value for a company in recovery mode after a volatile lockdown trading period is not easy. Toscafund will have an opinion with a 28% share, but they prefer to know how far the board thinks they can get on their own. Ted Baker obviously doesn’t need rescuing. If none of the offers are entirely compelling, directors should not be afraid to say no.
The Treasury doesn’t need a trendy NFT
There’s nothing wrong with the Treasury taking a reconnaissance walk around the crypto block when we talk about stablecoins, i.e. cryptoassets pegged to a fiat currency as opposed to cryptocurrencies, which appear to be little more than vehicles for wild speculation . Indeed, stablecoins could bring profits to businesses and consumers by lowering transaction costs as long as payments take place within a strong regulatory framework.
But the Chancellor, Rishi Sunak, rather undermines the idea of high-spirited regulatory seriousness by dabbling in a non-fungible token, or NFT. The Royal Mint was asked to create an NFT “to symbolize the forward-thinking approach the UK is committed to”. Don’t rush everyone at once. The Treasury would be better off sticking to boring technical reviews of payment systems; It doesn’t have to perform fashionable stunts.