Top 5 Commercial Updates This Week - Ollie Burgess and Tanvi Dhingra

1. Will Shell Split Up?


The activist hedge fun, Third Point, who own a $750 million stake in Shell (which works out at just 0.25 percent) announced a proposal to split the oil major into several companies. Despite owning such a low proportion, this still makes them one of the largest shareholders of the firm which is valued at $187 billion.

They argued there was ‘hidden value’ which could be unlocked by splitting Shell into its oil and renewables divisions. However, Shell themselves, and other major investors, have rejected such plans. They pointed out that much of the renewable arm’s funding has come from the legacy business, and think it’s unfeasible to find the necessary funding if the company were to break off. Others have pointed out that such a highly integrated company could prove near impossible to break up, even if it may help investors’ pockets.



2. J&J Baby Powder


It has been an issue for several issues about the effect that J&J’s baby powder has on health. There are 38,000 lawsuits against J&J precisely because of the asbestos present in their baby powder. However, J&J launched a company called LTL and transferred those lawsuits to the new company; they did this by giving LTL the liability for the product.

LTL then filed for bankruptcy in a federal court to limit how much they would have to pay in damages. This means that consumers negatively impacted by this product are unable to truly achieve justice as instead of fighting J&J, they have to target the smaller company that J&J created for this purpose that has filed for bankruptcy. J&J has been aware of the asbestos in their products for decades but has not made any move towards a solution. This solution allows J&J to use bankruptcy against these lawsuits without having to actually file for bankruptcy themselves. Other companies are making similar moves.


3. Major Pledge on Zero-Carbon Shipping


Also this week, nine big companies pledged to only move cargo on ships fuelled by zero-carbon fuel from 2040. The Aspen Institute – the organisation coordinating the campaign – managed to get the signatures of Ikea, Amazon, and Unilever under the plan which they hope will push the shipping industry to decarbonise sooner. It’s one of the world’s most heavily-polluting industries, making up 3 percent of global carbon emissions.


Experts have suggested the decarbonisation of shipping could cost as much at $2 trillion. Nonetheless, under the Paris Agreement, the shipping industry must be fully decarbonised by 2050. Either way, then, it’s going to be expensive. The first nine firms to sign up to the pledge are just a drop in the ocean relative to the progress that needs to be made.



4. Chinese Telecom Company’s US Licenses


There was a meeting between the US and China that was taken to be the sign of the start of improved relations after the recent conflict. However, hours after the meeting, China Telecom’s license was taken away in the name of national security. The US based this on the Chinese control over the company. Companies in China tend to have more government influence because the role of the state is considered more important than in other nations.

China Telecom had operated in the US for 20 years at that point and was told to stop providing services within 60 days. This is a continuation of the US targeting Chinese telecoms companies due to national security fears. The US is afraid that China will use these companies for intelligence purposes.



5. A Big Week for Facebook


It’s been a big week for Facebook in the news. The bad news for Facebook is that whistle-blower information suggests the company has evidence to show the harm that the app does to teenagers’ mental health. They are also now being investigated by the Federal Trade Commission as to whether they broke a $5 billion settlement agreement over user privacy.

On the good side, they announced a huge quarterly profit of $9 billion, and their user-base had grown by 6 percent in the last year. They also announced the major rebranding of the firm. Its new name is Meta, which is designed to signify their venture further beyond social media, and into areas like virtual reality.



 

https://www.npr.org/2021/10/21/1047828535/baby-powder-cancer-johnson-johnson-bankruptcy?t=1635511354354


https://www.bbc.co.uk/news/business-59055360


https://www.bbc.co.uk/news/business-58970877


https://www.ft.com/content/51b6ddd3-cbbf-46ae-abdf-c1f5c1945e37


https://www.telegraph.co.uk/business/2021/10/29/investors-back-strategy-wall-street-raiders-swoop/


https://www.bbc.co.uk/news/technology-59083601


https://www.businessinsider.com/ftc-probing-facebook-over-leaked-whistleblower-files-report-2021-10?r=US&IR=T

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