A round up of some of the week’s most significant corporate events and news stories.
Apple looks to McLaren for electric vehicle formula
Apple’s secretive electric car project has been under way for more than two years, but evidence of its existence has so far been scant. This week’s revelation of the iPhone maker’s interest in McLaren Technology Group, the British supercar engineer and racing team owner, is the clearest sign yet of its intent to upend the automotive industry, writes Tim Bradshaw.
Over the summer, Apple discussed a potential acquisition or strategic investment in McLaren, people familiar with the negotiations told the Financial Times. This could value the Woking, Surrey-based company at up to £1.5bn. The sum may be small for Apple, the world’s most valuable company with more than $200bn in cash held offshore, but it would represent a rich premium for the lossmaking automotive group, which is owned by its chairman Ron Dennis, Mansour Ojjeh, and Mumtalakat, Bahrain’s sovereign wealth fund.
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McLaren is best known for its Formula 1 team, but Apple’s interest is said to focus on its engineering expertise, particularly when it comes to using novel materials and manufacturing techniques, as well as its intellectual property.
While Apple declined to comment, McLaren sought to play down the report, saying in a statement that it “is not in discussion with Apple about any potential investment”. However, the company did not say whether it had been approached previously.
The circumstances surrounding the potential deal may have changed in recent weeks, amid a shake-up in the Apple car project. After Bob Mansfield, an Apple veteran, came in to lead the unit earlier this summer, its priority has shifted towards developing a fully autonomous system, people close to the company have said. Dozens of staff have left Project Titan, as the automotive team is codenamed, in recent weeks, following the strategic reboot.
Nonetheless, the talks with McLaren signal that Apple is prepared to look outside the company for expertise in breaking into a new market. That echoes its $3bn acquisition of Beats Electronics two years ago, which accelerated Apple’s move into digital music streaming, as well as paving the way for the iPhone 7’s shift to wireless headphones.
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US unveils national policy for self-driving car rollout
This week saw a major step forward for self-driving cars in the US, the world’s second-largest car market, as the federal government unveiled its first set of guidelines for autonomous vehicles, writes Leslie Hook.
The new rules pave the way for the development of self-driving cars that conform to national-level rules, rather than patchwork regulations at the state level. The guidelines, which fall short of being formal laws, are designed to be changed and updated as autonomous technology evolves, and officials said they would update the policy once a year.
Carmakers and transportation companies had been concerned that individual US states might enact restrictive laws around self-driving cars, such as a proposal earlier this year in California that included a requirement for a human driver to be ready to take control of an autonomous vehicle at all times.
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Carmakers welcomed the new rules. The Self-Driving Coalition for Safe Streets, which counts Uber, Google, Volvo, Lyft and Ford as members, said the guidelines were “an important step forward in establishing the basis of a national framework for the deployment of self-driving vehicles”.
The commercial use of self-driving cars has also taken big steps forward recently, with test-phase launches of taxi fleets using autonomous vehicles in Singapore and the US city of Pittsburgh.
Uber started taking passengers on test rides in its self-driving cars in Pittsburgh last week. Uber has a $300m partnership with Volvo to jointly develop driverless technology and has said it will introduce new self-driving Volvos later this year.
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Ruling against EU Airbus subsidies bolsters Boeing
It has been an eventful week for Airbus Group after the World Trade Organisation supported claims from rival Boeing that it continued to receive billions of dollars of illegal EU subsidies, writes Peggy Hollinger.
The ruling marks the latest chapter in a 12-year battle that shows no sign of ending soon. The WTO will rule next year on whether Boeing continues to receive illegal aid from the US and is widely expected to find that it does.
Meanwhile, the Financial Times reported this week that Airbus is preparing to announce a wide-ranging restructuring next month as it seeks to complete the
integration of its aircraft subsidiary and to cut costs.
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Fabrice Brégier, the head of the company’s commercial aircraft division, is expected to be promoted to chief operating officer and will take on a new group-wide responsibility as part of the wide-ranging plan.
With the appointment, Tom Enders, the group’s chief executive, is attempting to lay to rest management tensions sparked by closer integration of the Franco-German aerospace group and break down the fiefdoms that still exist — and that add cost — within the group formally known as EADS.
The restructuring will tighten Mr Enders’ grip on the civil aerospace division which accounts for 70 per cent of the European company’s revenues. He aims to eliminate duplication of certain functions between the aircraft subsidiary and its parent, as well as with other business units.
The plan has not yet been finalised but could include job cuts across the group.
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Santander pulls out of talks to acquire Williams & Glyn
Santander has withdrawn from talks with Royal Bank of Scotland to acquire Williams & Glyn in a blow to the state-backed lender’s attempts to sell off the challenger bank, writes Emma Dunkley.
The Spanish bank submitted a formal offer to buy the 300 Williams & Glyn branches from RBS last month, bankers told the FT.
But Santander has now pulled out of the acquisition negotiations, according to two people briefed on the process. One person said this was because of price disagreements, noting that Williams & Glyn was originally valued at about £1.9bn.
The latest development is a major setback for RBS, which is 73 per cent owned by the government, after it has spent seven years and £1.6bn attempting to separate Williams & Glyn.
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RBS must divest Williams & Glyn by the end of 2017 as a condition of European Commission rules for receiving a £45bn bailout during the financial crisis. Ross McEwan, chief executive of RBS, has said in the past that offloading Williams & Glyn is a precondition for returning excess capital and dividends to investors.
RBS is understood to be in discussions with the Treasury about other ways it could meet the EC’s criteria. One senior banker suggested that instead of a sale, a number of banks could acquire different customer groups of Williams & Glyn.
The bank abandoned plans to create Williams & Glyn as a separate bank with its own IT system and licence last month, pointing to the lower for longer interest rate environment and the impact this would have on creating a profitable bank in the future. Santander, the Treasury and RBS declined to comment.
Senator calls for criminal probe of Wells Fargo chief
Wells Fargo’s hard-won reputation as a customer-friendly lender was further compromised this week as lawmakers piled pressure on the US bank over its bogus accounts scandal, writes Alistair Gray.
John Stumpf, chairman and chief executive, was put through the wringer in a blistering hearing on Capitol Hill.
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Elizabeth Warren, the Democratic senator, said he should be “criminally investigated” after regulators found that thousands of Wells employees secretly created as many as 2m accounts and credit cards. In some cases staff invented email addresses and forged signatures, and the bank charged fees on accounts customers did not know existed.
The focus shifted this week from how Wells treated consumers — the bank has already paid a $185m fine — to how it dealt with staff. Lawmakers contended workers resorted to fraud because they were under intense pressure to hit sales targets. Later in the week, senators wrote to President Obama’s Labor secretary Thomas Perez, calling on his department to investigate whether the bank breached employment standards.
The episode is raising more questions about the future of Mr Stumpf, who resigned with immediate effect on Thursday from an advisory position at the Federal Reserve following political pressure. Wells said it was his “personal decision” to go, adding “we pride ourselves on creating a positive environment for our team members”.
There is no end in sight for the bank, which has lost about $22bn of its market capitalisation since the scandal erupted. Mr Stumpf has been summoned to testify at another Congressional hearing next week.
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