This is a City AM Studios production.
SPEAKER_04Hello and welcome back to Business as Usual with me, Martin Kimber. And me, Matt Kenyon. Coming up on the podcast, Hugo Boss has told its investors to reject a buyout offer from Mike Ashley's Fraser's group.
SPEAKER_05Could the government be about to limit access to virtual private networks? Are VPNs just a way to conceal wrongdoing? Or the last bastion of internet freedom in the UK?
SPEAKER_04Plus, is air conditioning overwhelming the UK's electricity grid. Now it might feel like we are approaching the silly season, but the square mile is not showing any signs of logging off just yet. So thank God that we have joining us our markets maverick, Simon Hunt. Hello, happy to help. Simon, I suppose big news of uh the end of this week uh is on the attempted Mike Ashley buyout of Hugo Boss, which they are resisting pretty damn hard.
SPEAKER_00Yes. So uh Ashley's Fraser's group, uh, which owns Sports Direct and several other retailers, made a 2.7 billion euro offer to acquire a German-listed Hugo Boss. Uh, but that offer has now been roundly rejected by the board, who said the offer was inadequate, which sounds like a very German response to an offer. So this is not adequate. Um But it does raise questions about whether this takeover will succeed, or indeed whether it was intended to succeed. Because Ashley already owns, or his firm, Fraser's Group, already owns, more than a quarter of the stock of Hugo Boss. And German stock exchange rules dictate that once you hit 30%, you are obliged to make a takeover offer. And so there is a thought that he was about to hit that threshold, therefore they have made a low ball offer because they are obliged to, not because they're not gonna be able to do that.
SPEAKER_04And is there the rule you just have to make an offer at some point just to show statement of intent, but it doesn't necessarily have to work?
SPEAKER_00Indeed, indeed. And so maybe there is an expectation that he just did it because he wants to increase his stake above 30%, not necessarily to get it up to 100%.
SPEAKER_05Are those are that is that rule designed to stop like companies being poached off the off of their stock exchange?
SPEAKER_00I think it's because once a particular shareholder's influence gets above a certain threshold, they have a sort of outsized influence over the whole company and they can sort of, you know, their their voting power is so strong that none of the other shareholders get to have a say. And so at that point, it feels appropriate for the other shareholders to understand that company's intentions. Do they actually want to buy the company outright, or do they have some other kind of strategic objective? So it seems like, because it's quite a low-ball offer, this offer of 38 euros a share is uh lower than what the company was trading at as recently as last year, and about half what it was trading at as recently as 2023, that maybe Ashley's Fraser's group has just done this because they have to, not actually because they want to take it over.
SPEAKER_04Was there any point at which Mike Ashley had set out a particularly fleshed-out plan of what he would do with Hugo Boss if he had it? Because obviously, as you say, like shares are down 50% on 2023. Yeah. But was there a vision for what would have been done?
SPEAKER_00Well, it's certainly an opportune moment to take it on because that the share price is languishing. And so it would be a bit of a bargain were he to have been successful with this offer. But it there is something of a pattern of this is the way Ashley or Fraser's group runs its investments in that it gradually increases its position in various different listed companies over time rather than just suddenly approaches it with a massive takeover, having having never been involved in the company.
SPEAKER_05Boss is a weird one. Like you don't really see many people talking about boss or I don't really see it as a logo on very many t-shirts and stuff like that. It's definitely retreated slightly and it's like.
SPEAKER_04I don't know if that's too opinionated to say. I think it's it's it's it's not it's not zeitgeisty at the moment.
SPEAKER_05I think there's a I see more people with Ralph Lauren walking around, the little polo. They're becoming quite crass.
SPEAKER_04It's still very expensive.
SPEAKER_00It's still pretty pricey. I mean, I went to a Hugo Boss um outlet store last year, I remember, where everything's supposed to be discounted to what you get on the high street. And even the discounted prices, I thought it was a bit too much for me, I'm afraid. So yeah.
SPEAKER_05Well, so I mean something slightly different. Um even though Andy Burnham has said he wants to strengthen Britain's defences and wants to prioritise British workers and British businesses, aka UK defence companies, uh, by doing so. Why have those companies' stock prices kind of remained relatively muted after that?
SPEAKER_00Yeah, well, I I mean what was interesting was in um Andy Burnham's first big set piece speech ahead of becoming Prime Minister uh up in the north um a few days ago, he gave this sort of wide-rating speech, but there was very little on defence, and it did feel like it was sort of the elephant in the room, given that that was uh what ultimately led to the defenstruation of Starmer. So Burnham has now um uh nipped that in the bud and has given some indication as to what he wants to do with defense, but it's all kind of broad brush stuff at the moment where he says defence is my first priority and we must make sure that we have a robust you know army in the world.
SPEAKER_04Out of context, that sounds like it could be a Starmer quote.
SPEAKER_00Yeah, well, exactly, exactly. And I think um perhaps the share reaction that we've seen from defence firms is a bit of an acknowledgement of that. That yes, you know, all politicians say defence is important, bar you know, a few the Greens, whatever, but they don't, you know, that's fire through. Exactly.
SPEAKER_05Yeah, they sort of don't put their pound where the Trevor Burrus, in the news meeting earlier I said, like, you know, is it kind of like the Trump always chickens out thing, but it's Labour always chickens out on actually paying for defence.
SPEAKER_00Yeah, so what Burnham has not done is is put his money where his mouth is so far. And so we've yeah, we've seen a bit of a mixed reaction uh in the stock market. Rolls-Royce is up, but BAE is down, Babcock is also down.
SPEAKER_04Rolls-Royce has been remarkably resilient throughout all of this. One thing which is quite striking, which I think Andy Burnham can take some solace in, is that Al Kahn's, who was the other defense minister who quit when John Healy did, as you say, ultimately leading to the defenestration of Keir Starmer, has now rolled in behind him. Yeah, is actively supporting Andy Burnham. So who maybe some kind of deal has been done behind closed doors to make some more reassurances to the defence sector? But who knows? That's just speculation. He was the Raymond Chishti of this contest. Yeah, the the dark horse. One more thing, Simon. Why is it that a London listed firm has been selling gold mines to pay for little stores?
SPEAKER_00It's a good question. Uh, and it's just one of a number of examples of the weird and wonderful things that happen on London's small cap aim market. So I've been taking a look at a firm called Roadside Real Estate, which is listed on AIM, and it's had quite a fascinating history over just the past five or ten years. So it began life as a West African gold mining company, then sold its interest in that mine and became what is known in the technical jargon as a cash shell. In other words, there was nothing in the company other than a bank account from which it collected the proceeds from selling this mine. And so there was a it either had to wind up and return all the money to shelders or do something else. And the company briefly flirted with the idea of becoming an Indian glasses maker, which is obviously the natural next step after gold mining in Africa. That's my backup plan. Uh unfortunately, that takeover deal fell through. Uh they didn't reach a reach an agreement with the with the company. So they then became a Gloucestershire-based uh pub and hotel chain. Again, the natural next step after I see. That went okay for a while. They bought up a few other things like a coffee shop chain, a few petrol stations, and a few a few lidles. They then invested in a Cambridge-based biotech company that um that deals with audio-based uh sleep therapy techniques. And then they got really big into petrol stations. So it's quite it's been quite an interesting little life for this company called Roadside Real Estate. But um this new CEO came in a while back called uh Charles Dixon, who is from a family that made their fortune having founded the uh Yates' wine lodge group back in the 19th century. They sold that about 20 years ago. Uh, and he's decided basically to cut all of the strange weird investments that the company's had and just focused on the petrol stations.
SPEAKER_05You look at that balance sheet and he's like flipping next. Yeah.
SPEAKER_00So they got rid of the pub chains, they got rid of the coffee shop, they have um sold down their interest in this uh biotech firm, and now they've gone big on petrol stations. And he now says he expects over the next few years for the company to own 400 of them across the UK, which would make them one of the biggest operators in the country. Um, and that puts them on a glide path of being on on a par with some of the other big operators, like EG Group, of course, the company owned by the billionaire Issa brothers, which is about to float in the US with a $9 billion market cap. So this random company that did all sorts of weird and wonderful things could one day be on the scale of EG Group.
SPEAKER_04Simon, that was one of those stories which I think almost evaded any follow-up questions because you wouldn't even know what to ask, and therefore just won't. We're also out of time. It's a classic of the genre of the Simon Hunt genre. Yeah, sort of almost like a story tape. Yeah. Thank you, Simon. We'll have you back very soon, I'm sure. So there has been a huge amount of debate about how to implement Labour's new online safety act, particularly the under-16 social media ban. How do you enforce it? It didn't really work when they tried to enforce it in Australia. One of the key reasons is VPNs, virtual private networks. Basically, people can scramble and hide their internet usage. But Andy Burnham's team are giving signals that they might try and put new restrictions on that.
SPEAKER_05Some of you might remember this public address from Downing Street only four years ago. Uh, the voice you're about to hear is the then UK Prime Minister Boris Johnson addressing the people of Russia not long after the outbreak of the war in Ukraine. Your president knows that if you could see what was happening, you would not support his war.
SPEAKER_04But don't just take my word for it. All you need is a VPN connection to access independent information from anywhere in the world. Joining us to chat through some of the political and technological implications of this is our tech reporter, Saskia Koopman. Welcome back, Saskia. Thanks for having me. So, Saskia, do you think we could be seriously looking at a ban on VPNs?
SPEAKER_02Yeah, so when um the social media ban was announced, I think overnight it was 165% um uptick in Google search for VPNs. So it was pretty obvious from the get-go that that was gonna be the way that people were trying to get around um, you know, any sort of social media platform if they were under the age of 16. They are now, we don't really know the date yet, but it's gonna be at some point next week, thinking of putting VPNs fully under the ban, which both for the social media platforms and for the VPN kind of providers is gonna look.
SPEAKER_04I mean very few countries on earth ban VPNs or put serious restrictions on VPNs. It's basically like North Korea.
SPEAKER_02I was gonna say, and the theme of them, the fact that the UK would be under the same umbrella is kind of like it's not a great cluster of three or four to be in.
SPEAKER_04No, no, and I don't I think, especially given that we ha do have a bit of a reputation in the US, admit, amongst Trump types, for better or for worse, as a as a country who is putting possibly too many restrictions on speech, this could just be a horrible look.
SPEAKER_05Yeah, but is it actually a restriction of civil liberties, or is this the natural next step to enforce this ban on social media? You know, if we assume that the ban is a good thing, um if one were to assume that, then surely this is the only thing the government can do.
SPEAKER_02Yeah, I think it's one of those classic uh moves where they've seen, you know, the spike in VPNs and everyone criticizing the ban for not working because of VPNs, and so have to have kind of, you know, thought about this approach as a kind of one size fits all remedy, which I don't think it will have. And I also think if you actually think about why VPNs were created, it's because people don't want that information, you know, being leaked and and yeah, it's it's a whole like data protection.
SPEAKER_04But this is what there have some journalists have said this week that it's a really good way of getting sources to talk to you and it enables lots of our whistleblowing apparatus. Like it is a really crucial, it's not just a CD criminal thing, it's also something which is used to expose truths.
SPEAKER_05It's also good IT hygiene. Like if you ever use if you use a public Wi-Fi network, for example, uh and you're not using a VPN, there's nothing to stop whoever is providing that Wi-Fi network from scraping every single thing that you punch into the internet, including credit card details, passwords, all right.
SPEAKER_04I mean, it's still for under-16, so some of it, I guess, you know, do you get the impression that under 16s would automatically have the wherewithal to use a VPN if they had things started getting blocked?
SPEAKER_02I think so. I think interesting. So NordVPN sent us some research about how actually less children than we would maybe think use VPNs to change the kind of adult kids are used to content. I think it was 14% of UK children had used VPNs in the past year, which isn't actually that much, but uh of that, only 1% had used it specifically to use kind of age-restricted content.
SPEAKER_05Well, that's that's however many are owning up to it. Well, well, exactly. No, no, that is actually they'll they'll know like where they're going, right?
SPEAKER_02Like, yeah, well, yeah. It's also interesting when we see, you know, in the Iran war um scenario, for example, when people use VPNs to communicate, and you know, that became quite an important thing. Um that's the shut off a whole kind of form of communication and whatever.
SPEAKER_04It's a seriously slippery slope because I think just because we we are in a position now of having I mean what what most people consider to be benign government, that that is not always something you will have. And you mustn't ever, I suppose, kick away the the safeguards we have. But Saskia will be following this closely as a formal announcement is expected pretty soon. For the meantime, thank you very much for coming on.
SPEAKER_02Thanks for having me.
SPEAKER_05And finally, it's it says here in the script it's really warm. Uh it's f hot. It's so hot. You can say whatever you like. Um with the UK facing more regular and longer heat waves than ever before, Brits are increasingly investing in aircon. But there has been a warning this week that air conditioning could be overwhelming Britain's electricity grid. Our chief reporter Ali Lyon has been investigating this. Ali, are the lights about to go out and the uh ice cream about to melt in the fridge? Well, you should keep it in the freezer. That'd help.
SPEAKER_03Our listeners will have found that out uh last night uh because our grid operator, Niso, sent out a very panicked warning uh on Wednesday evening, basically asking energy suppliers, uh, be they domestic gas-fired power stations or even foreign uh sort of uh producers who we are up sort of plugged into our network, desperately asking them for more energy because as you mentioned, in the hotter months, we use Aircon and we use fans overnight. And what that means is that our grid doesn't really have the energy to provide us with all of that lovely cooling.
SPEAKER_04I'm I'm quite struck that there might even be the number of air conditioning units to create this problem. So I wonder actually if quite a lot of this is from really energy inefficient fans that people buy from sort of Robert Diaz or the back end of a larger Tesco. And then plug in.
SPEAKER_05Like when the when the ads come on and people put on the kettle, right?
SPEAKER_03So National Grid Live is one of the best sites to go on, I think. And and how how precise is the live data? A it's incredibly precise, but B, it gives you all sort of backdated trends and stuff. Um, and what you see is that during the day, everyone will have noticed that there is no wind, and that is a problem for us. But during the daylight hours, our newly rolled-out reams of solar farms kick in and will help us out to keep all our offices cool, to keep our houses cool during the day. But then during the night, when the sun goes to bed, uh there we are, there is no solar energy. Uh, and then that is why there is all this stress perversely at night, despite the fact that we do use more energy during the day.
SPEAKER_05Exactly, because the the thing is like loads of people lock in energy um plans which give you cheap energy overnight, and so people with like storage heaters will fill those up overnight. Uh, people who heat their flats with electricity, for example, and then during the day it's a bit more expensive. Loads of people um also charge up their EVs overnight because they have like an EV tariff, right?
SPEAKER_03And then get paid to give them that battery from their EV back during the peak hours.
SPEAKER_05So, are we now going to potentially see uh an impact where maybe overnight energy doesn't get that cheap anymore because people are running fans and air conditioning over the summer, which then presumably impacts prices all year round?
SPEAKER_03Yeah, so certainly during these these hotter months. And and the thing that is uh also important to note is that as I've sort of mentioned, we it's not quite importing, we're sort of plugged into these emergency suppliers um abroad, and often from France, a bit from Ireland, and I think some Nordic uh countries as well. And they're going through exactly the same thing as us at the moment. This heat dome, as it's being called, is is all across the continent. And indeed, France, who have reams and reams of energy, a lot of nuclear energy, they've had to turn off uh some of their nuclear reactors because the water that surrounds them that's used to cool those reactors has got too hot. And so the one bit of energy where you're like, oh, nuclear is going to save us, even that is threatened by this this heat wave.
SPEAKER_05Cool, that that's all a bit chernoble. I'm looking at the uh grid live thing now, and it's currently saying solar is uh 16 uh 16%, 17% at the moment. So that's quite cool. It's quite cool. It's called grid.imkate.com. Uh and it's it's full of loads of interesting data for people who want to know where your electricity comes from.
SPEAKER_04Well, Ali, thank you very much for joining us. We'll be discussing much more on the heat wave and various energy things.
SPEAKER_05We'll have you back in our air-conditioned studio very soon. Thank you very much. Well, that's just about all we have time for today. Thank you very much for listening or watching Business as Usual, which you can now do on YouTube. Uh, best of luck to Arthur Ferry at Wimbledon on Friday from everyone at the uh City AM team.
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SPEAKER_05Yes, it's got everything those expensive ones do, except it's free. We'll be back in your podcast feeds next week on Tuesday morning at 6 a.m. But for now, goodbye. Goodbye.