😬 Meta's Giphy woes

Markets

• London stocks struggled for momentum today as traders sat on the sidelines following a lack of progress on the highly-watched US debt ceiling deal.

• The retail sector was out of favour after a recent strong run, with Burberry (-3.1%), Frasers Group (-4.2%), JD Sports (-2.8%), Next (-1.3%) and B&M European Value Retail (-5%) all weaker.

• On the upside - Meat producer Cranswick was a standout performer in the FTSE 250 after a positive trading update, with shares up 5.4%.

Corporate News

Shares in Upper Crust owner SSP rose 3.1% on Tuesday after announcing full-year sales and EBITDA were expected to be at the top end of previous forecasts, driven by strong growth in North America and a continued rebound in travel; Revenues and EBITDA are now expected to be around £3bn and £280m respectively. (Link, SSP)

RS Group shares slid 7% despite reporting a 17% increase in revenue for the year to March; the FTSE 100 industrial products company warned that trading in the first seven weeks of this financial year reflected a “slowing in industrial growth”. (Link, RS Group)

Palantir - the US tech firm co-founded by Peter Thiel - is reportedly mulling an 8% cut to its UK workforce; the news follows an earlier round of headcount reductions from February, where around 2% of the global workforce was slashed. (Link)

Deals

Meta announced that it would be selling Giphy - the gif search engine - at a $260m loss after the UK’s Competition and Markets Authority ordered the US giant to divest the company; Shutterstock will acquire Giphy for just $53m. (Link)

French billionaire Patrick Drahi (through his telecom group Altice) used the recent weakness in BT shares to purchase an additional 6% in the company, costing around £960m; however, Drahi reiterated he was not looking to acquire the telecoms business outright. (Link)

Onfido - the UK-based verification startup that helps businesses onboard clients and conduct KYC checks - acquired US digital ID sharing company Airside Mobile, for an undisclosed sum. (Link)

Today’s VC round up:

• Builder.ai - the UK-based software design company - raised a monster $250m Series D round led by Qatar Investment Authority, with participation from Iconiq, Jungle Ventures and Insight Partners; the funding is in addition to a recent undisclosed amount raised from Microsoft, which accompanied a strategic partnership. (Link)

• Paydock - the London-based ‘payment orchestration’ fintech - raised a £25m Series A funding round led by Silverstripe. (Link)

• ITV invested £3m in Cambridge-based pet health firm PitPat, in a media-for-equity deal through its AdVentures unit. (Link)

Economy / General

UK food inflation remained stubbornly high in May - despite falling marginally from the previous month, Kantar reported food inflation at 17.2% for the 12 months to May, down modestly from 17.1% in April. Discount supermarkets Lidl and Aldi benefitted from a jump in sales as consumers sought cheaper alternatives. (Link)

Despite a strong showing in the travel, leisure and hospitality sectors, the UK’s private sector grew less than expected in May as manufacturing firms reported a fall in output for the third month in a row; the S&P/CIPS PMI showed a reading of 53.9, below forecasts of 54.7. (Link)

BoE Governor Andrew Bailey and other top central bank officials were grilled by MPs on Tuesday for failing to predict a spike in inflation; Bailey said the BoE had “very big lessons to learn” regarding the way they conduct monetary policy in the future. (Link)

Increasing costs of energy support schemes, rising benefits and higher debt interest payments were blamed for the surge in the government’s borrowing costs for April; total borrowing came in at £25.6bn - well above both the £13.7bn reported in April 2022 and the £22.4bn that was forecasted by the OBR. (Link)

🌎 Global Snapshot

Shares in Broadcom jumped 4.2% after the company announced a strategic partnership with Apple to provide US-produced 5G wireless components. (Link)

Despite beating market revenue and earnings expectations for the last quarter, DIY retail giant Lowes pared back forecasts for the full year after CEO Marvin Ellison warned of “a pullback in discretionary consumer spending over the near term.” (Link)

Choice Hotels is reportedly mulling a bid for $5.7bn rival Wyndham Hotels, in a deal that would create one of the largest affordable hotel chains in the US; share prices were mixed after the leak - Wyndham jumped 5.1% whilst Choice fell 4.6%. (Link)

Alibaba is rightsizing its cloud computing division as it prepares for a IPO, with 7% of the workforce set to be cut. (Link)

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