The round-up of the stories that a budding Student Lawyer should be aware of this week. Sign up here to get these updates in your inbox every week.
Article by Jamie Adair (1st year LLB student at Warwick University)
The California-based cloud software company, Salesforce, is in talks with the work messaging app, Slack, over a potential acquisition. Slack’s share price rose by 22% after the news broke that they were trying to reach a deal while Salesforce’s fell by 3%.
After a large increase in demand for cloud software, rather than embedded hardware development, throughout the duration of the pandemic, Marc Benioff, the founder and chief executive of Salesforce has been on the lookout for a potential acquisition. The deal would make sense for Salesforce who are trying to challenge Microsoft to become the number one cloud software provider for office workers.
The California-based company has made a number of high-profile acquisitions in recent years with it purchasing data analytics software provider, Tableau Software, for $16 billion in 2019 and Mulesoft, a network software maker for $6.5 billion in 2018. Despite this trend, recent deals have proven much more difficult because of incredibly high valuations for software companies.
Slack, meanwhile, has lost ground this year to Microsoft Teams which Microsoft decided to include as a free add-on to Office. The pandemic has caused workers to adapt by finding new software to communicate and the number of people using Teams daily has recently hit 115 million, a significant increase compared to approximately 20 million a year ago. In comparison, Slack has grown much more slowly, despite disclosing that 130,000 businesses now use its service which is an increase of 30% over the last year. Additionally, economic consequences of the pandemic have forced Slack to give discounts to many of its customers who have had to make cost cuts.
One key advantage that Salesforce has is that fact that its share price has more than doubled since the start of the pandemic which means a large portion of the deal to acquire Slack is likely to be in shares as they look to take advantage of its own rich market valuation. If the negotiations are successful, a deal could be announced within a week.
You can read more about the deal here, here and here.
Article by Joyce Yiu (LLM student at the Queen Mary University of London)
Chancellor Rishi Sunak announced his one-year spending review to the House of Commons on the 25th November 2020. He declared ‘the economic emergency’ from the coronavirus pandemic ‘has only just begun’. Therefore, jobs, businesses and public services will be prioritised and the government is spending £280bn to get the country through Covid-19.
The chancellor told the MPs the Office for Budget Responsibility (OBR) expects the economy will contract by 11.3% this year, the biggest decline in three centuries. Also, the overall unemployment is forecasted to a peak of 2.6 million people next summer, at a level of 7.5%. Also, the budget deficit will be £394bn this year, or 19% of GDP – the highest level in peacetime. Borrowing will remain at £164bn next year and remains at about £100bn for the remainder of the forecast.
Pay freeze for public sector workers outside of the NHS
Pay rises for the public sector will be paused next year, with an exemption for more than 1 million nurses and doctors in the NHS. The chancellor defended his public sector pay freeze by highlighting how private-sector wages fell by nearly 1% in the six months to September, compared to last year, while the public sector wages rose by nearly 4%. It is noted that 2.1 million public sector workers who earn below the median wage of £24,000 will be guaranteed a pay rise of at least £250. The national living wage will also be increased to £8.91 an hour and extended to over-21s.
Cutting the overseas aid budget to 0.5%
The chancellor confirmed that the government will cut the overseas aid budget to 0.5% in 2021, allocating £10bn at this spending review, with an intention to return to 0.7% ‘when the fiscal situation allows’.
An extra £3bn funding will be injected into the NHS and it would help tackle backlogs in the health service, with thousands of treatments and operations delayed due to the pandemic. The number of people waiting a year for treatment has significantly risen from around 1,500 in February to 140,000 in September. Scotland, Wales and Northern Ireland will receive the equivalent fund as well.
New Restart jobs scheme
A package is designed to help jobless people back to work and it includes £2.9bn for a new Restart jobs scheme and £2bn for the Kickstart scheme. The Restart jobs scheme which lasts for 3 years aims to support people out of work for 12 months and the Kickstart scheme will subsidise jobs for young people.
Infrastructure and levelling up
A ‘levelling-up fund’ for England worth £4bn will be launched to support towns and communities with regeneration projections. Apart from the £4bn for England, there will be funding worth £800m for Scotland, Wales and Northern Ireland.
Local areas will be able to apply for up to £20m each from the fund to spend on projects which command local support. It was designed to improve ‘the infrastructure of everyday life’.
You can read more here.