Amazon said Friday that it is buying U.S. self-driving technology company Zoox, which is developing an autonomous vehicle for a ride-hailing service that people would request on their phones.
Seattle-based Amazon did not disclose how much it is paying for Zoox, which was founded six years ago in Foster City, California. Analysts pegged the purchase price at over $1 billion US.
The online retailing giant said Zoox will keep running as a separate business and continue to develop its own autonomous vehicle.
“We’re excited to help the talented Zoox team to bring their vision to reality in the years ahead,” said Amazon’s Jeff Wilke, who runs the company’s retail business.
We are delighted to announce that Zoox is teaming up with <a href=”https://twitter.com/amazon?ref_src=twsrc%5Etfw”>@amazon</a>. We have made great strides in creating autonomous mobility from the ground up, and are excited to continue working with our exceptionally talented team to realize that vision. <a href=”https://t.co/TdQKaebKW7″>https://t.co/TdQKaebKW7</a>
Amazon entering a new industry?
The deal could drive Amazon into an entirely new business: transporting people from one place to another. But some industry analysts think Amazon’s ultimate goal is to repurpose the Zoox vehicle for its core business, delivering packages to shoppers.
“My guess would be in the near term that Amazon is probably more interested in taking that platform and adapting it as an alternative or complement to its existing fleet of delivery vans,” said Sam Abuelsamid, principal analyst for Guidehouse Insights, who follows autonomous vehicle developments.
Abuelsamid said Zoox has a good autonomous system and was planning to deploy a ride-hailing service next year. It’s also building its own vehicle that can travel in two directions — both ends can be the front and the back — making it ideal for urban deliveries. He sees Amazon converting the small vehicles into mobile lockers that would stop at delivery sites for people to pick up packages.
Amazon didn’t directly answer a question about whether autonomous package delivery is its goal, but said Zoox would “continue working toward their mission to transform mobility as a service by developing a fully autonomous, purpose built vehicle.”
Self-driving vehicles far down the road
The company cautioned that widespread use of autonomous vehicles is still years away and will require a substantial capital investment in a crowded field. The deal puts Amazon, which has grown rapidly from its start as an online bookseller 25 years ago, in competition with Google’s self-driving technology spinoff called Waymo, and General Motors’ Cruise autonomous vehicle unit.
Autonomous delivery would fit with Amazon’s plans to deliver more of its packages on its own and rely less on UPS and the U.S. Postal Service. In recent years it has expanded its fleet of planes, built package sorting hubs at airports and launched a program that lets people start businesses that deliver packages in vans stamped with the Amazon logo.
The investment could complement the $700 million US that Amazon put into electric vehicle startup Rivian in 2019. Rivian, with operations in suburban Detroit and California, has a contract to make 100,000 electric delivery vans for Amazon. The company also has a factory in Normal, Illinois, with extra capacity that could be used to build the Zoox vehicles for Amazon, Abuelsamid said.
Amazon’s acquisition changes the landscape in the autonomous vehicle business by bringing in a deep-pocketed competitor, Abuelsamid said. It increases pressure on smaller companies that are building delivery vehicles, he said.
Amazon’s past autonomous tech ventures
The Zoox acquisition isn’t Amazon’s first foray into autonomous vehicles. Early in 2019, it joined other investors in a $530 million US stake in Aurora Innovation. Aurora recently has focused on a self-driving system for heavy trucks.
Amazon has used autonomous technology to get orders to shoppers: self-driving robots shuffle products around its warehouses and a cooler-sized robot with six wheels has delivered orders in a Seattle suburb. It’s also working on self-piloted drones that fly small goods to customers’ homes.
The deal comes at a time when the power of Amazon and other technology stalwarts such as Google, Facebook and Apple have drawn increasing scrutiny from U.S. lawmakers and antitrust regulators. The pandemic-stricken economy is making it more difficult for startups to raise money to continue work, creating opportunities for the industry’s still-thriving giants to make acquisitions at bargain prices.
Privately held Zoox received $990 million US in funding from investors, according to Crunchbase, which tracks investments in startups.
Bank of Canada survey says business hiring plans remain muted – BNN
Canadian business sentiment has fallen to its lowest level since the 2008-09 recession as sales slow and uncertainty about future growth remains elevated, according to a survey of executives released today by the Bank of Canada.
The Ottawa-based central bank polled businesses between May 12 and June 5 to gauge sentiment during the pandemic. The results show that even as provinces begin to reopen their economies, many businesses are still struggling with weak demand. Companies reported growing slack in capacity, easing price pressures and collapsing forward-sales expectations.
Results “suggest that business sentiment is strongly negative in all regions and sectors due to impacts from the COVID‑19 pandemic and the drop in oil prices,” the Bank of Canada said in a summary of its findings.
The composite gauge of sentiment declined to -7 which is the lowest reading since the financial crisis. Even though businesses have experienced a sharp drop in sentiment from the pandemic, many expect a recovery within the next 12 months. About half of firms anticipate that their sales will recover to pre-pandemic levels within the year.
Despite the plunge in sentiment, firms are overall less pessimistic than during the financial crisis. That’s due in part to government support buffering the economic fallout and the expectation for a fairly quick rebound in operations, according to the survey.
Since the survey was completed, provinces across Canada have moved forward with their reopening plans. In particular, the countries two largest provinces — Ontario and Quebec — have begun to allow more businesses to operate. This could result in an improvement in sentiment moving forward.
Still, “forward-looking sales indicators have collapsed” on expected weakness in domestic and foreign demand, the central bank said.
• Almost half of all Canadian businesses reported a decline in sales in the past 12 months because of the impact from COVID-19, lower energy prices and heightened uncertainty. Businesses continue to expect weak demand in the future with more firms expecting lower future sales growth in the next year.
• While millions of jobs were lost in March and April due to the pandemic-induced shutdowns, jobs have started to come back and the results of the survey reinforce the view that employers are looking to rehire.
• A majority of firms that recently laid off workers have plans to refill at least some of the positions in the next 12 months. However, many firms do not intend to increase their workforce partly due to weak expectations of future sales.
• More than half of firms expect their sales and employment levels to be near pre-pandemic levels within a year. On the flip side, just under half of businesses expect at most a partial recovery, or that their sales path is too uncertain to predict over the next year.
• “Firms reported that, while capacity could resume quickly as the economy reopens and containment measures are lifted, the recovery in demand is expected to be more gradual.”
• The fiscal support from the federal government has helped buffer the drop in business sentiment; “Credit conditions have tightened significantly, but government measures are a helpful offset.”
• Half of exporters expect sales abroad to decrease over the next 12 months.
• Firms signalled a significant decrease in capital spending over the next 12 months, with the balance of opinion on investment intentions in machinery and equipment falling to a near-record low.
• The number of firms that reported they would have difficulties meeting an unexpected increase in demand has fallen sharply.
• The share of businesses reporting that major labour shortages has declined significantly, suggesting a “broad-based increase in labour market slack”
• Firms’ inflation expectations declined significantly to a near-record low.
Uber plans to gobble up delivery rival Postmates in $2.6 billion deal – Ars Technica
Uber is trying again to acquire a food delivery rival after it wiped out on its last attempt earlier this year. The company said today it plans chow down on Postmates in a deal valued at $2.6 billion.
The companies announced the all-stock transaction this morning. Uber said the companies’ businesses are “highly complementary,” as they have different customer bases in different parts of the country. Uber in its press release praised Postmates as “an early pioneer of ‘delivery-as-a-service,'” a truly spectacular buzzword jam for our era.
What Uber probably wants, though, is for someone to deliver it a profit. The company lost $2.9 billion in the first quarter of this year (period ending March 31), after losing $1.1 billion each in Q4 and Q3 and a whopping $5 billion in the quarter before that.
The COVID-19 pandemic crashed the ride-hailing half of Uber’s business. Demand for rides dropped by 70 percent in recent months, as people stopped going anywhere for several months and have remained understandably leery of sharing an enclosed space with one or more strangers on the rare occasion they do. Uber laid off 6,700 workers—about a quarter of its global full-time workforce—across two rounds of job cuts in May.
Food delivery businesses, on the other hand, have seen increased demand as all the people who can’t go anywhere to get anything instead use apps and services to have all those things, including restaurant meals, brought to them. Bookings on Uber Eats more than doubled in Q2 2020 as compared to 2019, Uber CEO Dara Khosrowshahi said in a written statement.
Trust and antitrust
Many merger agreements contain language requiring one company to pay a penalty to the other if for some reason the deal cannot come to fruition. In cases that are likely to receive a great deal of scrutiny from regulators, the company being acquired may request the company doing the buying to compensate them if the deal gets nixed by the government. That fee is reportedly what GrubHub and Uber were stuck on, and with good reason: the mere rumor that Uber and GrubHub might merge already had state and federal regulators deeply concerned.
GrubHub ultimately went a different direction entirely, instead agreeing in June to a sale to Amsterdam-based Just Eat Takeaway in an all-stock deal valued at $7.3 billion.
Uber’s Postmates plan may face an easier path to approval than its GrubHub aspirations did, but regulators are still likely to scrutinize the deal closely. About 95 percent of the US restaurant food delivery market is controlled by four businesses: GrubHub (which includes Seamless), DoorDash, Postmates, and Uber Eats.
Cineplex sues former merger partner Cineworld for $2.1B – CBC.ca
Cineplex Inc. has filed a lawsuit against its former suitor Cineworld Group PLC, seeking damages over the U.K. company’s failed acquisition that could exceed the $2.18 billion outstanding on the deal.
The Canadian movie theatre operator filed the suit in Ontario Superior Court on Friday, detailing what it claims was “a case of buyer’s remorse” on the part of the U.K. company in the middle of a pandemic that’s seen cinemas across the world unable to operate.
Cineworld walked away from the $2.8-billion deal on June 12, saying it had become aware of a material adverse effect and breaches by the Toronto-based company.
Cineplex says it complied with its obligations under the agreement and vowed to “vigorously defend any allegation to the contrary.”
The Canadian chain is seeking damages that include the $2.18 billion that Cineworld would have paid had the deal closed, minus the value of Cineplex’s securities retained by its holders.
It’s also seeking compensation for the $664 million in debt and transaction expenses that Cineworld would have shouldered had the deal successfully closed, as well as repayment of certain “benefits” it received as part of the transaction.
A representative for Cineworld did not respond for comment.
Sarah Van Lange, a spokeswoman for Cineplex, says it’s “not possible for Cineplex to determine the amount of damages” it’s seeking in total, due to uncertainties inherent in litigation, including the determined value of Cineplex shares.
The company’s share price has fallen substantially since the Cineworld deal was struck in late 2019, due to a confluence of factors that included weakened optimism for the 2020 movie slate, and the sudden closure of theatres due to COVID-19 in March.
Cineworld offered to buy Cineplex at $34 per share, a 42 per cent premium on the chain’s stock price at the time, but by March the company’s shares had dropped below $10 on the Toronto Stock Exchange. Cineplex closed at $8.50 per share on Friday.
The Canadian exhibitor has slowly resumed business at locations in certain parts of the country, including British Columbia and Alberta, though the company delayed a more extensive reopening plan as Hollywood studios delayed the release of most of their titles due to an escalation of virus cases in some U.S. states.
On Tuesday, Cineplex said it reached a deal with its lenders to provide some financial relief due to the pandemic, but warned about its ability to “continue as a going concern.”
Bank of Canada survey says business hiring plans remain muted – BNN
Bob Rae named Canadian ambassador to the United Nations – CBC.ca
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