BAE Systems (BA.) has spent £1.7 billion on two defence businesses that will help it expand in the US. The British defence group will spend almost £1.5 billion buying Collins Aerospace’s military GPS division, which makes technology that helps guide missiles to their targets. And it will spend another £210m on a unit of American rival Raytheon, which makes airborne radios and communications systems for customers that include the US Department of Defence. Both firms have to sell some of their divisions so that the deal, which was announced last June, can get approval from regulators. BAE’s takeovers, however, depend on the Raytheon-UTC merger going through, as well as also getting the green light from regulators.
Fevertree Drinks (FEVR) value crashed £629m yesterday as it issued its second warning about sales within three months. The tonic water company said UK sales fell over the Christmas period, triggering a sell-off that sent shares plunging more than 27%. The business blamed the lacklustre performance on ‘consumer belt-tightening’ and said it expected conditions to remain challenging in 2020. There are signs that the gin boom – which Fever-Tree has ridden to huge success – could be losing its fizz as drinkers increasingly turn to spiced rums.
The focus of crop science on protecting plants from seed to harvest is changing as it faces environmental and regulatory challenges. Key among them is the issue of polymer-based coatings used to preserve and protect seeds that are adding to the microplastics problem. Two years ago, the European Union initiated restrictions on the use of these tiny pollutants in cosmetics and most experts believe the agri-sector has no more than five years before it is subject to similar strictures. Eden Research (EDEN) sustaine encapsulation technology is free from plastics, is derived from a natural source, and is suitable for use with both sustainable biopesticides and conventional synthetic pesticides. Indeed, it is this technology that has enabled the commercialisation of Eden’s own biopesticides, which are used to protect grapevines and various other crops. On January 8, Eden revealed it had signed a one-year exclusive evaluation agreement with Corteva – the former’s first foray into the seed market. While the exact details of the evaluation haven’t been released, Eden chief executive Sean Smith confirmed Sustaine would be used on a ‘significant crop’.
Intu Properties (INTU) went public with its desire to raise funds to shore up its rickety balance sheet. The shares shed 2.5% in early trading after it confirmed it is in ‘constructive discussions’ with shareholders and potential new investors who are being asked to back the cash call. According to one weekend report, Intu is looking for £1 billion of emergency cash. While it is an eye-watering sum, it may not cut the mustard. According to City broker Peel Hunt, an injection of the order talked about would leave Intu ‘arguably still over-levered’. Fundamental changes in shopping habits resulted in the first fall in retail sales in more than a quarter of a century last year, according to the British Retail Consortium.
Goldman Sachs took a forensic look at the media sector, which it said is primed for earnings growth coupled with merger and acquisition activity. Upgraded to ‘buy’ was used car listings site Auto Trader Group (AUTO), while Relx plc (REL), the publisher formerly known as Reed Elsevier, was among Goldman’s top picks. WPP (WPP), meanwhile, was downgraded to ‘neutral’ with the risk and reward of investing in the advertising group now ‘more balanced’. Among those stocks rated ‘sell’ by Goldman was the struggling school and college books firm Pearson (PSON). It ended the day flat at 588.6p, supported by whispers that it may be the subject of a break-up bid.
Convatec Group (CTEC), the wound care specialist and maker of stoma bags, fell to 205.5p on a downgrade to ‘underweight’ by JP Morgan Cazenove to reflect the potential failure risks allied to the company’s turnaround plans.
