Sainsbury’s has vowed to fight on to clinch its takeover of Asda despite a damning report from the competition watchdog throwing the multibillion-pound merger into doubt. The Competition and Markets Authority (CMA) said it had “extensive” competition concerns over the proposed deal between Sainsbury (J) (SBRY) and Asda, warning it could lead to higher prices and reduce quality in store and online. The merger could lead to a “poorer shopping experience” and a “reduction in the range and quality of products offered”, the CMA said. It also warned that the deal could result in a hike in petrol prices in around 100 locations in the UK where there are both Sainsbury’s and Asda petrol stations.
The former chairman of Barclays (BARC)Barclays has told a jury he was “unaware” the bank struck a £280m deal with Qatar to secure funding at the height of the financial crisis. Marcus Agius was giving evidence as part of a high-profile case against four former Barclays executives. The men are accused of keeping an extra fee paid to Qatar in return for £4bn in financial support secret from the market. The Serious Fraud Office (SFO) claims the payments were hidden from other investors in so-called advisory services agreements. The bank avoided a Government bail-out after the Qataris invested £1.9bn in Barclays in June 2008 and another £2bn that November.
Glencore (GLEN) has vowed to limit its coal output in a bid to address mounting investor unease over the fossil fuel’s contribution to climate change. The Swiss-based FTSE 100 mining giant, one of the world’s biggest producers and traders of coal, has long been bullish on the outlook for the commodity, which is still a major source of energy in parts of Asia and Africa. Coal contributed to around 39% of Glencore’s earnings in 2018. But chief executive Ivan Glasenberg said the company would curb output at 150 million tonnes a year and shift investment over time towards metals such as cobalt and copper, which will be in demand for electric vehicles and batteries.
Shopping centre owner Intu Properties (INTU) plunged to a huge annual loss after the malaise sweeping the retail sector wiped almost £1.4bn off the value of its properties. The value of its portfolio, which includes Lakeside in Essex and Manchester’s Trafford Centre, fell by 13% to £9.2bn. Intu said the decision to scrap its final dividend would help fund investment in its properties and improve its debt position. Investors baulked at the move, sending its shares, already battered by two aborted takeover bids last year, down a further 8.3% to 108.5p on Wednesday morning.
Ashley (Laura) Holding (ALY) has warned on profits yet again as sales slumped in the second half of last year amid “difficult trading conditions”. The soft furnishings and fashion retailer reported a pre-tax loss of £1.5m including exceptional items and said its performance for the second half would fall short of expectations. It was the fourth profit warning in just two years. The company pointed to an 11.8% jump in fashion sales, which include accessories and perfumery, although they accounted for less than a fifth of revenues, according to Hannah Thomson at GlobalData.
US airline Mesa Air bids to snap up Flybe. US airline Mesa Air has proposed a last-minute deal to takeover struggling regional carrier Flybe Group (FLYB), according to Sky News. The Arizona-based company is part of a consortium of investors which has offered to inject £65m into the troubled FTSE 250 carrier and pull the rug from Virgin Atlantic’s takeover bid. The refinancing plan is reportedly being led by South African aviation investment firm Bateleur Capital and US hedge fund Avenue Capital. The group plans to inject £65m of new equity at roughly 4.5p per share, a significantly higher offer than the 1p per share from the Virgin-led consortium.
InterContinental vows to ‘up its game’ in German turf war with Whitbread. InterContinental Hotels Group (IHG) has promised to “up its game” as a battle with blue-chip rival Whitbread (WTB) erupts in Germany. The global hotel powerhouse views the country as one of a handful of “strategic markets”. But it faces growing opposition from its FTSE 100 peer. Whitbread boss Alison Brittain has vowed to “stamp across Europe” with Premier Inn; and Germany is her primary growth target. Premier Inn, Britain’s biggest hotel chain, wants to quickly replicate its success abroad. It is aiming to establish itself as one of Germany’s biggest hotel firms, where it is aiming to have 33 hotels with 6,000 by 2021.
Cobham takes another £160m hit on troubled tanker contract. Cobham (COB) will take a further £160m hit on the troubled KC-46 air-to-air tanker project after striking an agreement with Boeing. The figure includes a £86m compensation payment for delays in building a refuelling system for the tanker’s fuselage, which has yet to be certified by regulators. Boeing will withhold a £37m payment owed to Cobham as part of the fee. The remaining £74m charge related to Cobham’s delivery of similar systems mounted on the KC-46’s wingtips. Testing for the system will begin this year and is expected to be completed in 2020.
South Western rail deadlock takes shine off FirstGroup trading. Bus and rail operator FirstGroup (FGP) is in deadlock with the Government over a contractual row about one of Britain’s biggest rail networks. The sprawling South Western train franchise remains a thorn in the side of the transport giant, causing sales growth to slow over the last final four months. While problems on the network quickly became an open secret across the industry last summer, it was not until November that FirstGroup said it was in talks with the Government about renegotiating terms on the country’s fourth-largest rail franchise.
John Varley was ‘courageous’, former Barclays (BARC) chairman tells trial. Marcus Agius, the former chairman of Barclays, has described the bank’s ex-boss as “courageous” as he became the first witness to give evidence in the high profile fraud trial of four former Barclays executives. Mr Agius, who stepped down as Barclays chairman in 2012, told a packed courtroom that before the financial crisis being given a seat on the bank’s board was regarded a “prestigious appointment” that people thought would enhance their reputation. However, he later feared resignations at the top as “circumstances changed almost out of recognition”.
Asda sales slow ahead of verdict on Sainsbury’s merger. Asda’s sales growth slowed over the crucial Christmas quarter as the supermarket waits for the outcome of a lengthy competition inquiry into its merger with rival Sainsbury (J) (SBRY). The Walmart-owned chain posted a 1% rise in like-for-like sales for the three months to Dec 31 – the seventh consecutive quarter of positive growth. However, while the lift in sales demonstrates the extent of Asda’s turnaround from the 7.5% sales tumble it posted in 2016 – the worst in its history – its rate of growth has slowed compared with the previous quarter. In November Asda reported a 2% rise in third quarter sales.
Vegan sausage roll brings home the bacon for Greggs (GRG). The popularity of its new vegan sausage roll helped Greggs record an “exceptionally strong start to 2019”, with annual profits likely to beat expectations. The high street bakery chain said like-for-like sales grew 9.6% in the seven weeks to Feb 16, while total sales soared 14.1%. Greggs shares jumped 6% following the news to a record £17, topping the FTSE 250 risers. The stock had been under 950p as recently as July last year. The company attributed its success to the “extensive publicity” surrounding the launch of its vegan-friendly sausage roll at the start of the year.
Greyhound helps First out of the traps. Transport giant FirstGroup (FGP) flirted with a five-month high in its strongest day this year as its improving US business reassured investors in new boss Matthew Gregory’s first update. Mr Gregory was promoted in November after predecessor Tim O’Toole was sacked following the bus and rail group’s slump to a £327m pre-tax loss last year. A pick-up in its US schools bus business and a return to growth in its ailing Greyhound arm helped keep trading in line over the four months to January amid a slowdown in its UK rail division.
Questor share tip: Costain Group (COST) may be a contractor but its business model is far more sensible than that of its former rival – and the shares aren’t expensive
