Marks & Spencer Group (MKS) has struck a £750m deal to buy half of Ocado Group (OCDO) grocery delivery business in a “game-changing” move that is destined to shake-up the British retail landscape. M&S boss Steve Rowe said the tie-up was his “biggest and boldest moment so far” and would allow customers across the UK to get its food delivered to their homes for the first time. He called it a “game-changing move to reshape Marks & Spencer” following years of resistance to launching an online food service after declaring that the retailer’s small basket size would make deliveries too expensive. Mr Rowe said the Ocado deal was “the only way M&S could have moved online.
Shares in Metro Bank (MTRO) sunk to a record low on Wednesday after revealing plans to raise £350m from investors and an investigation by regulators. The bank said after the London market closed on Tuesday that it had to raise money after it emerged that hundreds of millions of pounds of risky loans had been miscalculated last month. Metro later admitted it was the Bank of England that found the £900m error, having previously insisted the issue was flagged in an internal review.
Interserve (IRV) attempt to sweeten the terms of a planned emergency rescue deal with lenders has failed to win over its largest shareholder, which is now considering legal action. The Government contractor’s current investors will now hold on to 5% of Interserve’s shares if the planned £400m debt-for-equity deal goes ahead, twice what they were offered under a preliminary deal unveiled earlier this month. Lenders have also offered to take a 10% haircut on what they are owed and to put up £110m of new liquidity until 2022.
ITV (ITV) and the BBC have confirmed plans for a subscription streaming joint venture named Britbox to challenge Netflix and address rapidly shifting viewing habits. The broadcasters said they were in the final stage of talks to launch the service in the second half of the year, subject to approval from the media regulator Ofcom. Pricing details were not revealed. ITV said it will invest about £25m in Britbox this year and £40m in 2020 as it commissions exclusive original dramas to draw subscribers. Channel 4 and Channel 5 are also in “constructive discussions” to join the venture.
Wealth manager St James’s Place (STJ) hopes to cash in on £1 trillion-worth of inheritances that are set to be passed on from the baby boomer generation to their children. Chief executive Andrew Croft said the number of qualified financial advisers in the UK was “insufficient” and warned there was an advice gap at a time when around £1 trillion is about to be inherited by the next generation. Chief operating officer Ian Gascoigne said that the figure was calculated after care homes and inheritance tax had been paid for.
Rio Tinto (RIO) has insisted the future is rosy despite warning of further delays at its huge new copper mine in Mongolia. The FTSE 100 giant admitted that first underground production from the Oyu Tolgoi project may be pushed back once again after encountering problems sinking a new shaft that may require “potentially significant changes” to its design. It had warned last year that underground production from the mine would be delayed until late 2021. Jean-Sébastien ‘J-S’ Jacques, chief executive, said there would be “some impact in terms of cost, schedule and ramp up. Some of them could be positive, some of them could be negative.”
Two activist investors have won seats on the board of Premier Foods (PFD) weeks after its chief executive stepped down amid shareholder pressure. The struggling maker of Mr Kipling cakes, Hovis bread and Batchelors soup said Daniel Wosner of Oasis Management and Orkun Kilic of Paulson & Co would join the board as non-executive directors, as part of a wider strategic review to “increase shareholder value”. The move comes just days after the food company ditched plans to sell its Ambrosia brand after failing to secure an acceptable price.
Marks & Spencer nears Ocado delivery tie-up in online fightback. Marks & Spencer Group (MKS) has confirmed that it is in talks with Ocado Group (OCDO) to form a huge joint venture that would provide the 135-year-old retail stalwart with a full online food delivery service years of resistance. The two companies issued matching statements to the City yesterday revealing they were in discussions after it was reported that M&S was looking to buy a 50% stake in a joint venture with Ocado. The confirmation followed weeks of speculation surrounding a growing alliance between the two sides as M&S bosses have searched for ways to address its digital shortcomings.
Metro Bank unveils £350m share sale in wake of loan blunder. Shares in Metro Bank (MTRO) plunged 16% yesterday after the company confirmed it was going to tap investors for £350m worth of capital. Shares fell 243p to £13 after the bank said it would push ahead with a share placement in the first half of this year. The bank last year raised £300m. Investors had been nervous the FTSE 250 company would have to raise money after it emerged that hundreds of millions of pounds of risky loans had been miscalculated last month. The brightly-coloured lender was then forced to admit that it was actually the Bank of England that found the £900m error, despite previously insisting it spotted the flaw itself.
Quality and reputation issues are top of the in-tray for Persimmon’s new boss. Persimmon (PSN) new boss Dave Jenkinson inherits a business that is, on the face of it, in strong shape. The housebuilder has just reported record profits of more than £1bn, enjoys industry-beating margins thanks to its well-stocked landbank and has continued to grow despite sluggishness in the wider housing market. But after reports it could be blocked from the Government’s lucrative Help to Buy scheme and as the fallout from its controversial bonus scheme continues to drag on, Jenkinson is unlikely to be spending his time sitting back and letting the money roll in.
Life still sweet for Hotel Chocolat Group (HOTC) with more store openings ahead. Chocolatier Hotel Chocolat has unveiled a surge in half-year sales as it shrugs off the high street gloom with new openings and a promising international push. Angus Thirlwell, co-founder and chief executive, launched a defence of physical shops in the face an onslaught from online retail, revealing the retailer had “stress-tested” its store estate to make sure it could survive a downturn. Even in a pessimistic scenario that included a steep fall in sales and rising cost pressures, it found its shops would still generate significant earnings growth over the next five years.
Direct Line elevates Penny James to chief executive. Direct Line Insurance Group (DLG), Britain’s largest motor insurer, has promoted chief financial officer Penny James to become its new boss, bringing the number of female FTSE 100 chief executives to seven. Penny James, who joined the insurer almost a year ago from Prudential, will start in May after its annual meeting. Her appointment comes seven months after Paul Geddes announced he would be stepping down. Mr Geddes had run the motor insurer for a decade and lead its separation from taxpayer-backed RBS in 2012, its listing on the London Stock Exchange and subsequent entry into the FTSE 100. He will leave at the end of July.
‘Rudderless’ Aviva delays unveiling new chief executive. It was almost done and dusted. Just under four months after chief executive Mark Wilson’s shock exit from insurance giant Aviva (AV.), a crunch board meeting at the end of January came close to deciding who the FTSE 100 group’s next boss would be. Its self-set target of unveiling a new chief executive by mid-February was going to plan. But then there was an unexpected delay. “The process clearly isn’t working as advertised and the conclusion I have to reach is the internal candidates haven’t made it, which says something about the enormity of change that the board thinks is required at the business,” says one chief executive in the industry, asking not to be named.
Competition watchdog threatens probe into hostile bid for Provident. The competition watchdog is posied to investigate the £1.3bn hostile takeover of Provident Financial (PFG) by its ex-boss. The Competition and Markets Authority (CMA) said it had served the two sides a so-called initial enforcement order that means the companies must stay separate while it decides if it should probe further. The firms can keep talking and agree terms in the meantime. John van Kuffeler, who was chief executive and then chairman of Provident for over two decades, made an unsolicited bid for the troubled doorstep lender last week through his firm Non-Standard Finance (NSF). Provident has hit back, saying the bid offers little value and should be rejected.
Drax sees future in supporting ‘intermittent’ solar and wind power. Drax Group (DRX) now produces three quarters of its electricity from biomass as the electricity producer announced higher annual profits in a year that saw it buy generating assets from Scottish Power. The FTSE 250 firm said it was now one of the UK’s leading generators of low carbon and renewable electricity, with four of its six units converted to burn compressed wood pellets from sustainably managed forests in the US rather than coal. While Drax expects the UK’s power system to become increasingly dominated by wind and solar power, it said alternative supplies would still be needed when those forms were not available.
Babcock takes £10m Brexit hit over new helicopter rules. Brexit-related changes to aircraft regulations will cost Babcock International Group (BAB) £10m as it restructures its aerial emergency services business. The company warned of the cost in a trading update on Tuesday, with chief executive Archie Bethel flagging up the impact of Britain leaving the EU on the 400 helicopters Babcock operates in Europe providing medical, firefighting and search and rescue services. The company expects a one-off £10m hit relating to operating within the European Aviation Safety Agency and is predicting an annual cost of about the same amount in the future to operate the new structure.
Travis Perkins buoyed by signs of turnaround at Wickes. Travis Perkins (TPK) is keeping its options on Wickes open after the DIY chain staged a surprise recovery at the end of last year. Builders merchant Travis said in December it may sell the struggling chain as part of plans to focus on trade customers. However, sales in its consumer division, which includes Wickes, rose 5.6% in the final quarter of the year, cheering investors and sending shares up as much as 13%. John Carter, chief executive, said that while “troubled” Wickes had recovered well in the second half, it had “underperformed compared to where we would’ve hoped it to be”.
Questor: pioneering medical devices and ‘sensible but ambitious’ management – buy Smith & Nephew (SN.). Questor share tip: Smith & Nephew’s advanced devices make patients’ lives better and save the NHS money – and investors should benefit too
