An audacious £32 billion approach for London Stock Exchange Group (LSE) from its Hong Kong rival was greeted with mounting scepticism amid expectations that it would be blocked by American, EU or British regulators even if a deal could be agreed by the group. Hong Kong Exchanges and Clearing announced that it was planning a cash-and-shares offer of £83.61 on condition that London Stock Exchange scraps its $27 billion deal to buy Refinitiv, the financial data business. An initial spike in LSE Group shares to above £79 was partly reversed amid expectations that regulators would not tolerate such a strategically important part of western capitalism’s infrastructure being in the hands of a company partly controlled by the Hong Kong government and subject to possible interference from Beijing.
Sir Martin Sorrell said yesterday that he was on track to double the size of his digital advertising agency after winning contracts from several heavyweight clients. He said that S4 Capital (SFOR) remained a “blip” but increasingly was pitching for work from some of the world’s largest companies. It has signed deals with Procter & Gamble, Nestlé, Coca-Cola and Sprint, the American telecoms group. By 2021, he said, revenues would be twice as large as they were when he set up S4 Capital last year. “We want to double the size of the business in three years, organically, and we’re well on the way to doing that,” Sir Martin, 74, said.
Mike Ashley clashed with the City again yesterday after about a third of independent investors voted against his re-election at the company’s annual meeting. The tycoon still controls just under 63% of the retailer, making it practically impossible for investors to oust him. Nevertheless, just over 9% of Sports Direct shareholders who voted at the AGM rebelled against his re-election. An analysis by Pirc, the investor advisory service, revealed that of the 420 million votes cast in Mr Ashley’s favour, 330 million of them were the retail boss voting for himself.
Galliford Try (GFRD) has reported a £61.5 million annual loss for its construction business only a day after revealing plans to focus on the division by selling off its profitable housebuilding unit to Bovis Homes. Losses for the construction business are more than double last year’s £29.1 million because of £46.4 million of exceptional costs relating to contract writedowns and internal restructuring. Galliford has begun to reduce the size of its construction business to focus on more profitable areas, including regional building, highways, defence, education, health and water infrastructure projects. Graham Prothero, 57, chief executive, said: “We are much happier with a slightly smaller but profitable business than a larger business that drops the ball from time to time.”
One of South Africa’s biggest listed property companies is in talks to buy a majority stake in a British shopping centre owner. Growthpoint Properties is proposing to buy a stake in Capital & Regional (CAL) through a part-cash offer and a subscription for new C&R shares. It has not yet disclosed detailed terms of any potential offer. Opportunistic overseas investors have been circling UK-listed retail landlords, whose shares have slumped as investors steer away from the sector.
The former chairman of Stobart, who survived a boardroom battle to oust him last year, has been appointed as non-executive chairman of Crest Nicholson Holdings (CRST). Iain Ferguson, 63, will take up the role at the housebuilder from November, replacing Stephen Stone, 65, the former chief executive who has been non-executive chairman since April. He has overseen a shift in strategy at the company and the appointment of a new management team. Mr Ferguson left Stobart in July after surviving a campaign by Andrew Tinkler, a former chief executive, to unseat him and replace him with Philip Day, the retail tycoon. Relations between the two businessmen soured over the handling of an opportunistic bid by Stobart for Flybe, the regional airline.
The Competition and Markets Authority has begun an investigation into a £1.4 billion deal that would create Britain’s biggest student housing landlord. Unite Group (UTG) confirmed yesterday that the competition watchdog would formally examine its proposed acquisition of Liberty Living, one of its biggest rivals, from the Canada Pension Plan Investment Board. If the cash-and-shares deal goes ahead, it will create a portfolio worth £5.2 billion, with 73,000 beds in 27 British towns and cities. The Canadian pension company would retain a 20% shareholding. Unite said that it expected to receive clearance from the watchdog in the final quarter of the year and was still confident of delivering the previously guided cost savings of £4 million next year and £15 million from 2021.
Chemring Group (CHG) reiterated its full-year forecasts for the year to October 31 in a trading update yesterday and said that its order book at the end of August was £480 million, “providing good visibility for the remainder of the financial year and beyond”. The Hampshire-based defence company also announced four contracts to supply the US navy and air force with countermeasures, such as flares and decoys, worth up to $127 million, which it said showed its recovery in the market.
Investors poured back into some unloved stocks yesterday, their appetite for risk appearing to return amid signs that the wider economic picture may be brightening. “The belief is that if you are going to be in equities in a turbulent period, you invest in the ‘best of the best’,” David Madden, a CMC Markets analyst, said. “But as sentiment improves, you start to take on a bit more risk.” Although it was only a small gesture, China’s move to waive import tariffs on 16 American products was welcomed by the markets. Adding to the optimism were expectations of some sort of stimulus package from the European Central Bank at today’s policy meeting. The risk of a no-deal Brexit also appeared to be receding, with UBS now reckoning that an extension to the deadline is the most likely scenario. All that put risk back on the menu, at least for the time being. Spectris (SXS) and Renishaw (RSW), the engineers that suffered tough summers, found their way back into traders’ portfolios. Renishaw rose 294p to £39.42, while Spectris added 159p to £24.75. Ted Baker (TED), still reeling from the departure of its founder, was back in fashion, climbing 64p to £10.70, while Aston Martin Holdings (AML) got back in gear after its recent profit warning, rising 32½p to 590¾p.
Gulf Marine Services (GMS) fell by almost a fifth, or 1½p, to just under 6p after it was forced to delay first-half results while talks continue with its lender over access to an “essential” debt facility.
Tower Resources (TRP) sank by 24.1% to ½p after the oil exploration minnow warned investors that it would need to come back to market for more money to pay off a $750,000 bridging loan at the end of the month.
Fevertree Drinks (FEVR) fizzed higher, adding 30p to £23.42. That was after analysts at JP Morgan Cazenove speculated that the share price could head back up towards the £40 mark.
Advanced Medical Solutions Group (AMS) was one of the few stocks in the red as a slump in sales of its Liquiband wound closure glue in the United States put a £2 million dent in half-year profit. The company had already warned investors that Liquiband sales would fall in the US after many of its American customers stockpiled it before the original Brexit deadline in March. A 27% drop in Liquiband sales in the opening six months of the year was worse than the market had feared. Bosses said that their full-year outlook remained unchanged, but analysts trimmed their forecasts, with Numis saying that the sharp decline in Liquiband sales “raises several concerns” as it cut its rating to hold.
Tempus – Lloyds Banking Group (LLOY): Avoid. Brexit erases the attractions of this otherwise very strong lender and the prospects of a recovery in the price seem dim
