Regulator could block Sainsbury-Asda merger over competition concerns. The proposed £12 billion merger of Sainsbury (J) (SBRY) and Asda could be blocked by the regulator after it found that the tie-up raised extensive competition concerns that would affect millions of shopper. The Competition and Markets Authority said that the deal could lead to higher prices, a poorer shopping experience and poorer quality and choice at its stores and online. It also raised concerns that the merger could drive up the price of petrol at a “large number” of Sainsbury’s and Asda petrol stations. The regulator said that it had identified more than 600 local areas of concern and warned that its current view “is that it is likely to be difficult for the companies to address the concerns it has identified”. It set out potential options to maintain the competitive rivalry lost through the merger, including blocking the deal or requiring the merging companies to sell off a significant number of stores and other assets — potentially including one of the Sainsbury’s or Asda brands.
Lloyds sweetens deal for investors despite profits miss. Lloyds Banking Group (LLOY) has revealed a bumper return to shareholders by pledging to buy back up to £1.75 billion of shares and increasing its dividend despite posting weaker than expected annual profits. The lender said that it was returning £4 billion to investors for last year after declaring a final dividend of 2.14p a share, which lifted the total payout for the year to 3.21p, and launching a buy-back programme equivalent to 2.46p a share. It came as Lloyds reported a 24% increase in net profits to £4.4 billion, which missed market expectations for £4.6 billion, on net income that rose by 2% to £17.8 billion. Pre-tax profits were up 13% to almost £6 billion.
Intu’s property portfolio loses £1.4bn. Intu Properties (INTU) said that £1.4 billion was wiped off the value of its portfolio last year amid a negative shift in sentiment towards the retail sector. The value of its property portfolio fell 13.3% to £9.2 billion, after a further 3% valuation fall in the final quarter. The drop in valuations pushed its debt-to-asset ratio up from 45.2% to 53.1%. Intu said that it would scrap its dividend and seek to sell assets in order to reduce its debt-to-asset ratio back below 50%.
BHP backs dam disasters scrutiny. Regulator needed to avert future collapses, mining giant warns. The boss of the world’s biggest miner has admitted that the industry does not fully understand why its waste dams keep collapsing and needs to urgently invest in research to prevent more disasters. joined calls for an “international, independent body” to oversee the thousands of dams holding mining waste worldwide, after the catastrophic collapse in Brazil last month believed to have killed more than 300 people. Andrew Mackenzie, its chief executive, said that the industry needed to “acknowledge the deficiencies in the scientific and technical understanding” and to “redouble our efforts to make sure that these things can’t happen again”. The collapse of the Córrego do Feijão dam in Brumadinho, owned by Vale, the Brazilian iron ore giant, unleashed millions of tonnes of crushed rock and water known as “tailings” that buried all in its path. The death toll stands at 169, with a further 141 people still missing. Three years ago, 19 people died when a similar tailings dam collapsed at Samarco, another Brazilian mine co-owned by Vale and BHP. Researchers have catalogued more than a dozen other serious collapses since 2007.
The former chief executive of Barclays (BARC) who is accused of fraud over actions he took to rescue the bank during the financial crisis was considered to be “a man of utmost integrity” by his chairman, a court was told. Marcus Agius, 72, who was chairman between 2007 and 2012, yesterday became the first witness in the criminal trial of four former Barclays bankers, including John Varley, who was chief executive, over extra fees that were paid to Qatar during emergency fundraising in 2008.
The company behind the Holiday Inn and Crowne Plaza chains said yesterday that the uncertainties around Brexit had not dented business at its British hotels. The slump in the value of the pound had led to an influx of visitors from overseas, Keith Barr, chief executive of InterContinental Hotels Group (IHG), said. Revenue per available room at its UK hotels grew by 1% on an underlying basis last year, London leading the way with a 3% gain. Mr Barr, 48, said that the company had managed to ride out myriad political uncertainties, from the trade conflict between the United States and China to recession in Italy. “You run out of fingers when you count them,” he said. “Yet in spite of all the noise that’s out there, global GDP is positive, so we’re not seeing any impact on our business.”
Glencore gave Kazakh dictator’s ally big share in school. Glencore (GLEN) gifted a majority share in an elite school in Kazakhstan to a trusted lieutenant of the country’s ruling autocrat in a previously undisclosed deal that sheds light on how the company built relations with the repressive regime. A subsidiary of the FTSE 100 mining group invested $23 million in Haileybury Astana, a Kazakh offshoot of the Hertfordshire public school that counts Clement Attlee and Sir Stirling Moss among its alumni and traces its origins to a college set up by the East India Company in 1806.
Market turmoil hits HSBC profits. HSBC Holdings (HSBA) has warned of growing risks to the global economy after rattling investors with an “ugly” set of quarterly results. Shares in the Asia-focused lender slid by 26½p to 637p after the bank unveiled annual pre-tax profits of $19.9 billion, which were up 16% on 2017 but fell short of market forecasts for $22 billion. Revenues rose by 5% to a $53.8 billion, also lower than expected. The results came after HSBC was hit by the turmoil that rocked financial markets in the final weeks of last year, which hurt its global markets division in the fourth quarter. Ian Gordon, an analyst at Investec, said that HSBC had posted “ugly” figures for the final three months of the year.
Asda has notched up a seventh consecutive quarter of sales growth, but though it is outpacing its rivals it warned of a challenging year ahead. Excluding fuel, like-for-like sales at the supermarket chain grew by 1% in the three months to December compared with the same period a year before. At Tesco they rose by 0.7% in the comparable quarter and at Sainsbury (J) (SBRY) they fell by 1.1%. Asda, which is owned by Walmart, the American retailer, is the third largest supermarket in Britain after Tesco and Sainsbury’s. It is seeking approval from the competition watchdog for a £12 billion merger with Sainsbury’s.
Cobham sees clear skies ahead after Boeing deal. Settling a dispute with Boeing will cost Cobham (COB) a further £160 million, the defence group admitted yesterday. However, its shares rose by more than 4% after it said that the American aerospace giant was no longer withholding payments after resolving a spat over the latter’s troubled aerial tanker programme. The charge comprises £86 million for the settlement and £74 million for additional costs to complete the retained contract. Cobham had already taken a £40 million hit over the dispute in July last year.
Profits are on a roll with Greggs (GRG) vegan option. The launch of Greggs’ vegan sausage roll was called a masterclass in public relations, attracting millions of views on social media and a backlash from Piers Morgan, the television presenter. Now its investors are reaping the rewards of the £1 Quorn-filled pastry. The surge in publicity for the country’s largest bakery chain prompted the company to increase its annual profit forecasts yesterday for the third time in less than three months.
Future magazines reports influx of new readers. The owner of Total Film and Classic Rock magazines shone a spotlight yesterday on an influx of new readers that it said would ensure that its profits exceeded City forecasts. Future (FUTR) said that it expected earnings in the first half of its financial year to be “significantly ahead of market expectations”. Shares in the Bath-based publisher rose 118p to 688p.
Guards row applies brake to revenue at First Group. The train and bus operator FirstGroup (FGP) has revealed that revenue growth in its rail division is slowing after a “disappointing” service for passengers amid strikes on South Western Railway. Like-for-like rail passenger revenue growth slowed to 4.2% between September and January as “significant infrastructure challenges” added to widespread disruption from an industrial dispute over guards on trains. It said that passengers also had been affected by several “operating incidents” on South Western Railway. Growth of 5.5% was reported for the previous six months, excluding South Western.
Plus500 in minus column yet again as shares tumble. The value of Plus500 Ltd (DI) (PLUS), the financial betting group once valued at more than £1 billion, has dropped by more than half in only a week after its shares continued to fall yesterday. The company’s stock started to drop on February 12 when it issued a warning to investors that appeared to contradict an announcement made two months earlier. The unexpected profit warning also followed share sales by its founders totalling almost £260 million. The shares fell a further 86½p to close at 720p yesterday, a low not seen since August 2017. They are down from £16.20 last week.
Analysts at UBS appeared to be playing both sides of the game with Playtech (PTEC) yesterday. On one hand, they suggested that investors should take a gamble and buy the stock; on the other, they cut both their price target and earnings forecast for the software group. Investors paid somewhat closer attention to the latter advice, noting a warning that higher taxes in Italy and Britain, as well as subdued sentiment around its Asia business, would hit earnings, and sent the shares down by 5%.
Indivior (INDV) tumbled 13½p to 104¾p after it became apparent at the start of trading that even positive news from a drug trial was insufficient to push up the stock. The drug maker’s shares have been under pressure because of looming competition to its blockbuster opioid addiction treatment. The word was that once investors had noticed, they questioned what could help the stock to recover — and then headed for the exit.
Galliford Try (GFRD), the construction group, rose 18p to 704p, after JO Hambro Capital Management disclosed that it had built up a 5.2% stake in the business.
Go-Ahead Group (GOG) edged up 27p to £18.77 after the travel company announced the £11.2 million acquisition of a Manchester bus depot and 163 buses from First Group, taking Go-Ahead into the huge Manchester conurbation for the first time.
Manolete Partners Plc (MANO), an insolvency litigation financing company, climbed 21½p to 295½p after it said that it expected full-year results for the year to the end of March to be ahead of market expectations.
Miner’s shares shed their lustre. Patagonia Gold (PGD) lost almost half its market value yesterday after the company halted production at its main mine and permanently closed another. It has halted production at its Cap-Oeste project, with output at about 1,000 oz of gold a month, compared with previous expectations of 6,300 oz a month. Patagonia also said that it was closing its Lomada de Leiva mine in Argentina, which restarted production only in November, because of lower production volumes. The two mines represent Patagonia’s only producing assets. However, it has multiple exploration and development sites, with work continuing in Argentina and Uruguay. The company said that it was discussing future financing alternatives with its big shareholders and would update the market.
Tempus – SSE (SSE): Sell. The shares may be cheap but the risks are high in a market that feels broken
Tempus – HarbourVest Global Private Equity Limited A Shs (HVPE): Buy long term. Richly diverse portfolio that has consistently beaten its benchmark
