Advent, the American private equity giant attempting to buy Cobham (COB) is ready to commit to protect British jobs and investment as it seeks to allay concerns over its £4 billion takeover of the defence and aerospace company. Amid fears that a sale to private equity runs the risk of a further sale and possible break-up of a key British industrial asset in a few years’ time, it is understood that Advent International will promise the government that it will maintain UK employment at current levels at least, invest in research and development in Britain and keep the Cobham brand. Advent will also commit to keeping Cobham’s various “sector headquarters” around southeast England and East Anglia. Advent secured support from Cobham investors for the proposed purchase last month, but it is subject to a review from competition regulators concerning national security implications.
Anglo American (AAL) is pushing ahead with its biggest project in more than a decade. The mining group has already spent more than $100 million diverting the Asana river through a 7.5 kilometre tunnel deep within the mountain to make way for its Quellaveco mine. It will cost at least $5 billion for the mine to reach full production. First copper is due in 2022 and at peak it will produce 330,000 tonnes a year of the red metal, which is forecast to be in increasing demand globally. Anglo plans to hollow out this valley over three decades to some 400 metres below the old riverbed. The vast pit will measure 900 metres deep and should yield 1.3 billion tonnes of Anglo’s prize: copper-rich ore.
More than 50 listed British companies are at risk of disappointing investors in the next set of financial results and suffering a fall in their share prices because of pressure on their profit margins, according to the highly regarded research team at Quest. Quest, a division of the stockbroker Canaccord Genuity, have drawn up a list of companies whose stock market valuation appears to be way ahead of where it should be given the underlying level of operating performance. The team’s analytical modelling has picked up 51 companies whose valuations look “particularly stretched” and in a note Quest singled out 13 quoted businesses whose price could be a red warning light for unsuspecting investors. Among the companies whose share prices look as if they are running ahead of their operating performance and profit margins are Britvic (BVIC), Greggs (GRG), London Stock Exchange Group (LSE) and WH Smith (SMWH). Games Workshop Group (GAW), Halfords Group (HFD), and Rentokil Initial (RTO), could also be potentially overvalued, Quest said. As a result, their share prices could be in danger of pronounced falls if forthcoming results underwhelm or their margins start to deteriorate. Graham Simpson, the author of the note, said: “We are saying that these stocks are in a precarious position. These companies are currently forecast to generate peak margin — that’s margins at a ten-year high — but despite that their valuations are really stretched already.”
One of the property tycoons behind the One Hyde Park development in London’s Knightsbridge is considering a takeover bid for Capital & Counties Properties (CAPC) the company that owns Earls Court and Covent Garden. Nick Candy, 46, who developed Qatari-backed One Hyde Park with his brother, Christian, is understood to have held early-stage talks with Saudi Arabia’s Public Investment Fund about a joint move on Capco, run by Ian Hawksworth. Capco has been mired in a dispute with Labour-led Hammersmith & Fulham council over its plan to build thousands of luxury homes at Earls Court. This led to its chief investment officer, Gary Yardley, being unofficially banned from the town hall. Yardley left Capco in June. The company has announced its intention to demerge its holdings in Earls Court and Covent Garden, flushing out various bids. Olympic Village owner Delancey, chaired by former British Land boss Sir John Ritblat and run by his son, Jamie, is understood to be in competition with Canary Wharf to buy Earls Court.
Standard Life Aberdeen (SLA) chairman Sir Douglas Flint is seeking to reinforce the troubled investment giant’s board with new directors. Flint has hired headhunter MWM to find non-executives. He is also looking for a veteran to chair its China joint venture with insurer Heng An.
Halfords Group (HFD) has had 4 four ptofit warnings in 2 years. The main reason it has not been even more of a bloodbath for the shares is the dividend — but now the City is beginning to believe that sacred cow could be sacrificed. Last year, the group paid a dividend of 18.6p per share. After the dismal share price performance, the stock trades on a yield of 10.8% compared with an average of 5% for the FTSE 350, making the payout look ripe for a cut. If the board makes that call, the shares could be in for a further pummelling. Yet the harsh reality is that pre-tax profits have dropped for four years in a row, falling by 24% to £51m last year. The Halfords directors, now led by Keith Williams, who also chairs Royal Mail, face a tough choice: brace themselves, cut the dividend and place their faith in Stapleton’s long-term vision; or hunker down, keep the shareholders happy and hope the retail storm passes. Either way, this looks like a situation that is going to get a lot worse before it gets better. Avoid.
Morrison (Wm) Supermarkets (MRW) has accelerated its push into online by deepening its ties with Amazon and sealing a tie-up with Deliveroo to launch a hot-food delivery service this month. David Potts, chief executive of Morrisons, told The Times in his first interview since he took the job, that its “Morrisons at Amazon” service, which offers one-hour deliveries, was in eight cities and would be in twenty by the end of the year. The Morrisons boss also revealed that the supermarkets group would open a store in Canning Town in east London at the end of the month with a new Market Kitchen service, so that hot food could be delivered to local customers through Deliveroo. He said that the ultra-fast service had proved popular with customers.
Civil unrest in Hong Kong and the trade war between the United States and China have dragged down revenues at InterContinental Hotels Group (IHG). The owner of Holiday Inn yesterday reported a 36% slide in revenue per available room — or revpar, the key industry metric — in Hong Kong during the three months to the end of September. This dragged down revpar in its Greater China division by 6.1% for the quarter.
Wincanton (WIN) is the third group to express interest inEddie Stobart Logistics (ESL). Dbay Advisors is also in talks with Eddie Stobart about a possible deal. Eddie Stobart operates about 2,700 vehicles and 5,000 trailers and employs around 6,600 staff. Eddie Stobart has opened its books to Wincanton, but it said yesterday that no proposal had been made and that there was no certainty that one would be forthcoming. Wincanton said that it was “undertaking a diligence exercise on Eddie Stobart and its assets to enable it to assess the potential merits of a combination”. It has until November 15 to announce a firm intention to make an offer or walk away.
Galliford Try (GFRD) chief executive plans to quit the ailing building company to join his old boss at . Graham Prothero, 57, is trying to engineer a move to Bovis, which is in the process of buying Galliford’s Linden Homes and regeneration divisions for £1bn. After the deal, Prothero could take a senior role alongside his former chief executive Greg Fitzgerald who runs Bovis. Prothero’s potential switch raises questions about his fiduciary duties to Galliford’s shareholders and whether he should recuse himself from decisions over the sale.
