Boris Johnson will pledge as much as £5 billion this week to his plan to cover the country with fibre broadband lines within six years. The prime minister is set to make the commitment at this week’s Conservative party conference in Manchester, according to industry sources. It will be one of several unfunded promises that Mr Johnson is expected to make as he gears up for a general election. The extra cash, first reported by The Sunday Telegraph, will be directed at rural areas, many of which are represented by Tory MPs. The £5 billion of extra funding would provide incentives for broadband companies such as BT Group (BT.A) to extend their fibreoptic networks into sparsely populated regions.
Car showrooms and their sales staff could be replaced by an online marketplace, an industry report has suggested. Falling sales and the increased cost of imports because of the weak pound are putting huge pressure on motor retailers. A report by Auto Trader Group (AUTO) believes that the sector is on the cusp of change. In The Future of Car Retailing, it says: “Today a lot is spent on the physical forecourt and the offline retail experience. This creates a mismatch between where car buyers are spending their time — online — and where retailers are spending their money — offline. As the whole industry evolves and takes a more digitally led role, there’s a huge opportunity to streamline costs.”
Sainsbury (J) (SBRY) has warned suppliers that they will be made to foot the bill for the hefty import tariffs that may arise from a no-deal Brexit. Commercial director Paul Mills-Hicks wrote to suppliers last week asking for confirmation that they would continue to serve Sainsbury’s with delivery duty paid (DDP) regardless of whether the UK leaves the EU with a deal. Delivering goods with DDP means the supplier bears the transport costs, including import tariffs. A no-deal Brexit would result in tariffs as high as 46% on cheese and 40% on beef from the EU.
Bob Dudley is preparing to step down from BP (BP.) after running the oil giant for a decade, The American is drawing up plans to retire in a year and has discussed them with new chairman Helge Lund, Sky News reported yesterday. Dudley, 64, has been paid more than $110m (£89m) since he became chief executive. About 59% of shareholders voted against his $19.6m pay package in 2015, and he took a cut.
Activist investors are circling Metro Bank (MTRO) with a view to taking a stake or picking off parts of the business after the troubled bank pulled a bond issue last week. The American raider Elliott Advisors is among a clutch of investors looking at the challenger bank after it was forced to postpone a £250m bond sale, despite offering a hefty yield of 7.5%. Activist investors are understood to be interested in taking an equity stake or purchasing new debt at a higher coupon in a private placement. One analyst said the coupon would have to be “bloody high” for a private sale. Other firms are looking at the possibility of acquiring Metro’s deposit book as a source of cheap funding.
Royal Mail (RMG) is recruiting a director to run its British operations as it heads for a showdown with postal workers and battles against slumping volumes in letters. The former state-owned monopoly abolished the job a year ago when it ousted Sue Whalley, the chief executive of UK post and parcels, after a spell of dire trading. Finance director Stuart Simpson was handed the additional role of chief operating officer. The board’s decision to appoint headhunters to fill the role again reflects consternation over its failure to get a grip on deteriorating performance in its UK business, which turns over £7.5bn and has 143,000 staff.
AstraZeneca (AZN) has moved to cement its position in oncology by revealing that its top cancer drug Lynparza is capable of extending the life of women with ovarian cancer by almost two years as it moves to cement its position in oncology. The Anglo-Swedish giant presented the data yesterday at the European Society for Medical Oncology in Barcelona, where it said that its drug, when taken in addition to an existing product, bevacizumab, reduced the risk of disease progression or death by 41%. Almost half of women in the trial showed no disease progression at two years, compared with 28% of women on bevacizumab alone.
HSBC Holdings (HSBA) has appointed Egon Zehnder to search for a new chief executive after the shock ousting of John Flint. Europe’s biggest bank is understood to have appointed the headhunter after holding a beauty parade including rivals Spencer Stuart and Russell Reynolds. HSBC declined to comment. The shortlist of external candidates includes Citigroup’s head of global consumer banking, Stephen Bird, and Stephen Hester, chief executive of the insurer RSA, who previously led Royal Bank of Scotland. Bird, a potential successor to Citi chief executive Michael Corbat, served as chief executive of Citi Asia Pacific from 2012 to 2015.
Domino’s Pizza Group (DOM) has hired headhunters to find a new chairman as it seeks to move on from a bruising dispute with powerful franchisees. The company is understood to have appointed Heidrick & Struggles to find a successor to Stephen Hemsley, who has been with Domino’s for more than 20 years. The process was kicked off on Friday by Ian Bull, who joined the board in April and became senior independent director this month. Bull, previously finance director at Greene King and Ladbrokes, is understood to be briefing shareholders that he intends the appointment to be the beginning of an overhaul of the Domino’s board.
Purplebricks Group (PURP) is braced for an investor revolt over bonuses. The shareholder advisory service ISS has urged investors to vote against Purplebricks’ financial statements at its annual meeting on Thursday, saying bosses’ incentive awards are not “subject to any performance hurdles” and vest in less than three years. A Purplebricks source said it needed to “attract and retain the appropriate calibre of individual” and that its executives were “not especially well-paid”. Former chief executive Michael Bruce received £273,000 last year.
Retail investors might like Marston’s (MARS). It could be for the 20% discount on food and lodging. More likely, it’s for the chunky dividend. Marston’s paid out £47.5m last year — a yield of 5.7%. It makes the company an attractive stock — as long as it remains committed to the shareholder payout. That is where it could become tricky: Marston’s has a lot of debt. Last year’s annual report said it was committed to paying down £200m of its £1.4bn net debt by 2023. Marston’s is understood to have appointed advisers from Christie & Co to sell off 150 tail-end pubs for about £45m, in a process dubbed Project Harvest — part of its mission to pay down the debt. Initial bids were due on Friday, but the deadline has been pushed back until the end of this week. This year has been tough for small pub deals, as Marston’s knows all too well. It called off the sale of its Pitcher & Piano business in the past few weeks. Marston’s is a good dividend stock, for now. Yet its shares are still trading on the Greene King premium, and tackling the debt pile is going to be some feat. Avoid.
