London shares have rebounded a little after their slump at the end of last week. Click here to see what The Trader thinks of the markets.
IC TIP UPDATES:
Bus and rail group National Express Group (NEX) has begun operating its first German rail contracts. The company won the tender for the franchises on the Rhine Munster Express route in February 2013. It will serve the North Rhine-Westphalia region, which includes the commuter cities Cologne and Bonn. The contracts are for 15 years and will generate revenues of around €1.6 billion (£1.15bn) across the period. Buy.
Royal Dutch Shell (RDSB) has got the nod from China’s antitrust regulators for its $70bn takeover of BG Group (BG.), the final pre-conditional approval required for the deal. It follows previous approvals from Brazil, the EU and Australia. Buy.
Specialist house builder Inland Homes (INL) has secured an agreement with Southampton City Council as development partner on an 8.9 acre brownfield site to be known as Chapel Riverside. The site has a gross development value of £110m. Inland has also received a resolution to grant planning consent for 95 residential units and 4,000 sq ft of commercial space at The Vale in Acton, West London. Estimated gross development value here is £50m. Buy.
Packaging specialist RPC (RPC) has launched a fully underwritten rights issue to fund about half its acquisition of Global Closure Systems from private equity firm PAI Partners. The rigid plastics packaging products and plastic containers group is paying an enterprise value of €650m (£470m) for the plastic closures and dispensing systems specialist. Shares climbed 2 per cent in early morning trading. Buy.
Investors sent shares in Trakm8 (TRAK) up 3 per cent after the telematics specialist extended its deal with the AA (AA.) beyond roadside assistance and recovery vehicles. AA will now offer Trakm8’s solutions to its business-to-business fleet management customers, which operate around 9.5m vehicles. Buy.
KCom (KCOM) has struck a deal to sell its national network infrastructure to CityFibre (CFHL) for £90m in cash. Management expects annual net costs of £4m for continued access. The deal has slashed the Hull and East Yorkshire-based telco’s pro forma net debt to £13m, paving the way to further growth investments. We remain buyers.
Shares in educational IT and services group RM (RM.) slid 6 per cent after student management systems specialist Tribal (TRB) warned that full-year adjusted operating profits would be lower than expected due to sluggish sales momentum, contract delays and certain payments slipping into next year. Under review.
After a disappointing six-month delay, Flowgroup (FLOW) is to re-launch its electricity-generating boiler to the UK market in January. The launch will coincide with a new energy tariff, which Flowgroup believes will be “one of the most competitive tariffs for gas and electricity on the market”. The first installations of the boiler will begin in March, and move to higher volume sales next winter. We stay buyers.
KEY STORIES:
Animal health business Benchmark Holdings (BMK) has announced a £186m placing to part-fund its acquisition of nutritional product manufacturer INVE Aquaculture for a total consideration of £227m. The deal is expected to be immediately earnings-enhancing for Benchmark.
Healthcare giant AstraZeneca (AZN) has admitted it’s in negotiations with Californian biotech Acerta Pharma BV. However, it’s keeping any further details confidential at this point, and warns that a potential deal has yet to be agreed.
The UK government is considering nationalising Rolls-Royce’s (RR.) nuclear submarine unit in a bid to stabilise the group’s performance and counteract the possibility of a foreign takeover. According to the Financial Times, a merger of all or part of Rolls-Royce with BAE Systems (BA.), is another scenario being discussed.
OTHER COMPANY NEWS:
Shares in hedge fund manager Man Group (EMG) have moved higher today after confirming its plans to appoint former BT boss Lord Livingston as chairman.
A surprise victim of the recent flood disaster across Northern England was home interiors group Walker Greenbank (WGB). The company’s Lancaster-based fabric printing business suffered substantial flooding and the disruption will have a material effect on the group’s financial performance for the year ending January 2016. Pre-tax profits are expected to be 15 per cent lower than the previous year, although management is hopeful an insurance claim will help them recoup the losses.
It hasn’t been all doom and gloom in the oil services space. Petrofac (PFC) has secured recent contract extensions from its customers on the UK Continental Shelf to the value of $400m. The oil service provider said it has recently secured a two-year extension with Centrica Storage on its contract on the 8A platform in the Rough field, which will start production in January 2016. This was in addition to a five-year contract extension from EnQuest (ENQ) in relation to the Kittiwake platform.
Electrocomponents (ECM) has appointed David Egan, formely of Alent, ESAB Holdings and Hanson as its new finance director.
Shares in Irish oil producer Circle Oil (COP) fell by a fifth after news of a possible debt restructuring or rights issue. Falling oil prices have weighed on the value of the company’s reserves, thereby limiting Circle’s borrowing base and sparking a stand off with creditor International Finance Corporation.
Despite setting records for the number of listens on its audio content-streaming platform, shares in Audioboom (BOOM) cratered 24 per cent after the group announced revenues were below market expectations.
