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News & Tips: Sainsbury, Cairn Energy, Caretech & more

Today's market overview

News & Tips: Sainsbury, Cairn Energy, Caretech & more

Seemingly decisive backing for Emmanuel Macron's En Marche political movement in French Assembly elections have boosted confidence in equity markets at the start of the week. Click here for The Trader Nicole Elliott's latest views on the markets.

IC TIP UPDATES:

Oil and gas explorer Cairn Energy (CNE) watched its share price fall 3 per cent after updating the market on its tax dispute in India. In March, the government had said via the international arbitration tribunal that $53m (£41m) of dividends from Cairn India Ltd (now Vedanta Ltd) were no longer restricted. In 9 June, the tribunal issued a formal order to the same effect, but on 16 June the India Income Tax Department directed Vedanta Ltd to pay the sum due to Cairn to the government, instead. International arbitration proceeds are progressing - Cairn says it is owed $104m, including that $53m in historical dividends, and is seeking damages of around $1bn. The tribunal’s final hearings are scheduled for January 2018.

KEY STORIES:

Reports in the weekend press suggest that J Sainsbury (SBRY) is in exclusive discussions to buy discount chain Nisa for £130m. Nisa recently hired investment bank Lazard to advise it on potential takeover offers, as Co-Op was also rumoured to be interested. In order for the offer to go ahead more than half of Nisa’s 1,300 members would have to accept the offer. Sainsbury’s bid for Nisa could be an effort to expand its presence as rival Tesco looks to acquire Booker, which runs Londis and Budgens stores. Sainsbury’s shares were up 2 per cent in early trading.

Care home operator CareTech (CTH) issued a brace of positive announcements this morning: interim results for the six months to March 2017, which showed increases in revenue and adjusted profitability, as well as the acquisition of specialist residential care and supported living provider Selborne Care Ltd for £16.9m in cash. The latter has 57 residential beds across eight sites in Midlands and the south-west. It also has supported living services for 30 service users.

Although revenue was up slightly, like-for-like sales at women’s fashion line Bonmarche (BON) fell 4.3 per cent in the year to April pushing pre-tax profits down 39 per cent to £5.8m. Management pointed to price and wage inflation, uncertainty linked to Brexit, and unseasonal weather patterns as reasons behind a slower than anticipated rate of improvement at the discount clothing chain. The retailer has updated its strategy to focus on one type of customer rather than four, to modernise its service, and to better co-ordinate working within the business. Shares fell nearly 2 per cent in early trading.

OTHER COMPANY NEWS:

Flowgroup (FLOW) has completed a financing, raising just over £25m, net of expenses. The proceeds will be used to pay off liabilities and grow Flow Energy. It aims to build Flow Energy into a mid-tier energy supplier. It has 250,000 customer fuel accounts currently. The group is in the process of “restructuring and rightsizing” Flow Products, and has been cutting costs to ensure it stops being a cash drain on the rest of the business.

Rockpool Acquisitions is planning to list on the main market in July - as the name suggests, it’s an acquisition vehicle. It will be raising £1.5m in shares at the IPO stage, targeting Northern Ireland-based companies of up to £20m in value, and with an “international outlook”. The first acquisition should be made in the first year since being admitted, and will be fashioned as a reverse takeover, likely settled in shares.

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By Graeme Davies,
19 June 2017

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