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Today's Markets: Woodford fund sets deadline, Meggitt takeover and the cost of beer

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Today's Markets: Woodford fund sets deadline, Meggitt takeover and the cost of beer
  • Heineken hints at beer price hike 
  • Megitt agrees to £6.3bn takeover by US rival 
  • Woodford fund to be wound up in 2022

Woodford fund to be wound up in 2022

The caretakers of the defunct Woodford Equity Income Fund have said that the sale of the remaining assets will be completed in 2022. As of 30 July 2021, the fund has just over £123m of assets remaining on the books, split between nine companies. 

Customers have not paid fees to the new managers of the fund (LF Equity Income) since the start of the wind down in early 2020, but many investors will still be waiting for some of their money to be returned to them as assets continue to be liquidated. Legal options are available to those who have been trapped in the fund since its collapse, but these are unlikely to offer much financial reassurance. 

The setting of a date for the sale of assets is interesting. No doubt the managers want to put the fund behind them, but putting a target for the sale adds more pressure to the managers and is unlikely to support prices. A probe into the events surrounding the collapse of the star fund manager is still ongoing. 

Aquis achieves record market share 

Evidence continues to mount that investor habits are changing. This morning Aquis Exchange (AQX) - the owner of junior London market the Aquis Stock Exchange as well as multilateral trading facilities across the UK and Europe - has announced that it achieved a 6.2 per cent share of market trading in July. A record level for the group. 

Aquis management has pitched its UK platform as a destination for investment in growth companies. Its cheap and easy listing rules means it is attracting companies which may otherwise have listed on Aim - cannabis pioneers Sativa and Ananda, popular British breweries Adnams and Shepherd Neame, and litigation specialists Watchstone, among them. 

The rising market share comes ahead of Aquis’ plans to offer online trading via some of the UK’s biggest digital trading platforms, including Hargreaves Lansdown, IG and AJ Bell. At the moment, investors trading on Aquis currently have to phone in to complete trades through a broker. 

Megitt agrees to £6.3bn takeover by US rival 

On the day of its financial results, Meggitt (MGGT) has announced that it has reached a takeover agreement with its US rival Parker-Hannifin, in a deal that values the engineering group at £6.3bn. The cash offer of 800p per share represents a 70.5 per cent premium to Meggitt’s closing price on Friday. 

Management also revealed that the group’s operating profit had dropped by two-fifths to £61.7m in the first half as it grappled with continued weakness in civil aerospace.

Parker-Hannifin said that it would maintain Meggitt’s “existing R&D, product engineering and direct manufacturing labour headcount in the UK at no less than current levels, while increasing by at least ten per cent.” 

Is a beer price hike on the cards? 

Heineken has said it is going to pursue “an assertive” pricing strategy for the remainder of the year amid the rising price of raw materials. That is likely to come as a blow for the struggling hospitality industry which will have to fork out more for its kegs and bottles. These price hikes will no doubt be passed onto the customers - as companies protect their margins amid rising raw material costs, it is those at the very end of the chain who pay the price. 

Breweries are facing big challenges. While marketing expenditure has returned to its painfully high pre-covid levels, drinking habits are yet to get back on track. Tourism remains on the ropes, while pubs, bars and restaurants are all struggling to creak back into top gear. Consumers’ penchant for at home drinking remains and margins are far lower for beverages sold to supermarkets than those sold into pubs. 

Read more: Diageo recovers on the back of premium brands