DS Smith (SMDS), Dr Martens (DOCS), TClarke (CTO), Hays (HAS), Hollywood Bowl (BOWL), B&M European Value Retail (BME), Moneysupermarket.com’s (MONY), Superdry (SDRY) and IntegraFin (IHP)
FTSE 100 packaging group DS Smith (SMDS) has reached an agreement with US giant International Paper (US:IP) about an all-share merger.
The deal values DS Smith at 415p per share – or £5.8bn in total – which represents a premium of 47.7 per cent to its pre-offer closing price. Upon completion, DS Smith shareholders would own 33.7 per cent of the combined company and International Paper shareholders would own the rest.
The combined company’s primary listing will be on the New York Stock Exchange, but International Paper intends to seek a secondary listing in London upon completion.
DS Smith chair Geoff Drabble said the deal “represents attractive value and creates a strong investment proposition for DS Smith shareholders in the global sustainable packaging industry”. However, the tie-up has still to be voted on by DS Smith shareholders.
If it is voted through, the combination is expected to become effective in the fourth quarter of 2024. The news is likely to come as a blow to FTSE 100 packager Mondi (MNDI), which reached an agreement in principle with DS Smith for an all-share offer last month. JS
Read more: The best packaging stocks in a struggling industry
Doc Martens shares booted on 2025 outlook, CEO change
Shares in shoemaker Dr Martens (DOCS) dropped over 30 per cent on Tuesday morning after it said US sales would likely be down by a double-digit percentage in the 2025 financial year. The company said its autumn/winter order book was “significantly down year-on-year”, leading to a £20mn hit to pretax profit. The company is already looking at a serious decline in earnings for the 2024 and 2025 financial years, as per analyst forecasts.
The dropoff in sales versus expectations means the company will have to spend around £15mn for the second year in a row to store excess inventory. A “worst case scenario” will be pretax profit in 2025 at one-third of the 2024 level, the company said.
At the same time as the downgrade, the company announced that new chief brand officer Ije Nwokorie will take over as chief executive “before the end of the current financial year”, which ends 31 March 2025. Nwokorie was senior director of Apple’s retail division before taking on the Dr Martens job. Outgoing boss Kenny Wilson has been in the job six years. AH
Read more: Can struggling shoemakers reboot their demand?
More bad news from recruiters
Shares in UK recruitment companies slid further this morning, following more news of “challenging” market conditions. Hays (HAS) reported a 14 per cent drop in like-for-like fee income between January and March. The group is now cutting its cost base in order to boost productivity.
Robert Walters (RWA) is also having a torrid time. At constant currency, net fee income tumbled by 16 per cent between January and March. Trading conditions “remain consistent with those seen at the end of 2023”.
“Although certain macro-economic indicators, such as inflation, continue to moderate in some markets, the general environment remains one where client and candidate confidence is at low levels, which we expect to continue to be a headwind to fee income growth in the near-term,” said chief executive Toby Fowlston.
Yesterday, PageGroup (PAGE) revealed that trading had deteriorated in the first quarter of 2024, with continental Europe proving particularly troublesome. JS
B&M’s UK growth slows
Discount retailer B&M European Value Retail (BME) disclosed a weak end to its financial year in its key UK market, where like-for-like sales were up 2.9 per cent in the fourth quarter compared to a full year growth rate of 3.7 per cent. Total group revenue was up 10.1 per cent to £5.5bn for the year to 30 March on the back of volume growth, with an expected adjusted cash profits figure of £629mn at the top end of management’s £620mn-£630mn guidance range. A gross 47 new UK B&M stores opened their doors in the year, ahead of previous guidance of 45 sites. The shares fell by 3 per cent in early trading. CA
Read why we’re still bullish on B&M
Superdry to delist in fight to stay alive
Struggling fashion retailer Superdry (SDRY) intends to leave the London Stock Exchange in order to restructure “away from the heightened exposure of public markets”.
Shares in the company fell by 25 per cent after it published plans to delist, raise equity and implement a restructuring plan. Superdry is seeking rent reductions on 39 UK sites and wants to extend the maturity date on certain loans. It also intends to raise up to £10mn to provide “the necessary liquidity headroom to deliver its turnaround plan”.
This equity raise is fully underwritten by co-founder and chief executive Julian Dunkerton, who owns over 26 per cent of the company. Shareholders will be asked to vote on the plans “in due course”.
Superdry warned that, unless the restructuring plan comes into effect, it would need to enter administration. “This outcome would leave creditors, including the creditors whose claims would otherwise be compromised by the restructuring plan, materially worse off than they would be under the restructuring plan,” it concluded. The company is trading at just a fraction of its level from even a year ago, dropping from 89p to 5.8p a share. JS
