London shares are struggling for positive momentum amid mixed economic data. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Royal Dutch Shell (RDSB) subsidiary Shell Gas is to sell its entire interest in Canadian Natural Resources for pre-tax proceeds of approximately $3.3bn. Funds raised from the sale, set to complete on Wednesday, will be used to reduce net debt. Long-term income buy.
Paragon (PAG) has confirmed press speculation that it is in talks to acquire residential development finance lender Titlestone, as part of its broader diversification strategy. Titlestone was established in 2012 and has a loan book of almost £300m. Buy.
Costain (COST) has won a contract from Highways England to supply motorway signalling systems. The group will supply 1,500 Motorway Incident Detection and Automated Signalling (MIDAS) units over a two-year period. Shares are up 1 per cent on the news. Buy.
The Competition and Markets Authority has opened a full investigation into the proposed merger of SSE’s (SSE) household energy business with Npower. The CMA already carried out a phase 1 investigation into the deal, finding it could reduce competition and lead to higher energy prices. The opening of a phase 2 investigation - which is more in-depth than a phase 1 - was widely expected, so the shares have not moved much. A decision is not expected until 22 October. Buy.
At ‘no-one is watching’ o’clock on Friday, Tharisa (THS) issued a painful preview of its half-year results, due next week. Essentially a profit warning, the platinum-chrome miner said the “normalisation” of contracted chrome prices and the strengthening of the South African rand meant basic and headline earnings per share would be 44 and 31 per cent below the levels seen for the half-year ended 31 March 2017. Our buy call is under review.
Shares in SDX Energy (SDX) are up 10 per cent in early trading at 70p, after the North African explorer-producer made another conventional natural gas discovery at its LMS-1 exploration well on the Lalla Mimouna permit in Morocco. The last of SDX’s nine-well exploration programme, LMS-1 is also the seventh success, and has opened what chief executive Paul Welch described as “a very significant new play area” in the Gharb basin. Busy on two fronts, SDX has also spud the Kelvin-1X exploration well at South Disouq, Egypt, in which it holds a 55 per cent working interest. Buy.
KEY STORIES:
CYBG (CYBG) has confirmed that it has made a preliminary all-share takeover approach for Virgin Money (VM.), under which Virgin shareholders would receive 1.1297 new CYBG shares for each Virgin Money share. Virgin shareholders would own 36.5 per cent the combined group. The offer values Virgin at £1.6bn and represents a 15 per cent premium to their previous closing price. Shares in Virgin were up 8 per cent in early trading.
High street bookie William Hill (WMH) continues to credit its online operations for continued growth, reporting a 12 per cent rise in online net revenues over the 17 weeks ended 24 April 2018. That was helped by a string of bookie-friendly results, which bosses expect will normalise over time. Elsewhere, the retail division fared less well, reporting a 4 per cent decline in net revenues, with the sportsbook revenues falling as much as 9 per cent. The group does continue to do well in the US however, which has been driven by strong sports results and wagering growth.
Hiscox (HSX) grew its gross written premiums by more than a fifth to $1.2bn (£888m) during the first quarter. Hiscox Re & ILS led the way, growing its gross written premiums by 42 per cent to $363m. The bulk of this increase was written on behalf of its ILS and quota share partners.
Standard Life Aberdeen (SLA) has announced it will challenge Lloyds’ (LLOY) decision to terminate its asset management arrangements - covering around £109bn in assets - at the end of a 12-month notice period. SLA argues that it is not in direct competition with Lloyds, following the merger between Standard Life and Aberdeen, and Lloyds and Scottish Widows therefore did not have the right to terminate its investment management arrangements. Both parties are engaging in a dispute resolution process.
At last, Shire’s (SHP) has recommended Takeda’s takeover offer. Shareholders will now have the opportunity to vote on the cash and shares deal which could see them pocked $30.33 in cash and either 0.839 new Takeda shares or 1.678 Takeda American Depositary Shares. After a number of attempts, this final offer is a 64 per cent premium to the share price prior to first suggestion of a takeover.
OTHER COMPANY NEWS:
Despite better data from the Society of Motor Manufacturers & Traders (SMMT) around new car sales in April, these results - which only track the six months up to the end of February - from Aim-listed Cambria Automobiles (CAMB) don’t make for cheerful reading. Interim revenues fell by 4.5 per cent to £295m, while underlying pre-tax profits fell by 14.3 per cent to £4.8m. Thankfully, the group remains in a good balance sheet position, and has thus been able to maintain its 0.25p dividend.
