Cohn's gone
Gary Cohn resigned this week as Donald Trump’s chief economic adviser, after failing in last-ditch efforts to convince the president to abandon a plan to impose tariffs on steel and aluminium. Mr Cohn, a former Goldman Sachs president, was reportedly gathering a group of executives to warn President Trump that levies on all steel and aluminium imports to the US, ostensibly targeting China, could lead to a trade war and disproportionately hurt US industrial companies. Last week, the President signalled he would slap a 25 per cent charge on imported steel and 10 per cent on aluminium, regardless of the source, meaning the brunt of the tariffs will be borne by close trading partners including the EU, Mexico and Canada.
Hostile bidding
MPs step in
The battle between the top brass at GKN (GKN) and Melrose Industries (MRO) over the latter’s hostile bid continued this week, but now the government is involved. Melrose co-founder and executive chairman Christopher Miller and GKN boss Ann Stevens appeared before the Business Select Committee to give evidence on the future of GKN. That followed a letter signed by 16 MPs to Business Secretary Greg Clark, calling for the deal to be blocked.
Beaufort bites dust
Brokerage succumbs
It’s become increasingly tough for brokerages to turn a profit in recent years, with falling broking margins and quieter capital markets, combined with a relatively fixed cost base. Perhaps, then, it is unsurprising that UK small-cap brokerage Beaufort Securities has been declared insolvent by the Financial Conduct Authority, along with its asset clearing services business. However, to add to its woes, Beaufort Securities and six individuals, along with four other corporate defendants, have been charged by the US Department of Justice with conspiracy to commit securities fraud and money laundering conspiracy.
Clean-up costs big
But demand up
Ashtead (AHT) is perhaps a victim of its own success. Despite posting double-digit sales and profit growth during the first nine months of its financial year, the shares dropped almost 6 per cent on the day of its earnings release. The largely US-centric group took advantage of the clean-up needed following a series of hurricanes suffered last year. However, that means costs were also higher, with management expecting capital expenditure to be at the top end of guidance at around £1.2bn.
Inbound investment
Saudi visit
The UK could be set for an influx of investment from Saudi Arabia, following a visit from the kingdom’s crown prince to negotiate a series of – likely contentious – deals this week. Saudi foreign minister Adel al-Jubeir told reporters ahead of the trip that it would take the countries’ relationship to a “higher level”, with agreements and memorandums of understanding signed in several areas. The visit is Prince Mohammed bin Salman’s first overseas tour since becoming the kingdom’s heir apparent. He is also set to head to the US, where he will meet with Apple (US:APPL) and Amazon (US:AMZN) over deals for them to open outlets and data centres respectively in the kingdom.
Turnaround year
Shareholder payday
Laird’s (LRD) shareholders couldn’t believe their luck when management announced it had received a £1bn takeover offer from private equity group Advent International. As the chief executive told us, in just a year the electronics and technology specialist has gone from “bumping up against its covenants constantly” to recommending a 200p cash offer to its shareholders – a massive 73 per cent premium to the undisturbed share price. Unsurprisingly, shares in the group rocketed three-quarters on the day of the news.
Axa loses
Bad bid reaction
There seemed to be one clear winner out of Axa’s (CS:FP) bid for XL (US:XL). Shares in Bermuda-based property and casualty insurance company XL jumped almost a quarter on news the French insurer had made an all-cash offer of $57.60 a share for its entire share capital. That represents a 33 per cent premium to New York-listed XL’s undisturbed share price. However, Axa’s shares dipped 9 per cent on the news. Some analysts reckoned the price looked high when compared with peer transactions. Axa said it expected cost synergies of €200m (£179m), and €100m each on cross-selling benefits and savings on reinsurance buying.
The shake-out in the equity markets in February, which heralded the return of volatility after months of quiet on the markets, doesn’t appear to have shaken investor confidence yet.
State Street’s Investor Confidence Index, which analyses the actual buying and selling of equities by institutional investors, rose in February to its highest reading since the summer of 2017.
In particular investors in the US and Asia were positive buyers of risk assets such as equities in February compared to European investors who adopted a more neutral stance. Whether this new found confidence survives the recent market turbulence remains to be seen.
