Comcast Sky bid trumps Fox
There was a time that Sky (SKY) looked in danger of collapse as competition in the UK pay-TV market increased. Things are very different now. Sky’s content is so valuable that it has caught the attention of three US media giants. Comcast – the latest company to wade into the takeover war – trumped 21st Century Fox’s original all-cash offer by 16 per cent this week, valuing Sky at £22bn in the process. If Comcast’s bid is accepted and approved by regulators, Sky’s shareholders will receive £12.50 per share. But there may be more to come. Disney – which has made a separate bid for Fox – has described Sky as a “jewel”. It might yet make an even better offer.
Bank bungle
TSB hurts, Lloyds improves
The UK banking sector has had an up and down few days. Firstly a disastrous IT migration led to a meltdown in TSB’s online banking service, leaving almost 2m customers without access to their accounts for days on end. The migration was supposed to shift customers who moved with the bank when it demerged from Lloyds from legacy systems onto a new system and should have completed over the weekend but bled into the middle of the working week. In better news for the sector, Lloyds posted a £2bn first-quarter profit despite another £90m provision for PPI claims, while Metro Bank’s founder, Vernon Hill, was re-elected as chairman despite shareholder disquiet over payments to his wife’s architectural business.
A-rated
Google owner profits surge
Concerns about privacy and internal spending on non-core projects failed to deflect Google owner Alphabet’s first-quarter performance as it smashed expectations. Posting an 84 per cent leap in net profits for the past three months to $9.4bn, Alphabet blew consensus expectations for profit of $6.6bn out of the water, helped by improving prices for clicks and ad views on its core Google search engine and YouTube video service. Privacy concerns are unlikely to go away, though, with European Union regulation on data looming.
Coffee to go
Costa demerger planned
The management of Costa Coffee-to-Premier Inns hotels group Whitbread has responded to activist investor pressure by confirming it plans a demerger of the fast-growing Costa Coffee business. After pressure from hedge funds Sachem Head and Elliott, which have been building up stakes on the share register, Whitbread bosses confirmed that they have “for some time been of the view that separating Premier Inn and Costa would at the right time enhance focus and enable value to be optimised for shareholders”. But there was a caveat that the process might take up to two years while an IT upgrade is completed at the Costa business.
Even keel
Borrowing dips again
Government borrowing has hit its lowest level since the first quarter of 2007, while day-to-day spending commitments have been met through taxes for the first time in 16 years. The latest figures from the Office for National Statistics represent a marked improvement from earlier forecasts, and it implies that most, if not all, of state borrowings in the year through to March 2018 was spent on capital investment programmes, including infrastructure such as new roads, schools, or railways.
Risers and Fallers
| CAPITA | 22.11 |
| ENQUEST | 20.39 |
| PREMIER OIL | 17.08 |
| PETRA DIAMONDS | 15.08 |
| POLYMETAL INTERNATIONAL | 14.14 |
| VECTURA GROUP | -15.36 |
| CLARKSON | -15.19 |
| WILLIAM HILL | -11.09 |
| PURETECH HEALTH | -10.42 |
| MOSS BROTHERS GROUP | -10.11 |
Week to 24 April 2018
Property dichotomy
Builders boom, agents suffer
The UK’s property market remains split. On the one hand, new-build housebuilders continue to report healthy sales growth while estate agents are increasingly suffering due to a stuttering secondary market. This week the UK’s second-biggest housebuilder, Persimmon, said trading since the turn of the year had been solid, with forward sales revenue rising by 8 per cent to £2.76bn and average selling prices also on the rise. At the same time estate agents are suffering a flat property market with localised weakness in key markets such as London – this week Countryside Properties reported a 10 per cent fall in income for the first quarter.
Patience tested
Woodford suffers
Investors in Neil Woodford’s Patient Capital Trust are going to have to show some further patience after a testing week. Earlier this week the fund took a hit when biotech Prothena, which the trust owns around one-third of, suffered a sharp sell-off after clinical trial failures forced it to call a halt on work on a core product. On Tuesday, the fund’s annual report detailed a 2 per cent fall in net asset value over 2017, a situation that will have deteriorated further since the turn of the year. Shares in Patient Capital Trust were changing hands for 76p midweek, well down on the 100p-a-share launch price in 2015.
