Signs of further tightening in US monetary policy to come have spooked investors in London this morning with sellers dominating. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Shares in Unilever (ULVR) are down 4 per cent this morning after the company stated it was unlikely to still be included in the FTSE 100 after the company moves its headquarters to the Netherlands. Chief financial officer Graeme Pitkethly said at a conference that after discussions with the FTSE Russell it has become clear that it would most likely be dropped from the index, but said the move to Rotterdam would still be best for the company and its shareholders. Buy.
Since it listed in the first half of 2017, Diversified Gas & Oil (DGOC) has hardly shied away from large acquisitions. Today, the Appalachian Basin-based firm has announced its biggest to date, signing a deal to buy 11,350 producing wells for $575m. The deal, which will be funded by a $225m share placing and a new $1bn debt facility, will more than double Diversified’s reserves and oil-equivalent output, and according to the company, should lead to a cash profits uplift of 289 per cent on 2017. As the deal represents a reverse takeover, the shares have been suspended, and so we place our buy call under review.
Gym Group (GYM) has acquired 13 gyms from easyGym for an initial £20.6m, with an extra £4.1m that will be payable once lease extensions are agreed for two sites. The deal was funded mainly by a £24m share placing. The additional sites are part of Gym Group’s aim to reach 200 sites by 2020, as it’s currently at 134 locations. Shares were up more than 4 per cent in early trading, but we’re still concerned about competition in the sector. Sell.
KEY STORIES:
Rathbone Brothers (RAT) has acquired Scotland’s largest fund manager Speirs & Jeffrey for an initial £104m consideration, which will be part funded by the proceeds of a £60m equity placing. The Scottish manager has £6.7bn under management and will increase Rathbones funds under management by almost a fifth to £44.5bn.
Despite what N Brown (BWNG) has called a “satisfactory” first quarter performance, an all-round challenging period for apparel retailers has sent the group’s shares tumbling in early trading. Group revenues rose by 0.4 per cent, although that largely reflected higher financial services sales as product revenues slipped 2.8 per cent. N Brown reckons nearly three-quarters of its sales are now generated online; e-commerce sales rose by 3 per cent in the opening quarter. The group has also started work to close 20 stores, which will generate higher-than-expected exceptional costs this year.
Full-year results from Majestic Wine (WINE) failed to ignite much reaction in the share price this morning, despite news of a 4 per cent improvement in underlying sales. Significant growth in Naked Wines also led to a whopping 63 per cent rise in underlying, adjusted pre-tax profits to £17.2m. The concern likely lies in Majestic Retail, where profits were flat after adverse foreign exchange rates weighed on margins. For now, investors are likely to be cheered by a 41 per cent rise in the total dividend to 7.2p a share.
Shares in PZ Cussons (PZC) fell nearly 7 per cent in early trading after the consumer goods company announced the continued poor discretionary spending in Nigeria has hurt volumes, prices and margins in the country. In the UK, new product launches haven’t been enough to compensate to falling volumes and contracting margin. In March the company had warned that pre-tax profit would be somewhere in the range of £80m to £85m, but now this is expected to fall towards the lower end of the range.
Revolution Bars (RBG) has warned that like-for-like sales had 1.7 per cent during the second half, and so adjusted cash profits are now expected to be flat on last year at around £15.1m but miss market expectations. The bar operator blamed a combination of bad weather, a lack of chief executive, and the distraction of two takeover offers towards the end of last year. Shares fell nearly 11 per cent in early trading.
OTHER COMPANY NEWS:
Anglo American (AAL) has agreed to sell an additional 21.9 per cent equity interest in its Quellaveco copper project in Peru to Mitsubishi, for $600m. The sale, which brings the Japanese car giant’s ownership of the project to 40 per cent, and will pre-fund a portion of Anglo American's capital outlay for the development of the mine.
