Shares in London's main indices are up after a strong start to the trading day. Click here for The Trader Nicole Elliott's latest take on the markets.
IC TIP UPDATES:
Shares in GlaxoSmithKline (GSK) have responded positively to news that the pharma giant is preparing to spin off its consumer health business. Initially, the group will establish a consumer health joint venture with American peer Pfizer (US:PFE), of which GSK will control 68 per cent. Together the JV will target sales of around £9.8bn. Then, within three years of the closing of the transaction, GSK intends to separate the JV via a demerger of its equity interest and a listing of GSK Consumer Healthcare on the UK equity market. That will effectively split GSK in two, with one company pursuing consumer health products, and the other developing oncology treatments. For now, the board has also committed to an 80p dividend this year. We remain buyers.
Half-year results for business insolvency firm Begbies Traynor (BEG), out this morning, suggest activity levels are picking up. Adjusted profit, which management believes is "a more meaningful measure of the performance of the business" rose 10 per cent in the six months to October, thanks to a mix of recent acquisitions and "an increase in the number of new insolvency appointments". We remain buyers.
After a slump in the company's share price, Melrose Industries (MRO) has finally found some bullish supporters. All hail from the firm's board: executive vice chairman David Roper, and non-executive directors Justin Dowley and David Lis have collectively dropped £2m on shares in a bid to shore up wider market support. Under review.
Shares in StatPro (SOG) were up by around 5 per cent in morning trading, on the news that the provider of portfolio analytics and asset pricing services for the asset management industry has won a three-year contract with an existing client. The deal, worth £1.115m, will see the respective client – a large European insurance group – use StatPro’s ‘Revolution Data’ service. Buy.
Shares in Burford Capital (BUR) were up almost a fifth in early trading after the litigation finance specialist announced it had secured funding for the next £1.6bn in investments. The group has entered a strategic relationship with a sovereign wealth fund, with a $1 billion pool of capital to be invested on a 2:1 basis, with the investor deploying $667 million and Burford providing the remaining $333 million. After the recovery of the capital invested, Burford will receive 60 per cent of investment profits while investing only 33 per cent of the capital. A private fund of $300m has also been raised, along with direct balance sheet investments of $300m. Buy.
GVC (GVC) has this morning confirmed that the enactment of a £2 betting limit on fixed odds betting terminals (FOBTs) by the UK government has reduced its contingent value right (CVR) on the acquisition of Ladbrokes Coral to zero. There is still a period of 10 days which must elapse before the CVR will officially be cancelled, but GVC’s board expects to announced this on or around 7 January 2019. Buy.
KEY STORIES:
Shares in HSS Hire (HSS) are up 3 per cent this morning after the Competition and Markets Authority approved the sale of HSS’s UK platforms business to Nationwide Platforms for £60.5m. The sale forms part of HSS’s plans to refocus on its core tool hire business and bring down its considerable debt burden, which reached 3.6 times adjusted cash profits at the end of September. Sell.
OTHER COMPANY NEWS:
Continuing its strong run of finds in 2018, Gem Diamonds (GEMD) has announced the recovery of high quality 101-carat and 71-carat white type IIa diamonds in a 24-hour period. The recoveries, from the Letseng mine in Lesotho, bring Gem's haul of 100-plus carat stones to fourteen so far this year.
GVC isn’t the only gambling group with good news on offer this morning. 888 (888) has confirmed that second half trading has remained strong as part of a pre-close trading update this morning. Following regulatory changes in the US, the group has launched its first sports betting operations in New Jersey, with a planned roll out across other states as changes in the law allow. Earlier this month the company also announced the acquisition of the remaining 53 per cent stake in the All American Poker Network, a joint venture which was established in 2013, for $28m (£22m).
