Shares in London look set to end the week on a positive note after a brighter opening session. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Vodafone (VOD) announced yesterday afternoon that it and Telecom Italia plan to enter a new network sharing partnership to allow for the faster deployment of 5G over a broader area, at a lower cost. The two parties also intend to consider active network sharing for their existing 4G networks, to support 5G active network sharing, and they plan to evaluate “the feasibility and merits of a potential business combination” of their 22,000 passive towers in Italy into a single entity. The parties have entered an exclusivity agreement to discuss their initiatives. Shares in Vodafone were up by around 1 per cent this morning. Buy.
Metro Bank (MTRO) has been awarded £120m in funding from the so-called capability and innovation, which is designed to boost competition in the banking sector. The fund is part of a £775m scheme paid for by Royal Bank of Scotland (RBS) as part of the terms of its 2009 bailout. Rival challenger bank CYBG (CYBG) failed to win any funding.
U&I Group (UAI) has completed the sale of the residential sites at Preston Barracks in Brighton, and together with other projects, this brings trading gains to around £30m, and it remains on target to deliver £45m-£50m for the full year. Buy
Yesterday afternoon, Oxford Metrics (OMG) released the statement that chairman Roger Perry would make shortly afterwards at the AGM. Mr Parry said that the group “has made a positive start to the new financial year” with current trading in line with market expectations for the full year ending September 2019. The company continues to make progress against its five-year strategy, announced in December 2016, to double profits and triple recurring revenue. Buy.
Dairy Crest (DCG) has received an all cash offer from Saputo Dairy UK for 620p per share or £975m. This represents a premium of 11.7 per cent to the closing price of Dairy Crest shares the day prior to the announcement, and a 27.1 per cent premium to the 30-day volume weighted average. Dairy Crest directors have unanimously recommended that shareholders accept the deal. Chairman Stephen Alexander the acquisition should enable Dairy Crest to benefit from Saputo's global expertise and strong financial position to fulfil and accelerate its growth ambitions. Shares in Dairy Crest were up 13 per cent in early trading. Buy.
KEY STORIES:
Provident Financial (PFG) has received a firm all-share offer from smaller rival Non-Standard Finance (NSF), which has already been supported by 50 per cent of the former’s shareholders, including Woodford, Invesco and Marathon. Under the terms of the deal, Provident’s shareholders would receive 8.88 new NSF shares, which based on NSF’s 58p share price at the close of trading on 21 February, values each Provident share at 511p. Proposals include simplifying the business portfolio through the sale of Moneybarn, the demerger and the sale or closure of Satsuma.
Centrica (CNA) has renewed its committed revolving credit facilities with 21 banks. The new facilities have an initial maturity date of February 2024 and an aggregate amount of £4.2bn, big enough to replace the majority of the group’s existing facilities. They have two, one-year extension options, exercisable on the first and second anniversary of the facility.
Flybe (FLYB) has now sold its operating business to Connect Airways, leaving shareholders to vote on the 1p per share offer for the remaining shell company. Flybe management has warned that shareholders will get nothing if they do not accept the 1p offer. Stobart Group (STOB) has now sold its aviation business, consisting of Atobart Air and Everdeal Holdings, to Connect Airways. Stobart, Virgin Atlantic, and Cyprus Capital Partners via DLP Holdings make up the consortium that is Connect Airways. Shares in Flybe fell 25 per cent in early trading, while Stobart’s shares were up 2 per cent.
OTHER COMPANY NEWS:
Pearson’s (PSON) full-year results for 2018 were broadly in line with the trading update released in January. Revenues dipped 1 per cent on an underlying basis, coming in at £4.13bn. Adjusted operating profits grew 8 per cent to £546m, while statutory operating profits rose by 23 per cent to £546m thanks largely to proceeds from disposals. As announced on 18 February, the company is selling its US K12 Courseware business to Nexus Capital Management. The group’s UK pension plan has also purchased a further insurance buy-in policy with Legal & General, amounting to around £500m. Alongside the two policies bought in 2017, this means that around half of the plan’s total liabilities are now insured.
Vesuvius (VSVS) has announced the appointment of Jefferies as joint corporate broker, alongside JP Morgan Cazenove.
Telit Communications (TCM) gave an update yesterday afternoon on the status of negotiations regarding the disposal of its automotive business. The buyer has indicated to Telit that it needs to “take certain administrative steps to comply with banking regulations in China” and to “formalise financing arrangements for a part of the overall consideration”. The buyer has also indicated that it anticipates satisfying these steps “in the coming days”. Telit said that whilst its board is “disappointed that the transaction has not yet been able to be completed”, the buyer is expected to be able to do so shortly.
Merlin Entertainment (MERL) has sold its Australian ski resorts ski resorts, Hotham and Falls Creek, to Vail Resorts for A$174m (£95m). This represents a multiple of 8.8 times cash profits. The deal is expected to close in June 2019. Merlin chief executive Nick Varney said the sale would allow the company to focus on its core business of location based entertainment, specifically theme parks and midway attractions.
