Asda for IPO?
Speaking at the first managers meeting since the Competition and Markets Authority ruled against the supermarket’s proposed merger with J Sainsbury (SBRY), Judith McKenna, chief executive of Asda's parent company Walmart’s International business, said management was “seriously considering a path to an IPO”. Sainsbury and Asda had pitched their merger as “a dynamic new player… with the ability to further lower prices”, but with the deal now scrapped both have had to revert to their previous strategies. Sainsbury is focusing on investment in its store portfolio and digital capabilities, while Asda is taking the view that “ease is as important as price” for customers, investing in customer experience.
Finablr lowers pricing
Unfriendly markets
Payments company Finablr (FIN) has announced a 175p offer price for its upcoming IPO, giving it a market capitalisation of £1.23bn upon admission to the London Stock Exchange. It said this price reflected “the more difficult market conditions during recent days”. The offer comprises 87.7m new shares issued by the company to raise gross proceeds of £153m and 87.3m shares being sold by the selling shareholders – equal to a total offer size of £306m, and representing a quarter of Finablr’s issued share capital on admission. A further 17.5m shares are also being made available by the selling shareholders pursuant to the over-allotment option. Commencement of unconditional dealings is expected to take place on 20 May.
On a roll
Guidance improved
The success of Greggs’ (GRG) vegan sausage roll continued to surprise, leading management to guide to “materially higher” sales and profits this year. Sales in the 19 weeks to May have grown “very strongly” as the meatless treat has been rolled out to all the group’s shops, with the latest improvement to guidance sending shares in the bakery up as much as 15 per cent on the day of the news. Vegan sausages aside, Greggs has been experiencing broader-based growth following investments in the product range and shops. It opened a net 16 new stores in the period.
Beijing retaliates
New tariffs
Trade tensions between China and the US ratcheted up a notch after Beijing said it would raise tariffs on $60bn of US imports, prompting the biggest share price fall in US stocks since the start of the year. China’s Ministry of Finance said it would increase levies on goods ranging from liquefied natural gas to toothpaste, following President Trump’s decision to increase tariffs on $200bn of Chinese imports to 25 per cent earlier this month. The MSCI index tracking emerging market currencies fell 0.6 per cent following the announcement, its largest decline of the year.
US leads
Offsets UK regulation
Following a “a year of transition” in retail and online gambling, William Hill (WMH) reported a 2 per cent rise in net revenue for the 17-week period to 30 April. An 8 per cent increase in online net revenue reflected the completed acquisition of Mr Green, while doubling the sports wagering handled meant US total net revenues surged by 48 per cent. That offset the impact on retail revenue of the £2 machine gaming stake limit, which fell by 15 per cent.
Risers and fallers (%)
| INDIVIOR | +16.38 |
| SIRIUS MINERALS | +15.91 |
| DP EURASIA N V | +15.12 |
| GREGGS | +13.81 |
| FINDEL | +13.43 |
| METRO BANK | -19.75 |
| STOBART GROUP ORD. | -15.07 |
| ITV | -14.21 |
| NANOCO GROUP | -11.32 |
| VICTREX | -10.78 |
Week to 14 May 2019
Labour re-floats nationalisation
Energy sector targeted
A leaked Labour document revealed plans to renationalise the UK’s £62bn energy networks and create a National Energy Agency. Companies mentioned include National Grid (NG.), as well as the transmission arms of SSE (SSE) and Scottish Power. Using Northern Rock as a template, the proposals involve purchasing energy companies using government bonds at a value named by parliament. However, RBC Capital Markets said nationalisation was “not a credible threat”, citing a lack of wider political support, potential damage to investor sentiment from paying below market value and questionable return on investment.
Activists eye FirstGroup
Board in view
US-based Coast Capital is attempting to oust most of FirstGroup’s (FGP) board, claiming the existing leadership had a “track record of value destruction and underperformance”. The activist investor – which has a 9.8 per cent stake in the transport group – has called for an extraordinary general meeting, in the hope of removing chairman Wolfhart Hauser and five other board members. The board of First Group said it had attempted to engage “constructively for more than a year” and that its correspondence had “included detailed responses to several proposals and has involved a number of meetings with the chairman and with senior management”.
