British Steel collapses
British Steel began insolvency proceedings after negotiations with the UK government and private equity owner Greybull for an emergency £30m loan failed. The High Court ordered a compulsory liquidation and appointed the Official Receiver, putting around 5,000 jobs at risk. Talks reportedly broke down because ministers felt a loan would breach EU state aid rules. The UK’s second-largest steel producer blamed Brexit-induced uncertainty for a slump in orders. In a statement, Official Receiver David Chapman said: “The company in liquidation is continuing to trade and supply its customers while I consider options for the business.”
Huawei hindered
US blacklist
EE and Vodafone (VOD) pulled Huawei phones from their 5G networks after the Chinese operator was slapped with a US export ban that could prevent it from using Google’s Android system. EE had planned to offer the phones as part of this week’s 5G launch but said it would “pause” it because of uncertainty after Huawei was included in a blacklist that bans US companies supplying it with technology. Vodafone said it would suspend the Mate X phone from its launch range.
Steaming ahead
Trainline IPO
Rail ticket sales platform Trainline announced its intention to float on London’s main market, with a mooted market valuation target of £1.5bn. The offer will comprise new and existing shares, the latter of which will be sold by certain existing shareholders, directors and employees. The company, which was bought by private equity firm KKR in 2015, is aiming to cut net debt to two times adjusted cash profits upon listing. The company doubled ticket sales from £1.6bn in 2015 to £3.2bn in 2019.
Pret swallows rival
Veggie expansion
Pret A Manger announced plans to buy rival Eat in a bid to accelerate its Veggie Pret expansion, with the aim of converting up to 90 stores to the new brand. The value of the deal was not disclosed but chief executive Clive Schlee said the acquisition would “turbo-charge” the development of Veggie Pret, of which three are operational. Eat reported a £17.2m loss during the year to June 2018, shortly before private equity owner Horizon Capital said it had appointed advisers to lead a sale process.
Tesco Bank exits
Mortgage pressure builds
In the latest evidence of intensifying competitive pressure in the UK mortgage market, Tesco (TSCO) announced it would cease new mortgage lending and look to sell its mortgage portfolio. The group holds a lending balance of £3.7bn and 23,000 customers, but Tesco Bank chief executive Gerry Mallon said difficult marketing conditions had limited opportunities for profitable growth in recent years. Instead, the group will look to serve “a broader range of customers in more specific areas”.
Risers and fallers (%)
| METRO BANK | +38.88 |
| ALLIED MINDS | +31.31 |
| SOPHOS GROUP | +20.33 |
| GALLIFORD TRY | +11.63 |
| PURECIRCLE (DI) | +11.54 |
| THOMAS COOK GROUP | -48.16 |
| LOW & BONAR | -27.33 |
| XAAR | -14.14 |
| SIRIUS MINERALS | -13.22 |
| GULF MARINE SERVICES | -12.25 |
Week to 21 May 2019
IG surprises
Expansion planned
Investors in IG (IGG) were reassured that despite subdued client activity in March and April, a pick-up in market volatility in the first three weeks of May had been “favourable” to client trading. The online trading outfit now reckons revenue in its current quarter will hit £115m, up from £108m in the three months to February, although net trading revenue is still expected to fall 17 per cent year on year. And while operating costs are expected to decline, this is largely due to a dip in expected variable remuneration. However, a strategic shift – which includes expanding its reach into Asian markets – is expected to add £100m in revenue over the next three years.
Acacia under offer
Barrick spat
Barrick Gold made the first public move in the much-rumoured takeover of Acacia Mining (ACA), in which it holds a 64 per cent stake. The offer of 0.1533 Barrick shares per Acacia share values the Tanzania-focused gold miner at $787m (£621m) and comes as the two companies’ relationship has deteriorated over discussions with the government of Tanzania, which has slapped a massive tax bill on Acacia and blocked exports of gold concentrate since 2017. Under UK takeover law, it is possible Barrick will not be able to vote its shares so minority shareholders would have the full say on the deal. Berenberg said there seemed “little alternative to the Barrick offer” because of Tanzania’s refusal to deal with Acacia.
