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News & Tips: Phoenix, WPP, Haynes Publishing & more

Equities look set to end the week on a happier note
December 6, 2019

Shares in London's blue chip FTSE100 and mid-cap FTSE250 are shaping up to end the week on a positive note with small gains recorded by mid-morning but the junior Aim market flat. Click here for The Trader Nicole Elliott's latest thought on the markets. 

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Phoenix Group (PHNX) has signed a £3.2bn cash-and-shares deal to acquire its biggest rival ReAssure, the UK-based closed book life insurance consolidator that reinsurance giant SwissRe failed to list in London earlier this year. The purchase, which will be funded by £1.2bn from cash and debt facilities and the transfer of a £2bn equity stake in Phoenix, will create Europe’s largest life and pensions consolidator, with £329bn of assets under administration. Phoenix reckons ReAssure will boost long-term aggregate cash flows by £7bn, and allow it to increase dividend payments. Under review.

WPP (WPP) has completed the transaction to sell 60 per cent of its Kantar business to Bain Capital. The proceeds of 90 per cent of this have been received. With final completion expected in the first half of 2020, total aggregate net proceeds after costs, tax and WPP’s continuing investment in 40 per cent of the equity of Kantar are expected to be around $3.1bn (£2.4bn). As previously announced, WPP plans to retain around 60 per cent of the net proceeds (around $1.9bn) to reduce debt to the low end of its target leverage range, and to return around 40 per cent to shareholders. WPP has now said that this return will be executed via a share buyback programme. Buy.

Haynes Publishing (HYNS) expects adjusted pre-tax profits for the half-year to November to finish ahead of the previous year by around 37 per cent. The group will announce its interim results on 30 January. Haynes announced on 15 November that it had commenced a formal sale process. Buy.

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Ahead of a general election widely seen as a critical moment for London-focused housebuilders, interim results for Berkeley Group (BKG) lead with the impacts of its operations on “all stakeholders”. Look beyond the apprenticeship numbers and environmental commitments, and you will see a 44 per cent drop in revenues and a decline in pre-tax profits to a “more normal level”, following the completion of several major projects. No interim dividend has been declared, though the cash pile has passed £1bn and the FTSE 100 group remains on track to generate a return on equity of at least 15 per cent.