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News & Tips: Metro Bank, Staffline, Ferguson & more

Blue-chips edged higher in morning trade
December 18, 2019

IC TIP UPDATES: 

Ferguson (FERG) has appointed Simon Oakland, who is currently its chief executive of its Canadian business and head of corporate development, to take over as chief executive of its UK business Wolseley UK, which it is planning to de-merge. Mr Oakland replaces Mark Higson, who is pursuing an opportunity outside the company. Ferguson said that its plans for a 2020 demerger remain on track and an update will be forthcoming in the first quarter of next year. Buy.

Anglo American (AAL) subsidiary De Beers has seen another large drop in diamond sales, with its tenth sales cycle of 2019 seeing a 22 per cent fall on the year before, to $425m (£324m). De Beers chief executive said demand was “steady”. This tenth cycle saw a steeper year-on-year fall than the previous one, which had a 10 per cent drop on the same cycle in 2018. Mr Cleaver said after that result De Beers was continuing to offer buyers more flexibility around their purchases, which were previously more locked in. We recommend buying Anglo American shares. 

Integrafin (IHP) reported a decline in net inflows during the year to September at £3.5bn, down on £4.1bn the prior year. The platform provider said that was due to a reduction in funds entering rather than heightened outflows. The rate of inflows also accelerated towards the end of the financial year, management said. A further £1.2bn in market gains meant funds under direction rose 14 per cent to £37.3bn. Buy

By this point, it feels as though Metro Bank (MTRO) founder Vernon Hill’s (pictured above) departure from the struggling lender has been confirmed multiple times. But as of Tuesday, he has officially relinquished his non-executive director duties, with the group’s share price down 88 per cent in a year. Sell.

In another sign of its ability to grow its deposit base, Bank of Georgia (BGEO) has signed a €50m, seven-year loan agreement with the European Investment Bank. The loan, which can be drawn in lari, dollars and euros, has been supported by the EU’s neighbourhood investment facility, which can be used to finance investment projects promoted by smaller businesses in Georgia. Buy.

 

KEY STORIES: 

Pearson (PSON) has announced that John Fallon will retire from his role as chief executive in 2020, once a successor has been appointed. It also said that it has agreed to sell its remaining 25 per cent stake in Penguin Random House to Bertelsmann, for around $675m (£530m). And, it has announced a £350m share buyback. The group noted that the Penguin Random House transaction values the venture at an enterprise value of $3.67bn, compared with the $3.55bn enterprise valuation in 2017 when Pearson sold a 22 per cent stake in the joint venture. The sale is subject to regulatory consent – and is expected to close during the first half of next year. It won’t have an impact on 2019 results. The shares were up by around 4 per cent this morning.

Hansteen (HSTN) has recommended a cash takeover offer from by private equity group Blackstone, under which shareholders would receive 116.5p a share. The bid price represents a 10.3 per cent premium to the regional commercial landlord’s undisturbed share price and 11.6 per cent to the 30 June 2019 EPRA NAV per share of 104p. The bidders have received irrevocable undertakings to support the offer from each of the Hansteen directors, representing 5.5 per cent of the share capital. 

Marshall Motor Holdings (MMH) has acquired eight Volkswagen franchises in the UK for £22m. The deal, which includes £13m in inventory, will deepen the group’s existing ties with Volkswagen, in line with its existing strategy to grow with existing partners. It is now the manufacturer’s largest partner in the UK. Management said the wider market remains challenging, but the group has held up well, and maintained its full-year outlook.

 

OTHER COMPANY NEWS: 

Staffline (STAF) shares have crashed again after the recruitment company said it had overstated 2018 profits by £4m and was performing worse than expected this quarter. Its finance chief Mike Watts has also resigned with immediate effect. The accounting errors came from costs not being correctly booked, the company said. The trading update also said customer was down 16 per cent year-on-year in November.  Staffline is trading at 6 per cent of its 12-month high share price of 1,280p, with profit warnings and a separate accounting issue causing several major selloffs. This news saw its share price fall another quarter to 80p. Sell

Following sales by his fellow directors and colleagues last week, AJ Bell (AJB) chief executive and founder Andy Bell has disposed of 5.5 million shares in the investment platform, banking gross proceeds of £23.1m. His remaining 17.4 per cent stake are subject to a lock-up which ends when the company publishes its interim results next year.

Arrow Global (ARW) has raised €628.5m in third-party capital for its inaugural pan-European non-performing loan fund, in a move management has described as “transformational”. The eight-year closed-end fund, which is targeting €2bn of assets under management before the end of 2020, will also include a investment from Arrow of either €500m or 25 per cent of the final commitment. Shares in the group are up 9 per cent in early trading.