Morning Financial Press Review
Paul Kettle
AM Press Round-Up -3 min read
06:48, 19th July 2019

Below are the key morning press headlines, featuring the The Times, The Telegraph, The Daily Mail & more - see the full Press section here.

The bidder behind the £2.5billion takeover of Inmarsat (ISAT) FOLLOW has pledged to keep its key operations in Britain. In a legally-binding agreement with the Government, private equity group Connect promised to protect the satellite firm’s base in London and maintain its engineering expertise. The pledge will be seen as an attempt to woo ministers as they prepare to weigh in on the takeover. Competition officials referred the deal to Digital, Culture and Media Secretary Jeremy Wright earlier this week over public interest issues, thought to be a reference to Inmarsat’s sensitive work for the UK and American militaries. Connect – a consortium which includes UK-based Apax Partners, US-based Warburg Pincus and the Canada Pension Plan Investment Board – said the undertakings to the Government are not related to the separate probe being conducted by the Competition and Markets Authority.

Stonegate – the company behind Slug and Lettuce, Walkabout and Yates – is on the verge of snapping up Britain’s biggest pub company, EI Group (EIG)FOLLOW , for £1.28billion. The deal means TDR Capital, Stonegate’s private equity backers, will add 4,000 pubs and properties to its portfolio and become the county’s biggest pub operator. Stonegate has plumped for a bid of 285p a share for Ei, previously known as Enterprise Inns, which is 38.5% higher than the latter’s closing price on Wednesday, and 26.8% above its highest closing price over the last decade. A year ago, Ei shares were hovering at around the £1.57 mark. The offer values Ei at £2.96billion including debt, which is 11.4 times its underlying earnings for 2018. According to its 2018 annual report, Ei’s net debt stands at £2billion. The all-cash deal, which will see yet another London-listed firm snapped up by a private equity house, will be put to a vote of Ei shareholders but is unlikely to face any opposition, with the board recommending the deal.

ASOS (ASC) FOLLOW lost almost a quarter of its value yesterday after a bungled warehouse overhaul knocked the online retailer’s sales growth off course and prompted its third profit warning in a year. Investors fear one of the brightest names in retail is coming under intense pressure from rivals while its investment-hungry business model stumbles. Yesterday’s warning sent the shares down by 636p to £21.07, meaning the company’s value has fallen by 65% this year. Investors appeared to be unmoved by the chairman Adam Crozier’s attempt to support the business by buying £100,000 worth of shares. Asos said that its pre-tax profit will now be about £30 million to £35 million this year, £20 million less than analysts expected. Total sales grew 12% to £919.8 million in the four months to June 30, far below its typical growth rate of 25%.

Brussels has given Vodafone Group (VOD) FOLLOW the green light for its $22bn (£18bn) takeover of parts of Liberty Global’s cable networks, clearing the way for the most valuable European telecoms merger in more than a decade. Competition regulators have been scrutinising Vodafone’s planned takeover of Liberty’s central Europe and German networks for months amid concerns it would lead to “higher prices, less choice and reduced innovation in telecoms and TV services for consumers”. The European Commission had, in particular, focused on what the takeover would mean for the German market, and whether it would reduce investment and broadcasters’ bargaining power in the region. In a statement on Thursday, Competition Commissioner Margrethe Vestager said the approval was “subject to remedies designed to ensure that customers will continue enjoying fair prices, high-quality services and innovative products.”

President Trump’s promise to lower prescription drugs prices has hit the buffers. His most-ambitious proposal, targeting rebates given to middlemen in the country’s highly complex medical system, has been abandoned. The plan looked likely to backfire and result in higher insurance premiums for the country’s seniors, so it was withdrawn last week. With other options apparently limited, pharmaceutical companies such as AstraZeneca (AZN) FOLLOW and GlaxoSmithKline (GSK) FOLLOW are now firmly in the sights of Democrats vying to become the candidate in next year’s presidential election. Cash flows – and therefore dividends – could be at risk. Democrat presidential candidates are seeking to cap the price that drugs companies can charge – and it looks like president Trump may move in this direction too, despite objections to “price controls” by many in his party. In March, he promised that Republicans were about to become the “party of healthcare” yet he has little to show on this front during his tenure in the Oval Office.

easyJet (EZJ) FOLLOW has hired a key lieutenant of Michael O’Leary at Ryanair and announced better-than-expected revenues during the spring and into summer as it used artificial intelligence systems to give it the confidence to keep its fares higher for longer. The airline announced an 11% rise in revenues to £1.76 billion in the three months to the end of June, despite carrying only 8% more passengers, at 26 million. Average revenues per passenger, a proxy for average fares, rose 3% to £66.70. The company said that it had appointed Peter Bellew as its chief operating officer, who has been doing the same job at rival Ryanair. Mr Bellew has been in the Ryanair job for 18 months although it was his second tour of duty, having worked there heading flight operations and sales between 2006 and 2014. In between he was the chief executive of Malaysia Airlines when it was trying to rebuild its reputation after the twin disasters of the disappearance of Flight MH370 to Beijing and Flight MH17, shot down over Ukraine in 2014.

Disclaimer & Declaration of Interest

The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.

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