Morning and Weekend Financial Press Review
Paul Kettle
AM Press Round-Up -3 min read
06:23, 10th June 2019

Below are the key morning and weekend headlines from the financial papers, featuring the The Times, The Telegraph, The Daily Mail & more - see the full Press section here.

The listed property developer Helical (HLCL) FOLLOW has received a secret £500m takeover bid, The Sunday Times can reveal. The unsolicited move is likely to trigger renewed debate about property valuations after the shopping centre giant Hammerson rejected a £5bn bid from its French rival Klépierre last year. Share prices of London-listed developers have tumbled since the Brexit referendum, leaving the three biggest — Land Securities, British Land and Hammerson — trading at an average discount of 47% to the official values of their portfolios. Bosses of listed developers have traditionally been reluctant to sell for less than the official net asset value (NAV). Yet they could come under pressure from investors as share prices stay depressed and the retail sector continues to crumble. It has received a bid from an unnamed US private equity firm. The approach is believed to value Helical at a significant premium to its current share price of 355p and market capitalisation of £425m. It is believed to be less than Helical’s NAV of £567.4m, however. The board could face questions over why it chose not to inform its shareholders of the approach.

Germany is braced for catastrophic car tariffs that could send the country into a deep economic shock and create a perfect storm for Europe, experts have warned. US taxes on car imports could act as a massive jolt to the bloc’s economy, wiping €14.5bn (£12.9bn) off GDP, according to analysis from investment advisers, Redburn. The firm’s economists believe a “nasty turn” in EU-US trade tensions is coming, which when combined with market nerves over Italian debt, could shake the eurozone. If the US presses ahead with tariffs, Germany, which relies on carmaking for a fifth of its manufacturing activity, could see 0.28% shaved from its GDP alone, Redburn claims. A darkening world economic outlook, including a slowdown in Germany’s major export destination China, mean US tariffs could tip the country into stagnation or even recession.

Hargreaves Lansdown boss Chris Hill says sorry to clients for Neil Woodford mess. Hargreaves Lansdown (HL.) FOLLOW has issued a grovelling apology to tens of thousands of clients whose money is trapped after the suspension of Neil Woodford’s flagship fund. In a rare statement, Chris Hill, chief executive of the FTSE 100 funds supermarket, said that he wanted to “apologise personally” to customers affected by the crisis over the Woodford Equity Income fund, which Hargreaves has promoted since its launch in 2014. Hill said Hargreaves Lansdown shared their “disappointment and frustration” over the suspension, announced by Woodford last week. Mark Dampier, head of research at Hargreaves and one of Woodford’s loudest cheerleaders, cashed in £600,000 of shares in the company last month. His wife, Annette, sold £5m.

Chinese giant Fosun plots Thomas Cook break-up. A multi-billion pound Chinese conglomerate is plotting the break-up of British holiday giant Thomas Cook Group (TCG) FOLLOW with plans for a potential offer for the 178 year-old company’s tour arm. Fosun, which is Thomas Cook’s largest shareholder with an 18% stake and also owns Club Med, is reportedly working with advisers at JP Morgan on an offer for the unit. Thomas Cook put its airline up for sale earlier this year after running into financial trouble that has wiped billions of pounds off the value of its shares. But Fosun would be barred from buying the unit because it is not based in the European Union and is instead looking to buy the tour division, which organises holidays for 11m customers each year, generating annual sales of £7.4bn. Sky News, which first reported Fosun’s possible bid, said sources stressed that talks were at an early stage and a formal bid was not guaranteed to emerge. The two companies already work together on a fast-growing joint venture in China.

GlaxoSmithKline (GSK) FOLLOW has sold a clutch of brands including antiseptic cream Savlon in a deal with Huddersfield-based Thornton & Ross. The deal, which a source close to the process said was valued in the high double digit million pound range, also includes skincare brands, Eurax, Polytar and Oilatum as well as paediatric cough remedy Tixylix. Roger Scarlett-Smith, head and executive vice president of Thornton & Ross, said: ‘These acquisitions are indicative of our ambition to be a leading company in consumer health.’

Millennium & Copthorne Hotels taken private in £2.2bn deal. Millennium & Copthorne Hotels (MLC) FOLLOW is set to be taken private by the Singaporean company that controls it in a £2.2bn deal. The 685p a share offer is the second time that City Developments – part of the Hong Leong Group owned by M&C chairman and billionaire Kwek Leng Beng – has tried to take the hotel operator private. The company, which already owned about two thirds of M&C shares, made an initial £1.8bn offer in October 2017. That was increased to £2bn, or 620p a share, but some investors refused to sell their shares arguing that the bid undervalued M&C. The latest offer was 37% above the closing price of 466p on 23 May, when City Developments made its latest proposal.

London’s rare earth miners were on a rollercoaster ride amid hopes the minnows will capitalise on the escalating trade war with a tie-up with the US government. As tensions rise with the White House, Beijing is considering weaponising its supply of rare earth minerals, which are used in a wide range of products from mobile phones to military equipment. A Pentagon engineer told Reuters that the US has held talks with Rainbow Rare Earths Limited NPV (RBW) and Mkango Resources (MKA) FOLLOW as part of its attempt to diversify its supply. Around 80% of the crucial minerals arriving in the US come from China and the price of rare earth minerals has soared on fears of them being dragged into the trade war. While the “steps do not necessarily result in purchase agreements”, it shows “the Pentagon is increasingly focused on diversifying supplies of critical minerals”, explained SP Angel.

High street visits hit six-year low as Brexit uncertainty deters shoppers. Cooler weather in May also contributed to reduction in footfall at UK stores, BRC says. The fate of Sir Philip Green’s sprawling fashion empire will be decided this week as new shopper figures lay bare the challenge faced by traditional retailers hit by customers deserting high streets, shopping centres and retail parks across the country. The British Retail Consortium’s (BRC) monthly footfall tracker for May shows store visits hit a six-year low in May as cooler weather and the ongoing political uncertainty around Brexit deterred shoppers. The BRC chief executive, Helen Dickinson, said the 3.5% decline recorded by its Springboard monthly footfall tracker was the worst since January 2013. She said: “The UK experienced the worst footfall figures in six years, with declines in every region, and across high streets, retail parks and shopping centres. This reflects our recent sales data, which showed the largest drop in retail sales on record.”

Hedge funds have placed a £900million bet that shares held by Neil Woodford will plummet as the star fund manager is forced into a fire sale. The aggressive tactic, known as short-selling, is another blow to Woodford whose reputation has already been badly damaged by the debacle at his Equity Income fund. Short-sellers have taken positions out against a series of Woodford favourites, including Barratt Developments (BDEV)FOLLOW , Crest Nicholson Holdings (CRST) FOLLOWKier Group (KIE) FOLLOW and We Buy Any Car owner BCA Marketplace (BCA) FOLLOW. In some cases, almost one in seven investors in these firms is betting the share price will fall. Other companies are expected to be targeted in the coming weeks as Woodford seeks to sell off his stakes in ‘illiquid’ firms whose shares are not often or easily traded either because they are small listed entities or unlisted on the stock exchange. Woodford is one of the few City investment managers who publishes a full list of his holdings. Analysts said the revelation that hedge funds are circling his investments is likely to compound the expected falls in shares he owns.

BT wants to join the party with Netflix rival. BT Group (BT.A) FOLLOW is said to be in talks about investing millions of pounds in Britbox, the subscription service to be launched by ITV (ITV) FOLLOW and the BBC. Discussions have been held already between ITV, which makes dramas such as Victoria, and BT about part-financing exclusive dramas produced in Britain, although differences over the valuation of BT’s stake could torpedo the deal, The Sunday Telegraph reported. Britbox, which is expected to charge subscribers £5 a month, is an attempt to lure viewers from rivals such as Netflix. The two British free-to-air broadcasters are expected to start withdrawing their old shows from Netflix and Amazon. The deal would be a step towards a commitment by Philip Jansen, BT’s new chief executive, to recasting it as a “national champion”. Its shares have fallen by about 50% over the past three years, but since replacing Gavin Patterson in February, Mr Jansen, 52, has committed to investing more in its fibreoptic broadband network and has said that BT would shut 90% of its offices in an attempt to cut costs by £1.5 billion.

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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