The Telegraph 11/09/19 - Vox Markets | Vox Markets

The Telegraph 11/09/19

One of Cobham’s major shareholders is backing the aerospace and defence company’s current managers over a £4bn private equity bid for the business. Sanderson Asset Management has indicated it will vote against the management-backed 165p-a-share offer for Cobham (COB) from US-based investor Advent International. Sanderson – which holds almost 3% of FTSE 250-listed Cobham – has written to the family of the company’s founder signalling it will go against the takeover at next week’s vote. Lady Cobham, widow of former chief executive Sir Michael Cobham, is leading a campaign to try to stop Advent’s bid. She fears that US ownership would see Cobham’s manufacturing work relocated abroad, harming the UK’s industrial base, and that the sale could raise national security issues.

Wetherspoon (J.D.) (JDW) boss Tim Martin has sought to quell angry brewers by promising that they will not have to pay for sweeping cuts to the price of a pint. The Society of Independent Brewers (SIBA) wrote to Mr Martin on Tuesday to complain about the pub chain’s decision to reduce beer prices to as little as £1.39 a pint. “Beer sold this cheaply has to be made cheaply,” SIBA chief executive James Calder told Mr Martin in an open letter. “The beer my members make is a quality premium product and should be treated as one. It is brewed with the finest quality ingredients by artisanal people with real skills.” Demanding a meeting with the Wetherspoon’s chairman and biggest shareholder, Mr Calder concluded: “Moves like this signal a race to the bottom to the brewers that supply your pubs.” The decision to cut the price of Greene King’s Ruddles beer at hundreds of its pubs was an attempt to show how “protectionist” overseas tariffs can be avoided under a no deal Brexit.

IP Group (IPO) blamed the crisis engulfing veteran fund manager Neil Woodford for a sluggish first half of the year. The investment company, which backs a mixture of private and Aim-listed early-stage technology businesses, said the “the well-publicised difficulties” experienced by Mr Woodford and his eponymous investment firm had “impacted” market sentiment towards the sector, damaging both company valuations and their ability to raise money. Mr Woodford is IP Group’s second-largest shareholder with a 13.42% stake. Both have invested in a number of the same companies, including biotech outfit Oxford Nanopore. IP Group is Oxford Nanopore’s largest shareholder, while it is estimated that Mr Woodford still owns around 12pc of the private company via both his suspended equity income fund and the Woodford Patient Capital Trust.

JD Sports Fashion (JD.) has cornered the booming market for fashionable athletic clothing. The fortunes of the two high street sports chains couldn’t be more different. In the last five years, shares in Ashley’s empire have slumped two-thirds amid fears that a company once feted by the City is beginning to unravel. Meanwhile, under executive chairman Peter Cowgill, JD Sports’ looks unstoppable. Its share price has shot up eight-fold, meaning it is now worth £6.3bn, four times more than Sports Direct. Just weeks after Ashley stunned investors with a £600m tax demand from Belgian authorities, JD Sports has posted another set of bumper results. The retailer has notched up an astonishing £2.7bn in turnover in the last six months, an increase of nearly 50%. Profits leapt another 10pc to a new record of £130m, and its dividend is being raised 3.7% at a time when a string of blue-chip companies such as BT, Vodfaone, and Centrica, have either chopped or canned shareholder payouts.

Investors hoping that the pain of PPI has passed lit a fire under major lenders’ stocks on Tuesday, with Barclays (BARC) and Lloyds Banking Group (LLOY) adding the biggest boost to the FTSE 100. Both banks announced their final repayments provisions for mis-selling PPI on Monday, with Lloyds setting aside up to £1.8bn, and Barclays up to £1.6bn. The figures – based on a rush of complaints in the days leading up to the deadline at the end of last month – tipped the grand total of PPI payments over £50bn. Barclays closed up 6.9p at 147.68p, its biggest one-day gain since July 2016. Lloyds – frequently cited as the UK’s most-traded stock – closed up 2.1p at 52.3p.  Jefferies analysts said the big hit to Barclays was a moment for “cleansing the Augean stables”, adding: “On the prospectively large PPI top up, the third-quarter charge should hopefully be the final charge and bring resolution to a years-long industry phenomenon that became grotesque.” They said from the next quarter, Lloyds would be able to focus on raising its dividend and improving its balance sheet.

Cairn Energy (CNE) was the biggest riser, after revealing it swung back to profit during the first half of the year. The Scottish oil and gas exploration company moved from a $603.9m (£489.2m) loss to a $43.2m profit, as it shook off considerable impairment costs that had devastated its balance sheet. Chief executive Simon Thomson said: “Cairn has seen good progress in the first half of 2019 with the opportunity to develop and deliver multiple catalysts for future growth.”


JD Sports Fashion (JD.) launched a broadside at landlords by demanding “fairness and flexibility” for leases as it posted a jump in sales. Executive chairman Peter Cowgill said: “For the healthy retailers… it feels unfair when the adjacent property may be occupied at a substantially reduced rent as a consequence of a company voluntary arrangement. The healthy retailers are going to look for serious levels of rent reductions.” The retailer, which has 374 JD Sports shops in the UK, plans to negotiate with landlords as leases come up for renewal, Mr Cowgill said. The sportswear seller added: “We are very aware of the financial benefit that other retailers appear to get when they downsize their estates and, whilst we have no plans to fundamentally alter the size of the JD store network in the UK at this time, we continue to seek fairness and flexibility in the terms of our leases.”

The chief executive of housebuilder Galliford Try (GFRD) has defended reviving talks with rival about a £1bn tie-up, after aborting a previous attempt to combine two divisions earlier this year. Graham Prothero called the latest deal “highly nuanced”, adding that it had been in the works for nearly two years. “This process actually dates back to 2017 when we first made a cheeky bid for Bovis,” he said. “Discussions in May were only very early stage before some idiot leaked it. That aborted what could have been an interesting discussion.” Galliford rejected an offer from Bovis for its housebuilding arm Linden Homes in late Spring, arguing that the price was too low. If the latest proposal it goes ahead, the two housebuilders would combine Bovis Homes with Linden and move Galliford’s partnerships and regeneration divisions over to Bovis. That would leave Galliford Try to run its construction and investment divisions as a separate, listed entity, rendering the deal a “combination” rather than a traditional merger.


Mentioned in this post

Cairn Energy
Galliford Try
IP Group
JD Sports Fashion
Wetherspoon (J.D.)
Lloyds Banking Group