The Times 12/02/19 - Vox Markets | Vox Markets

The Times 12/02/19

The online trading platform Plus500 Ltd (DI) (PLUS) had about £600 million wiped off its value this morning after it surprised the market with a profit warning. The shares fell by 526p to £11.16 after the company said that it expected this year’s profit to be “materially lower than current market expectations” because of tighter regulation on speculative trading tools. Only six weeks ago the company had said in a trading update that it had “continued to perform well” since the implementation of the regulatory changes made by the European Securities and Markets Authority in August. The profit warning sent shivers across the spread-betting sector. IG Group Holdings (IGG) fell 32p to 585p. CMC Markets (CMCX) edged down 1½p to 114½p.

AA (AA.) insisted this morning that its recovery plan remained on track as it reported trading in line with expectations but revealed declining membership figures. The London-listed company said that earnings were “not less than” £340 million in the year to January 31, having guided the market to a range of between £335 million and £345 million. Executives are seeking to revive the company’s fortunes. The roadside services group was formed by four driving enthusiasts in 1905 and now has 13 million members. But its more recent history, since it was floated by private equity owners in 2014, has not been straightforward. Corporate contracts with the likes of Jaguar Land Rover and Volkswagen now account for the lion’s share of AA’s services, with about ten million business-to-business members. Paid personal memberships fell by about 2% to 3.21 million across the year, it said. The company said that this decline was anticipated and put it down to regulatory pressures, competition and the decision to “re-phase our summer marketing campaign”.

 

Investor warns Just Eat to seek merger, not new chief. The American hedge fund agitating for an overhaul at Just Eat (JE.) has turned up the heat on the takeaway delivery group, demanding that it seeks a merger with a rival rather than appointing a new chief executive. Cat Rock Capital Management, which owns 1.9% of the company, said that a merger with a well-managed rival would be a “better alternative” than sticking with a “plodding” board. In a scathing open letter published yesterday, the hedge fund attacked Just Eat over the recruitment of Peter Plumb, 55, the former boss of Moneysupermarket, as chief executive in 2017. Mr Plumb was shown the door three weeks ago after only 16 months in the job.

IAG in warning to non-EU shareholders. UK shareholders in the company that owns British Airways will not face new restrictions on their holdings after Brexit, the group said last night, but other non-EU shareholders will. International Consolidated Airlines Group SA (CDI) (IAG) said that non-EU ownership of its shares had reached 47.5% and tht it was placing a ceiling on non-EU ownership of that amount in future. Any non-EU buyer making purchases that breached the ceiling would lose their voting rights on the shares and would be forced to sell them within ten days. UK-resident shareholders would not be treated as non-EU holders, it said, even after Brexit, which is due on March 29.

The close ties between Big Tobacco and Formula One date back decades, to when cigarette brands were splashed across cars and fuelled the rise of the sport into a multibillion-pound business. Now, 13 years after the sport banned tobacco advertising amid tightening international regulation, one of the world’s biggest tobacco manufacturers has returned to Formula One. British American Tobacco (BATS) and McLaren, the Woking-based team, yesterday unveiled a global partnership on the eve of the 2019 championship. It marks a back to the future moment for BAT, which sold its British American Racing team to Honda in 2005, as well as for McLaren, whose cars were once sponsored by Philip Morris, BAT’s rival, and raced in the red and white of its Marlboro brand. BAT is a £61.7 billion, FTSE 100 company, generating £20 billion of revenue. Headquartered in London, its brands include Lucky Stripe and Dunhill. The new tie-up is being pitched as “focusing solely on potentially reduced risk products and grounded in technology and innovation”.

There’s light at end of the tunnel, says Acacia. Acacia Mining (ACA) is hoping that its long-running dispute with Tanzania can move towards a resolution in the “near future” after a change of leadership at Barrick, its parent company that is handling negotiations. The goldminer has been in dispute with the Tanzanian government for two years after the country imposed an export ban on gold and copper concentrate and demanded that Acacia pay $190 billion taxes that it allegedly owed. Acacia is majority-owned by Barrick, the Canadian-listed gold specialist that has just taken over Randgold Resources. Barrick has taken on most of Randgold’s senior management, with Mark Bristow, 60, its former boss, becoming chief executive of the merged entity. Peter Geleta, 54, Acacia’s interim chief executive, said that there had been “a lot of engagement with the new Barrick leadership” and added that he was “optimistic” about the prospects of a resolution, given Mr Bristow’s “years and years of Africa experience”. “There is a better understanding of our issues and what is required to get a settlement,” he said, adding that he was “hopeful that Barrick will be in a place to provide . . . a comprehensive settlement proposal in the near future”.

Glass Lewis backs BTG takeover but attacks failure to disclose bid details. A leading shareholder advisory group has backed a £3.3 billion takeover of BTG (BTG) by an American rival, but has questioned the board’s handling of the sale process and the role of its financial advisers. Glass Lewis has recommended that investors back the acquisition of the FTSE 250 pharmaceuticals group by Boston Scientific. However, it also has complained that BTG “has not publicly provided any substantive information regarding the process that the board followed to arrive at the proposed transaction. “In particular, the company does not disclose whether it made any meaningful attempts to solicit alternative offers from other potential third-party buyers prior to agreeing to the scheme with Boston Scientific.”

Petrofac faces £400m investors’ lawsuit. The troubles facing Petrofac Ltd. (PFC) deepened yesterday when the oil services company was threatened with a £400 million lawsuit from investors over its alleged involvement in a bribery scandal. Lawyers and funders for the proposed shareholder litigation went public with details of the “well progressed” legal claim yesterday, days after a former senior executive at Petrofac had pleaded guilty to bribery. It is understood that the action could exceed £400 million on behalf of claimants including British and American pension funds. The shareholders will argue that they “suffered substantial losses” from Petrofac’s alleged involvement in bribery, corruption and money laundering.

Imperial confirms chairman Mark Williamson’s exit. Imperial Brands (IMB) is searching for a new non-executive chairman after confirming that Mark Williamson will step down after 11 years on the board. The FTSE 100 tobacco group said that the departure, revealed in The Times yesterday, was being made “in anticipation of the requirements of the new UK corporate governance code”, which recommends a tenure of no more than nine years. Mr Williamson, 61, will stay until a successor has been found. The length of time he has spent in the role was the basis of resistance to his re-election at Imperial’s annual meeting last week, together with overboarding — holding too many other boardroom positions. The opposition is understood to have been led by Blackrock, Imperial’s biggest investor with a 5.6% stake. Blackrock recently introduced new proxy voting guidelines on areas including overboarding. Mr Williamson is also chairman of Spectris, the precision instruments maker, and the senior independent non-executive director at National Grid.

Asda merger report delayed for 8 weeks. The competition regulator is to extend its investigation into the proposed merger of Sainsbury (J) (SBRY) and Asda by eight weeks. As widely expected, the Competition and Markets Authority has delayed the deadline for its final report on the £12 billion transaction from March 5 to April 30. The decision comes after the Competition Appeal Tribunal said in a ruling last month, following a legal spat between the grocers and the regulator about a deadline extension, that it was “almost inevitable” that the CMA would have to extend the inquiry. News of the extension came with the CMA expected to report its initial findings on the merger within the next week or two.

Smurfit Kappa Group (SKG) was one of yesterday’s biggest risers after Credit Suisse laid out the investment case for the FTSE 100 packaging group. More than £2 billion has been wiped off its market value in the past quarter amid worries about a fall in prices for containerboard, which it produces and sells — but, with its final results set to be unveiled tomorrow, Credit Suisse’s analysts said that the sell-off had been “overdone”.

Smith & Nephew (SN.) was one of the day’s steepest fallers as investors took fright over a mooted deal. Shares in the knee and hip replacement group fell by 3% after the Financial Times reported that the company had held talks to buy Nuvasive, an American medical equipment maker. The mooted acquisition would be worth more than $3 billion.

Metro Bank (MTRO), whose market value has nearly halved since it announced an accounting error, recouped 84p to £13.54 after bullish investors decided that it had fallen far enough. Berenberg issued a “hold” rating on the stock, with analysts saying that they believed Metro’s shares were now “fairly valued”.

Tritax Big Box Reit (BBOX), an investor in distribution centres, edged down 2p to 136½p after it said that it had successfully raised about £250 million through the issue of 192 million shares at 130p a share. The proceeds will be used to fund the acquisition of an 87% interest in DB Symmetry, a logistics business.

 

Tempus – Metro Bank (MTRO): Avoid. There are too many risks in a lender whose financial resilience remains unproven

Tempus – Murray Income Trust (MUT): Hold long-term. Strong dividend payer with diverse portfolio

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Mentioned in this post

ACA
Acacia Mining
BATS
British American Tobacco
BBOX
Tritax Big Box Reit
BTG
BTG
CMCX
CMC Markets
IAG
International Consolidated Airlines Group SA (CDI)
IGG
IG Group Holdings
IMB
Imperial Brands
JE.
Just Eat
MTRO
Metro Bank
MUT
Murray Income Trust
PFC
Petrofac Ltd.
PLUS
Plus500 Ltd (DI)
SBRY
Sainsbury (J)
SKG
Smurfit Kappa Group
SN.
Smith & Nephew