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FTSE 100 Live 29 May: Blue-chips slide, Ocado and St James' Place in for relegation

FTSE 100 Live (Evening Standard)
FTSE 100 Live (Evening Standard)

Royal Mail owner IDS today backed a £3.5 billion takeover by Czech billionaire Daniel Kretinsky.

The agreement with West Ham part-owner Kretinsky follows his company’s undertakings to protect Royal Mail’s “critical functions”.

In other City developments, BHP was turned down when it asked to extend the Anglo American bid timeline and Pets at Home has posted lower profits.

FTSE 100 Live Wednesday

  • Royal Mail owner backs takeover

  • BHP wants more time on Anglo bid

  • Pets at Home profits fall

Wednesday 29 May 2024 13:51 , Daniel O'Boyle

The FTSE 100 has lost more ground and is now close to the 8200 mark.

Take a look at our latest market snapshot:

Would-be parents ‘delay having children because of cost-of-living crisis’

Wednesday 29 May 2024 12:46 , Daniel O'Boyle

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Increases in the cost of living are causing people to put off having children, according to research, as a growing number say rising prices are affecting how they plan their families.

A survey of more than 4,000 people by insurer Royal London found that 22% of people aged 18 to 34 have made changes to family planning because of the crisis.

Meanwhile, 8% of people in the age bracket said they have delayed having children because they do not have the money.

Read more here

Forestry investment firm axes its London listing in £167 million deal to go private

Wednesday 29 May 2024 12:11 , Daniel O'Boyle

Foresight Sustainable Forestry became the latest firm to join the exodus from the London Stock Exchange today, as it backed a £167 million offer from private equity.

Averon Park is buying the company and will delist it immediately after the deal goes through. It priced at 97p per share in cash and is expected to complete some time in the third quarter. FSF’s stock rose 22p to 95p today, a rise of over 30%.

FSF’s chairman, Richard Davidson, said the offer “represents good value for shareholders,” adding: “The structure of the deal means investors can continue to participate in the compelling investment fundamentals presented by the forestry and carbon credit industries through a private structure."

Read more here

UK has Europe’s most expensive diesel

Wednesday 29 May 2024 11:44 , Daniel O'Boyle

UK motorists are being charged the highest diesel prices in Europe, according to new analysis.

The RAC, which carried out the research, said there is “no good reason” why British fuel retailers are not cutting pump prices.

It found the average price of a litre of diesel at UK forecourts is 155p.

Read more here

Anglo says no to BHP call for more time to discuss £39-billion mining sector mega merger

Wednesday 29 May 2024 10:39 , Michael Hunter

The potential £39 billion mega merger in London’s mining sector took a new twist today, as Anglo American rejected a call from its suitor BHP for an extension to today’s 5pm deadline for a full, formal offer.

BHP is keen for Anglo’s board to back what would be the biggest deal ever in the mining sector and the largest takeover in London since 2017, when British American Tobacco bought US peer Reynolds for £40 billion.

The Australian giant had wanted more time to discuss terms, not least over spinning off Anglo’s South African assets, which has caused controversy in the country. Anglo was set up in the Johannesburg in 1917 and owns the De Beers diamond miner.As BHP called for the extension, it said there were now “a range of socioeconomic measures intended to address Anglo American’s concerns” and the extra time would “allow for further engagement”.

But Anglo said “BHP has not addressed the Board’s fundamental concerns” as it rebuffed what would have been the second extension to what is known in the City as the “put up or shut up” deadline.

That leaves BHP with the choice to go hostile by putting the bid direct to Anglo investors, or withdrawing it.

Anglo’s shares fell 16p to 2542p after its rejection of the extension.

Vistry shares maintain blue-chip push, FTSE 100 lower

Wednesday 29 May 2024 10:32 , Graeme Evans

The chances of Bovis Homes owner Vistry joining the FTSE 100 index were boosted today as its shares added another 2% or 23 to 1277p.

The partnerships-focused company is up 40% this year and about 85% since signs of an upturn in house market conditions first emerged last autumn.

Promotion for the £4.2 billion valued company, which was created in 2020 after Bovis bought Linden Homes and Galliford Try Partnerships, depends on next Tuesday’s closing prices.

A valuation below £3 billion means wealth manager St James’s Place is set to lose its blue-chip status in June’s quarterly reshuffle, with Ocado also in danger after a slide of 45% this year.

The grocery warehouse technology business was not helped by today’s showing as a fresh reverse of 21.6p to 388.8p placed it at the top of the FTSE 100 fallers board.

Ocado was joined by another stock near the exit door, with electrical components supplier RS Group 13.5p lower at 740p after analysts at Liberum cut their price target to 800p.

The FTSE 100 index weakened 13.47 points to 8240.71, despite the support of BP and Shell after Brent Crude’s recovery to $84 barrel helped their shares up 1.5%.

Mexico-based gold and silver miner Fresnillo led the FTSE 100 with a rise of 3% or 19p to 633p, while election jitters eased to help Severn Trent and United Utilities up 51p to 2436p and 27.7p to 1009.5p respectively.

The FTSE 250 index dropped 0.3% or 62.92 points to 20,642.35, with National Express owner Mobico back under pressure after Berenberg analysts ditched their “Buy“ stance with a new price target of 66p.

The transport group fell 2.75p to 56.55p, increasing its chances of relegation from the mid-cap benchmark as part of next month’s reshuffle.

Who is Daniel Křetínský, the Czech billionaire buying Royal Mail?

Wednesday 29 May 2024 10:29 , Daniel O'Boyle

Czech billionaire Daniel Křetínský is set to be the next owner of Royal Mail, after its parent company International Distributions Services (IDS) today accepted a £3.5 billion offer from him.

Kretinsky said: “IDS, and Royal Mail in particular, form part of the national infrastructure of the countries they operate in. More than that, Royal Mail is part of the fabric of UK society and has been for hundreds of years.

“The EP group has the utmost respect for Royal Mail's history and tradition, and I know that owning this business will come with enormous responsibility - not just to the employees but to the citizens who rely on its services every day.”

But who is the energy and media mogul that could soon own the 500-year-old British institution?

Fullers cuts a fifth of its tenanted pubs estate

Wednesday 29 May 2024 09:49 , Simon Hunt

Fullers today said it was cutting a fifth of its tenanted pub estate after the London pub chain reached a deal to sell 37 sites to rival Admiral Taverns.

The pubs, which include the Cocoanut in Kingston on Thames and the White Horse in Hertford, have been sold for £18.3 million, a premium of 10% over their gross asset value of £16.7 million.

Fullers said the deal would strengthen its balance sheet and support future acquisitions.

 (Fullers)
(Fullers)

Bloomsbury shares up on major acquisition

Wednesday 29 May 2024 09:16 , Simon Hunt

Harry Potter publisher Bloomsbury today unveiled its biggest-ever acquisition after it bought the academic publishing arm of US firm Rowman & Littlefield in a £65 million deal.

The deal will add 40,000 academic titles to Bloomsbury’s collection, bringing the total to just under 100,000. Bloomsbury said the acquisition would be funded with a combination of its cash resources and a new £30 million, three-year loan with Lloyds Bank.

The London-based publisher said it was upping its target revenues as a result of the transaction and that cost savings would help grow margins.

Founded in 1949, Rowman & Littlefield titles cover academic arts, humanities and social sciences, including the complete works of psychologist Sigmund Freud, and generates revenues of just under £30 million annually with pre-tax profits of £5 million.

Shares in Bloomsbury rose 2.5% to 572p.

Fresnillo and oil giants support weaker FTSE 100, IDS up to 330p

Wednesday 29 May 2024 08:44 , Graeme Evans

Gains of 1% for BP and Shell after Brent Crude rose to $84 a barrel have failed to prevent the FTSE 100 index dropping another 18.18 points to 8236.

The best performing stock is Mexico-based gold and silver miner Fresnillo, which is up 3% or 19p to 633p.

Components supplier RS Group is down 3% or 21.5p to 732p at the top of the FTSE 100 fallers board, with Ocado not far behind.

National Express business Mobico is down 4% among the biggest fallers in the FTSE 250 index, which is down 25.08 points to 20,680.19.

Royal Mail owner IDS rose 3% or 8.8p to 330p, matching its 2013 IPO price but short of the 370p a share agreement with Czech billionaire Daniel Kretinsky.

BHP calls for more time on its £39 billion bid for Anglo American

Wednesday 29 May 2024 07:44 , Michael Hunter

The potential £39 billion mega merger in London’s mining sector took a new twist today, with BHP calling for a second deadline extension for Anglo American to consider backing its bid.

A formal offer from the Australian suitor for the FTSE 100 miner is due by 5pm today under rules known as “put up or shut up” in the City, which leave a set period of time between an approach and a formal offer.

BHP is ken to secure backing from Anglo’s board for the deal before it formalises the approach for what would be the biggest deal ever in the mining sector and the largest deal in London for years.

The terms of the deal, which have been discussed by the two firms, include spinning off Anglo’s South African assets, which has caused controversy there. Anglo was set up in the Johannesburg in 1917, giving it deep roots in the country.

As BHP called for the extension today, it said such a move would “allow for further engagement on the proposal”.

Those include “a range of socioeconomic measures intended to address Anglo American's concerns” it said, adding:

“BHP is confident that the measures it has proposed to the Board of Anglo American provide a viable pathway to resolve the matters raised by Anglo American and would support South African regulatory approvals.

“BHP has considered market precedent transactions and believes that the risks are quantifiable and manageable.  BHP has already factored the costs associated with these risks into the offer ratio of its proposal.”

Darktrace and Vistry set for promotion in FTSE 100 reshuffle

Wednesday 29 May 2024 07:44 , Graeme Evans

Ocado and St James’s Place are in danger of losing their places in the FTSE 100 index, with takeover target Darktrace and the building firm Vistry poised to replace them.

June’s quarterly reshuffle of London’s top flight and the FTSE 250 index is based on next Tuesday’s closing prices, with index provider FTSE Russell confirming the changes the following evening.

Current valuations also suggest that National Express owner Mobico and the Ukraine-based iron ore pellets supplier Ferrexpo will be relegated from the FTSE 250 index.

In a separate development, FTSE Russell has announced that Hargreaves Lansdown will rejoin the FTSE 100 index at the end of this week.

The investment platform will take the place of Flutter Entertainment after the gaming firm switched its primary listing to the New York stock exchange.

FTSE 100 under pressure but US technology stocks rally

Wednesday 29 May 2024 07:21 , Graeme Evans

Investors are facing another downbeat session, with FTSE 100 futures pointing to a decline of 23 points on top of yesterday’s fall of 0.8% to 8254.

The pressure follows a mixed session on Wall Street after healthcare and consumer stocks led to the Dow Jones Industrial Average dropping 0.6%.

The S&P 500 index finished broadly flat due to the support of semiconductor and other technology stocks as the Magnificent Seven surged by 1.3%.

The Nasdaq Composite finished 0.6% higher at a fresh record but Asia markets were weaker this morning after Australia’s inflation rate increased by more than expected to 3.6%.

Oil prices have continued to pick up ahead of this weekend’s OPEC+ meeting, with Brent Crude trading near to a four-week high at $84.40 a barrel.

Profits down at Pets at Home

Wednesday 29 May 2024 07:18 , Simon English

Pets at Home profits are down 14% to £106m in a “pivotal year” as its digital platform was launched to customers.

Despite a cost-of-living crisis, demand for pet products was “resilient” as a nation of pet lovers continued to pamper their cats and dogs.

CEO Lyssa McGowan said: “We know the nation's pets better than anyone else, with over 10 years of analytical data on 10 million pets, and we now have a best-in-class digital platform.”

For investors, there will be another £25 million share buyback, on top of £100 million over the last two years.

McGowan said 2024, “has been a pivotal year for the business, having delivered some key building blocks of our platform for long term growth.”

The final dividend is held at 8.3p.

The company believes its new app and website have “transformed” the shopping and subscription experience.

Czech billionaire to buy Royal Mail owner IDS

Wednesday 29 May 2024 07:11 , Daniel O'Boyle

Royal Mail owner International Distribution Services will be taken over by Czech billionaire Daniel Kretinsky after agreeing a £3.5 billion deal.

The acquisition will take Royal Mail’s parent company off  the London stock market 11 years after it was privatised.

West Ham part-owner Kretinsky, via his EP Group business, first made an approach to buy IDS in April, and the IDS board had said they were “minded to” accept a bid at the price agreed today if one came in.

Keith Williams, the Chair of IDS, said: "IDS has the potential to become a leading international logistics player. Both the IDS Board and EP are acutely aware of their responsibilities to IDS and particularly to the unique heritage of Royal Mail and its obligations as the designated Universal Service Provider of postal services in the UK.

Because of the “critical functions” performed by Royal Mail, EP has agreed on certain undertakings with the UK Government, including that the business will remain the country’s Universal Service Provider for the next five years.

Wednesday 29 May 2024 06:43 , Simon Hunt

Good morning from the Standard City Desk.

It was a fascinating — and long — mea culpa yesterday from top London stock picker Nick Train, director of Lindsell Train, which manages the portfolio for the listed Finsbury Growth & Income Trust.

The trust invests largely in UK equities, three cheers for that, but has underperformed its benchmark, the FTSE All-Share Index, over the six months to the end of March.

No wonder Mr Train admitted that his half-year review was “difficult” to write. No one likes to be the bearer of bad news, not least to investors. The review starts with an expression of frustration at “the malaise gripping the UK Equity market”.

But Train is a believer in the fundamental strength, potential and investment cases of a number of British-based businesses. Where, he admits, he went badly wrong was being under-invested in Britain’s quoted tech sector — yes it does exist — as well as “world class” British brands.

As a result he has bet heavily on three stocks, Experian, Rightmove and Fever-Tree. Consequently, the allocation to tech or data companies has grown from 30% to 55%, with other big holdings in RELX, Sage and, of course, the Stock Exchange’s owner LSEG.

It is a big punt but Train is convinced that there are world-class and heavily undervalued London-listed companies out there, rubies in the rubble if you like. After the strong run the London market has enjoyed over recent weeks, it is surely nailed on that Train will find it far more enjoyable writing his full-year review.

And if he can convince his fellow fund managers that they do not have to stampede over to America for the best returns from tech then perhaps there is hope for the London market yet.

~

Here’s a summary of our top headlines from yesterday: