Yahoo Finance Trending tickers: Virgin Money, Rentokil, Aviva, ITV
Virgin Money (VMUK.L)
Nationwide Building Society has struck a deal to buy Virgin Money for £2.9bn ($3.7bn), creating one of the UK's largest mortgage and savings groups.
The 220p-a-share price offered comes as a 38% premium to Virgin Money's closing share price on Wednesday. David Bennett, chairman of Virgin Money UK, said that the deal offered “attractive value for our shareholders”.
The move is not set to make any material changes to Virgin Money's 7,300 employees "in the near term," Nationwide confirmed. It plans to initially keep the Virgin Money brand but it will later be phased out over six years once the takeover is completed.
Nationwide is UK's biggest building society with more than 17 million customers, while Virgin Money is the UK's sixth largest retail bank with around 6.6 million customers and 91 branches.
The combination of the two will create a group with 696 branches, second only in the UK to Lloyds Banking Group.
Shares rose as much as 36% on the back of the news, climbing to the top of the FTSE 250 (^FTMC).
Rentokil (RTO.L)
Rentokil shares surged 14% in London after the pest control firm reported a 57% jump in operating annual profit, benefiting from the Terminix acquisition.
Organic revenue grew by 4.9% while operating margin was up 1.20 percentage points to 16.6%, even though North American growth was weak.
Rentokil completed 41 acquisitions during 2023 and said that its pipeline of bolt-on prospects "remains strong", with the business expecting to invest £250m this year.
"Transformational acquisitions always bring significant risk to a business. Rentokil's acquisition of Terminix is a case in point," Charlie Huggins, manager of the Quality Shares Portfolio at Wealth Club, said.
"The Terminix deal is by far the largest the group has ever done, establishing it as the leading Pest Control business in North America and opening up substantial cost savings. However, there have clearly been teething issues with the integration.
The North American pest control business is seeing lower organic growth than expected due mainly to weak new customer acquisition. The distraction and complexity of such a large integration has meant the group has taken its eye off the ball. This has been compounded by an increasingly competitive market environment."
Aviva (AV.L)
Aviva has announced a $380m buyback after a 9% profit rise thanks to strong performance in general and health insurance.
Operating profit came in at £1.74bn, slightly above analysts' forecasts of £1.43bn, according to a company-compiled consensus poll.
"Aviva is moving even faster than before," Amanda Blanc, chief executive, said on a media call. "We are exceeding our targets and setting new ones."
The insurer increased its dividend by 8% to 33.4p, against a forecast of 33.3p. It also set an operating profit target of £2bn by 2026.
The positive results come days after the insurer announced its return to the Lloyd’s of London syndicate by acquiring Probitas for £242m.
ITV (ITV.L)
Profits at ITV dropped in 2023 as the broadcaster found it “challenging” to encourage advertisers to spend money on traditional TV commercials due to the poor global economy.
The company said profits before tax fell from £501m in 2022 to £193m last year, however, there was growth at some of its business units.
Shares rose 8% in London despite a 15% “severe decline” in linear advertising but digital revenue performed much better, increasing 19% to £490m.
Group revenues fell by 2% to £4.3bn, with TV advertising down by 15%. Digital revenues rose by 19% and its studios arm recorded a 4% increase, to £2.2bn.
Carolyn McCall, chief executive, said: “In 2023 we saw the benefit of the actions we have taken to reposition ITV towards higher sustainable growth.
“Our Studios business recorded the highest ever revenues and profits, and in its first year ITVX delivered strong growth in viewing and digital revenue with investment on plan.
“This growth in production and streaming substantially offset the challenging linear TV advertising market conditions.”
She added that total advertising revenue was expected to be up 3% in the first quarter of 2024 helped by digital advertising revenues. ITV expects advertising to be bolstered by upcoming events including the UEFA Euro 2024 football championships in June.
“The advertising market last year was challenging to say the least but we expect this year to be better than last year,” she said.
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