FTSE 100 live: Bumper day for deals as National Express and Stagecoach plot merger, BT nears sale of pay TV brand, and DraftKings makes surprise Entain bid
The FTSE 100 index rebounded after Monday’s turbulence, with another big rise for airline giant IAG and a strong session for Royal Dutch Shell helping to offset the contagion fears triggered by the plight of debt-laden Chinese property firm Evergrande.
There’s also more merger and acquisition activity after National Express and Stagecoach confirmed talks over a potential tie-up, while interim results from B&Q owner Kingfisher have included plans for a £300 million buyback and higher dividend. A surprise bid for Entain from US fantasy sports group DraftKings provided some afternoon excitement.
FTSE Live Tuesday
Entain surges on takeover bid from DraftKings
BT jumps on report it’s nearing sale of BT Sport
Stagecoach in National Express merger talks
FTSE 100 rallies after Monday slide
B&Q owner reveals £300m buyback
The close: FTSE erases Monday's losses
16:56 , Oscar Williams-Grut
The FTSE 100 has erased the losses it suffered on Monday, closing up 66 points, or 1%, at 6970. The index was helped higher by a bumper day for deals. Here are the headlines:
• Ladbrokes owner Entain rocketed 15% to top the FTSE after a surprise $20 billion bid from US fantasy sports operator DraftKings. Shares in rivals 888 and Paddy Power-owner Flutter also rose on news of the approach.
• Shares in Stagecoach closed 26% higher thanks to an all shares takeover bid from National Express. The bid is an 18% premium on Monday’s closing price. National Express rose 7.6%.
• BT gained 2.7% on reports that it is nearing a deal to sell its pay TV sports business to streaming company DAZN. The company said discussions are ongoing and all options remain on the table.
• Confirmation of relaxed travel restrictions between the US and UK helped British Airways-owner IAG rise 3%. Rolls-Royce, which makes jet engines for planes, gained 3.3%.
National Express and Stagecoach in merger talks
07:26 , Graeme Evans
Coach operator National Express and bus company Stagecoach have confirmed they are in talks about a potential merger.
Stagecoach said there were significant operational efficiencies from a tie-up, such as National Express utilising its depot network to run and maintain coach operations.
The Perth-based company's shareholders will receive 0.36 new National Express ordinary shares for each share, giving them about 25% of the combined group.
Stagecoach said the terms represent an 18% premium on their respective closing prices.
It added: “The boards of Stagecoach and National Express believe that the potential combination would be a strategically compelling proposition with the potential to realise significant growth and cost synergies, as well as delivering strong value creation for both sets of shareholders.”
FTSE steadies after China turbulence
07:41 , Graeme Evans
Concerns over the solvency of Chinese property developer Evergrande sent London's FTSE 100 index more than 2% lower at one point on Monday, before the top flight finished a more respectable 0.9% down at 6,903.91.
The calmer trend, which was helped in afternoon trading by plans in the US to open borders to vaccinated passengers from Europe, is set to continue at the open in London today.
CMC Markets is forecasting the FTSE 100 index will open 45 points higher at 6,949.
Wall Street markets, meanwhile, slipped to a two-month low last night, not helped by jitters ahead of the latest two-day meeting of the Federal Reserve getting underway later today.
CMC's chief markets analyst Michael Hewson said: “The topic of tapering is likely to feature highly, along with speculation of where Fed members see the likely timing of future rate rises, by way of their dot plots.
“The bigger question given the risks emanating from events in China is whether the Fed adopts a less hawkish stance tomorrow in order to buy itself some time until the situation becomes clearer.”
Four decades of Stagecoach
07:59 , Graeme Evans
Sir Brian Souter and sister Dame Ann Gloag co-founded the business in 1980 with the running of two second-hand buses. The business is now the UK's biggest bus and coach operator, with 8,300 vehicles serving communities in England, Scotland and Wales.
Stagecoach also operated the first privatised rail services in 1996 and later ran key networks including the South Western and East Midlands franchises as well as a 22 year partnership with Virgin for train services on the West Coast inter-city rail franchise.
In June, the company reported a big slide in profits as it warned it will be “some time” before demand for its services returns to pre-Covid levels.
The founders still own a quarter of the London bus operator through family shareholdings, but revealed plans in April to reduce this to 5% over the next ten years.
Sir Brian said at the time: “We remain significant long-term shareholders in Stagecoach and remain supportive of the company’s strategy and management team.”
The founders will see their shares rolled into National Express if the all-share bid from the coach operator gets the go ahead.
DIY boom lifts sales and profits at Kingfisher
08:24 , Joanna Bourke
Screwfix and B&Q owner Kingfisher will launch a £300 million share buyback after the pandemic DIY boom helped sales to swell above pre-Covid levels.
The FTSE 100 retail company saw pre-tax profit surge 70.6% to £677 million in the six months to July. The return of money to shareholders reflects “strong cash generation and confidence in outlook”, Kingfisher said.
It was boosted as people in lockdown made the most of time at home and undertook DIY projects. Kingfisher chief executive Thierry Garnier said: “Our industry is benefiting from new trends that we believe will be supportive over the long term.”
For the full story, click HERE.
Shell and IAG lead FTSE 100 recovery
08:37 , Graeme Evans
The FTSE 100 index is up 46.02 points to 6,949.93 in a calmer session for investors after the scare sparked on Monday by fears that Chinese property developer Evergrande might struggle to repay its mammoth debt pile.
The company, which has liabilities of just over $300 billion, faces several debt repayment deadlines this week. Evergrande's plight ignited broader worries about the health of China’s property market, which makes up around 10% of GDP, and sent mining and Asia-focused companies sharply lower on Monday.
London-listed stocks were much firmer today, with Anglo American pulling out of its recent slump to stand 28p higher at 2,498.5p. There was also a further gain for British Airways owner IAG, having surged 11% on plans for the relaxation of US travel restrictions.
The shares added another 4% or 6.2p to 172.4p. Royal Dutch Shell shares were also 3% higher after the supermajor sold off Permian Basin assets to ConocoPhillips for $9.5billion.
Record payday for BHP shareholders
08:41 , Graeme Evans
BHP's London-listed shareholders will find a chunky dividend in their accounts as part of a record $10.1 billion (£8.6 billion) being paid today by the miner from 2020/21 trading.
The $2 a share, equivalent to £1.44 a share for UK investors, was declared just over a month ago after BHP reaped the benefit of soaring commodity prices to report annual underlying profits of $37.4 billion (£31.2 billion).
Fortunes have changed dramatically since then, with BHP shares down more 20% as slowing demand from steelmakers and other parts of the Chinese economy sends the price of iron ore down tumbling from its May peak to below £100 a tonne.
The dividend may one of the last many UK shareholders get from BHP after the Anglo-Australian company revealed plans last month to scrap the London and Sydney dual listing that's existed since the company's BHP/Billiton merger in 2001.
The primary listing will be on the Australian Stock Exchange alongside a standard listing in London, costing the company its place in the FTSE 100 index and meaning many index trackers and pension funds no longer follow the stock.
Including the half-year dividend, BHP has returned US$15 billion (£12.8 billion) to shareholders over the past year and £38 billion (£32.4 billion) for the past three years.
Luxury clothing retailer Matchesfashion names new CEO
09:37 , Joanna Bourke
London-headquartered luxury retailer Matchesfashion has appointed the former boss of French department store group Printemps to lead the business.
Matchesfashion, which sells goods from brands such as Alexander McQueen and Jimmy Choo from its three London stores as well as online, said Paolo de Cesare will start as chief executive later this year.
The incoming boss previously spent 12 years as president and chief executive of Printemps Group.
For the full story, click HERE.
Miners higher in FTSE 100 recovery
09:40 , Graeme Evans
Buyers have returned to the London market after Monday's China-fuelled sell-off, with British Airways owner IAG leading the charge after US authorities yesterday gave the go-ahead for the resumption of lucrative transatlantic trade.
IAG shares were up another 7% or 11p at 177.18p at the top of the FTSE 100 risers board, having also surged 11% by last night's close on relief that US borders will soon be open to vaccinated travellers from Europe.
The shares are still only back to where they were in early August, with IAG changing hands at 215p as recently as April.
The FTSE 100 index is up more than 1%, or 74.74 points to 6,978.65 in a calmer ession for investors after the scare sparked on Monday by fears that Chinese property developer Evergrande might struggle to repay its mammoth debt pile.
The company, which has liabilities of just over $300 billion, faces debt repayment deadlines this week. Its plight ignited broader fears about the health of China’s property market, which makes up around 10% of GDP, and sent mining and Asia-focused companies sharply lower on Monday.
Today’s rebuilding job in the mining sector saw BHP and Antofagasta both rally by 3%, although analysts at Liberum said risks were still pointing to the downside after prices of iron ore more than halved in just over eight weeks. The broker has sell recommendations on both Rio Tinto and fellow heavyweight BHP.
Royal Dutch Shell posted one of the biggest gains in the top flight after last night's agreement to sell all its Permian assets to ConocoPhilips for $9.5 billion. The proceeds will be used to fund additional shareholder distributions and to bolster the balance sheet, helping Shell’s B shares to rally 4% or 58p to 1,488.6p.
In the FTSE All-Share, Stagecoach shares jumped 20%, up 13.6p to 81.65p, after the bus operator unveiled a potential all-share takeover by coach business National Express, which also rose 14.6p to 237.6p in the FTSE 250 index.
Pernod Ricard reveals deal for The Whisky Exchange
10:28 , Joanna Bourke
Spirits maker Pernod Ricard has agreed to buy The Whisky Exchange which has three stores in the heart of central London.
As well as branches in Covent Garden, Great Portland Street and London Bridge, the Whisky Exchange also comprises an online business which stocks some 4000 whisky, 700 rum and 600 gin brands.
In addition, the firm is known for online auctions of rare spirits.
Read the full story HERE.
Stagecoach shares soar on takeover talks
11:29 , Oscar Williams-Grut
Shares in Stagecoach jumped over 20% after confirming it was holding merger talks with rival National Express.
Both companies said in separate statements that they were engaged in talks about a possible all-share combination that would see National Express subsume Stagecoach. Deal talks were first reported by Bloomberg.
National Express is offering Stagecoach shareholders 0.36 shares in National Express for every Stagecoach stock they hold, which would give Stagecoach investors 25% of the combined business. The offer represents a premium of around 18% based on Monday’s closing price.
Shares in both businesses jumped in early trading, valuing the Stagecoach bid at around £480 million.
The boards of both companies said the deal would be “strategically compelling”, promising cost savings, growth, and value for both sets of shareholders.
Read more HERE.
Stagecoach takeover makes sense for both companies
11:50 , Oscar Williams-Grut
The surge in both Stagecoach and National Express’ share prices today shows that the City sees value in this deal on both sides.
Both businesses operate large fleets that could benefit from shared servicing. Both need to invest large sums to get ready for the Net Zero future. A combined balance sheet offers more borrowing power and heftier buying power.
In many ways, what’s surprising is that this deal hasn’t happened sooner. Stagecoach first tried to buy National Express in 2009. Activist investor Elliott advocated for a merger at National Express three years later. It’s been a coy dance ever since.
The one thing that could burst the tyres on this deal is the competition watchdog. A deal with this much impact on the UK’s transport infrastructure will no doubt be scrutinized closely.
Pitt v Clooney coffee wars boost Soho ad legends M&C Saatchi
11:59 , Simon English
M&C Saatchi has launched a coffee war ad campaign that puts Brad Pitt up against friend and rival George Clooney.
Pitt is the new face of Italian brand De’Longhi, going head-to-head with Clooney and Nespresso.
That was just one client win of several in the half-year that see the Soho firm bounce back from a tough two years that included an accounting scandal and a management overhaul.
Revenues jumped 15% to £171 million, profit soared from £2 million to £10.5 million.
British Steel’s shutdown warning as gas price mayhem boils
12:08 , Simon Freeman
British Steel today issued a stark warning over power prices “spiralling out of control” as the gas crisis swept across the UK economy.
The nation’s second-biggest steel producer said the colossal hikes — up 50-fold from £50 per megawatt-hour to £2500 per MWh since April — are making the power-hungry production process impossible at certain times.
“With winter approaching, when demand will rise, prices could get significantly worse,” the company said.
British Steel, owned by Chinese conglomerate Jingye, said it was maintaining production at “normal levels” for now but the spike in costs could not be “absorbed or ignored.”
Alphawave soars on microchip boom
12:45 , Oscar Williams-Grut
The world may be in the midst of a microchip shortage but that hasn’t stopped Alphawave coining it.
The Canadian chip designer, which listed in London in May, today reported surging half-year sales and revenues and upgraded full-year forecasts. Bookings surged 490% to $196.1 million (£143.3 million) and revenue jumped 140% to $27.6 million.
Alphawave, which designs chips and then licenses them to manufacturers, said it was seeing a boom in demand due to ever increasing connectivity. Its chips are going into data centers, 5G networks and cars, among other things. CEO Tony Pialis called it a “breakout period” for the company.
Executive chairman John Holt said the ongoing global microchip shortage was an “opportunity” for the company as it was leading to investment in new factories to meet demand. That in turn was helping to fill order books.
Profit dipped 36% to $2.7 million as IPO costs hit the company’s bottom line. Alphawave upgraded its forecast for full year revenue growth by 25% to 125%. Shares in the business rocketed 40.6p, or 11.9% to 382.20p.
UK residential transactions jumped last month
12:46 , Joanna Bourke
There was more positive news from the property market today with HMRC saying home sales bounced back in August, up a third higher on July.
An estimated 98,300 transactions took place last month, a 21% year on year rise.
Low mortgage rates, the tail-end of the stamp duty holiday and a continued “race for space” maintained momentum.
Mike Scott at estate agency Yopa said: “The housing market has recovered very quickly from the dip in activity after the stamp duty deadline at the end of June.”
BT jumps on sports sale report
13:19 , Oscar Williams-Grut
BT jumped on Tuesday after reports that sports streaming service DAZN had bid for the telecoms company’s pay TV sports channels.
DAZN, a startup backed by billionaire Sir Leonard Blavatnik, is in “advanced” discussions to buy BT Sports and a deal could be announced within weeks, the Financial Times reported. The story sent shares in BT climbing 2.7% in London.
The deal would be a significant coup for DAZN, a London-founded startup that has been called the ‘Netflix of sport’ in the press. DAZN offers subscription sports streaming services and has made its name in combat sports like boxing and UFC, as well as NFL. Despite being founded in London, the company has a smaller footprint in the UK than in North America.
A deal to buy BT Sports would significantly expand DAZN’s reach in Britain and hand the company rights to Premier League matches.
Lunchtime update
13:28 , Oscar Williams-Grut
Here are the main stories in the market this lunchtime:
- The FTSE 100 is up 86 points, or 1.2%, to 6990. The index is rebounding from a sell-off on Monday driven by fears that Chinese real estate giant Evergrande could default on its $300 billion debt pile. Concerns about possible global contagion have eased slightly.
- BT’s stock has spiked after a report that ‘Netflix for sport’ service DAZN is nearing a deal to buy the telecoms operator’s pay TV channels
Ladbrokes owner Entain surges on surprise $20 billion bid
15:54 , Oscar Williams-Grut
It’s a bid day for deals. First Stagecoah and National Express, then BT’s possible DAZN transaction, now a possible Entain takeover.
Shares in Ladbrokes owner Entain have surged 15% after the gambling group received a takeover bid from US fantasy sports firm DraftKings.
Entain confirmed in a statement to the market early on Tuesday afternoon that it had received a preliminary proposal from DraftKings for a mixed cash and stock bid.
“There can be no certainty that any offer will be made for the Company, nor as to the terms on which any such offer may be made,” the company said. “A further announcement will be made as and when appropriate. Shareholders are urged to take no action at this time.”
The brief statement followed a report by CNBC breaking news of the approach. CNBC said the offer was worth $20 billion.
Shares in Entain jumped 15% following the report. Entain was valued at £12.9 billion ($17 billion) prior to the spike.
‘M&A is alive and well'
16:32 , Oscar Williams-Grut
Chris Beauchamp, chief market analyst, says: “M&A is certainly alive and well it seems judging by today’s announcements, as Entain shoots to the top of the FTSE 100 and travel groups National Express and Stagecoach make strong gains as well among the mid-caps. Coupled with the mystery bid for easyJet it seems that there are plenty of people around the globe who think any worries about a slowing global economy are overdone, and that there is more good news to come on the economic front that can lift both earnings and stocks. “
