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(Alliance News) - Co-op on Wednesday said it has agreed to sell its petrol forecourt business to food retailing peer Asda for an enterprise value of GBP600 million.
The deal includes 129 petrol forecourt sites across the UK, representing 5% of Co-ops total retail estate of 2,564 stores.
Asda was bought by the Issa brothers and UK-based private equity firm TDR Capital in February last year for GBP6.8 billion. The Issa brothers, Zuber and Mohsin, made their money through EG Group, a petrol station business that has 6,000 sites in the UK and Europe.
Co-op said the proceeds - being cash consideration of GBP438 million - will be used to reinvest into its core convenience business and pricing, as well as reducing debt. The remainder of the GBP600 million enterprise value represents IFRS 16 lease liabilities of GBP162 million.
"This transaction is in line with our strategy to move away from operating petrol forecourts and supports our vision of Co-operating for a fairer world while building our core leading convenience business," said Chief Executive Shirine Khoury-Haq.
The deal is expected to close in the fourth quarter.
In addition to its food stores, Co-op operates over 800 funeral homes and also has interests in insurance and legal services.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.7% at 7,374.78
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Hang Seng: up 0.2% at 19,993.83
Nikkei 225: closed down 0.4% at 28,091.53
S&P/ASX 200: closed down 0.2% at 6,986.80
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DJIA: closed down 308.12 points, or 1.0%, at 31,790.87
S&P 500: closed down 44.45 points, or 1.1%, at 3,986.16
Nasdaq Composite: closed down 134.53 points, or 1.1%, at 11,883.14
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EUR: flat at USD1.0017 (USD1.0022)
GBP: firm at USD1.1675 (USD1.1662)
USD: down at JPY138.41 (JPY138.75)
Gold: down at USD1,721.45 per ounce (USD1,725.60)
Oil (Brent): firm at USD100.04 a barrel (USD99.99)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Wednesday's key economic events still to come
0955 CEST Germany labour market statistics
1100 CEST EU flash consumer price index
1100 BST Ireland monthly unemployment
0700 EDT US MBA mortgage applications survey
0800 EDT US Fed Cleveland President Loretta Mester speaks
0815 EDT US ADP national employment report
1030 EDT US EIA petroleum status report
1830 EDT US Fed Atlanta President Raphael Bostic speaks
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Tourists will be able to visit Japan from next week on package tours without a guide, Prime Minister Fumio Kishida said, as the country moves to ease strict Covid-19 controls. From September 7, Japan will also raise its daily cap on the number of people allowed to enter the country to 50,000, Kishida told reporters. Japan has kept strict border restrictions in place longer than many other major economies, and only in June began allowing tourists to visit on the condition they came in tour groups accompanied by guides. "As international exchange becomes more active worldwide, Japan will join this movement – also from the viewpoint of taking advantage of a cheap yen," said Kishida, who has himself just recovered from Covid-19.
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Taiwan's Defence Ministry said China's recent military drills had jeopardized the status quo in the Taiwan Strait, vowing to "do whatever it takes" to defend Taiwan. "We will continue defending our national security, firmly holding on to the median line, and doing whatever it takes to protect our homes, our families, and our sovereignty," ministry spokesperson Li-Fang Sun said. After US House of Representatives Speaker Nancy Pelosi visited Taiwan in early August, the Chinese People's Liberation Army launched military manoeuvres around Taiwan, followed by large-scale maritime and aerial drills.
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BROKER RATING CHANGES
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Berenberg raises Workspace to 'buy' (hold) - price target 650 (850) pence
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Berenberg cuts Great Portland Estates to 'sell' (hold) - price target 460 (750) pence
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Berenberg cuts LondonMetric Property to 'sell' (hold) - price target 200 (280) pence
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COMPANIES - FTSE 100
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J Sainsbury said it will pump GBP65 million into its pricing next month amid ratcheting pressure on customers' budgets in the UK. Chief Executive Simon Roberts promised the supermarket chain will stand with its customers "to ease the financial pressure they face". The latest pricing pledge – which is part of wider a GBP500 million investment commitment – comes as fresh figures from the British Retail Consortium revealed that customers witnessed 9.3% food inflation in August, compared with the same month last year.
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Miner Anglo American said De Beers' seventh rough diamond sales cycle of 2022 amounted to USD630 million, down marginally on USD638 million in the sixth cycle but up from USD522 million in the seventh cycle of 2021. "De Beers Group rough diamond sales continued at a steady level in the seventh sales cycle of 2022. In line with normal seasonal trends, we anticipate that sales in the next few cycles will be affected by the temporary closure of polishing factories for the Diwali holidays," said Chief Executive Bruce Cleaver. Diwali, the Hindu festival of lights, falls on October 24 this year.
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COMPANIES - FTSE 250
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Royal Mail workers have walked out on strike again in a bitter dispute over pay, with further industrial action planned. Members of the Communication Workers Union mounted picket lines outside Royal Mail offices across the UK on Wednesday. The union said more than 100,000 workers are involved, making it the biggest strike of the summer. The action follows a walkout last week and there will be further stoppages on Thursday September 8 and Friday September 9. The action is in protest at a 2% pay rise, although the company has said more money is on offer.
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Infrastructure investor BBGI Global Infrastructure declared an interim dividend of 3.74 pence per share and confirmed its annual targets for the next three years, aiming to pay a total of 7.48p for 2022, 7.63p for 2023 and 7.78p for 2024. Net asset value per share stood at 149.8p on June 30, up 6.5% from 140.7p on December 31.
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COMPANIES - SMALL CAP
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Esken said it expects to take a hit after London Southend Airport's global logistics partner said it will cease to use cargo operations, effective from mid-September. "LSA has been one of its global logistics customer's best performing aviation hubs. However, the operation has over time reduced from an original 18 flights per week to 7 since October 2021 and the global logistics partner has now advised LSA that it will cease operations in line with a change of strategic focus from air freight to road-based cargo," said Esken, which didn't name the customer. Esken said it expects a GBP900,000 hit to earnings before interest, tax, depreciation and amortisation for the remainder of the current financial year, before exit fees. There are exit fee provisions within the contract, and the logistics customer will also pay fees related to its 60-day notice period, Esken said. Esken's financial year runs to the end of February 2023. It reported a pretax loss of GBP34.6 million in financial 2022. In the 2024 financial year, Esken expects its Aviation arm will take a GBP2.9 million hit, prior to any further cost savings or new cargo agreements. Esken has been in talks with other logistics businesses, and it added that it is in "positive dialogue" with a range of carriers over passenger flights for the summer 2023 season. Outside of Southend airport, Esken said its Renewables division continues to perform well and remains on track to achieve Ebitda in excess of GBP22 million in the current financial year.
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Restaurant operator Fulham Shore said it has continued to trade well despite UK economic "turmoil" and rail strikes. Trading is in line with management expectations and new restaurant openings are being received well, Executive Chair David Page will say at Wednesday's annual general meeting. "Franco Manca and The Real Greek continue to operate busy restaurants," he said. The company has opened nine Franco Manca and one The Real Greek restaurants during its current financial year so far, taking its total number of restaurants to 90. It remains on track to deliver 18 new restaurants in the current financial year.
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Wednesday's shareholder meetings
Fulham Shore PLC - AGM
GYG PLC - GM cancellation of admission of Ordinary Shares to trading on AIM
Invinity Energy Systems PLC - AGM
James Latham PLC - AGM
Rural Broadband Solutions PLC - AGM
Scottish Investment Trust PLC - GM re recombination of assets with JPMorgan Global Growth & Income PLC
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By Tom Waite; thomaslwaite@alliancenews.com
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