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(Alliance News) - Softbank-backed investment manager Fortress hasn't abandoned yet its effort to buy Wm Morrison Supermarkets, despite the UK grocer late Thursday agreeing to a new GBP7 billion offer from rival bidder Clayton, Dubilier & Rice.
Fortress on Friday asked Morrisons shareholders to take no action on the new CD&R bid, saying it is "considering its options" with respect to the all-cash offer it made at the start of July and increased at the start of August. It said it will make a further announcement "in due course".
The new CD&R offer has been unanimously accepted by the board of the grocer, and directors have said shareholders should vote in favour of the takeover at a meeting due in early October. This means Morrisons has withdrawn its recommendation for investors to accept a previous GBP6.7 billion takeover deal from a consortium led by Fortress.
Last week, CD&R was given an extended deadline until this afternoon by takeover regulators to say whether it wants to make a new offer for Morrisons, or to walk away.
CD&R had originally been turned down by the Morrisons board over a potential GBP5.5 billion bid. In June, the board said the offer "significantly undervalued Morrisons and its future prospects". Since then CD&R had been pondering whether it should increase its bid for the supermarket chain.
Morrisons shares were up 4.6% at 292.08 pence early Friday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.2% at 7,074.38
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Hang Seng: down 1.9% at 24,830.72
Nikkei 225: closed down 1.0% at 27,013.25
DJIA: closed down 66.57 points, or 0.2%, at 34,894.12
S&P 500: closed up 5.53 points, or 0.1%, at 4,405.80
Nasdaq Composite: closed up 15.87 points, or 0.1%, at 14,541.79
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EUR: soft at USD1.1679 (USD1.1685)
GBP: down at USD1.3614 (USD1.3666)
USD: down at JPY109.64 (JPY109.75)
Gold: up at USD1,787.40 per ounce (USD1,781.65)
Oil (Brent): up at USD66.62 a barrel (USD66.10)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Friday's Key Economic Events still to come
1100 BST Ireland wholesale price index
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Retail sales unexpectedly declined in the UK in July, data from the Office of National Statistics showed. Retail sales volumes fell by 2.5% in July from June, which is significantly below the market consensus cited by FXStreet of a 0.4% gain. On the year before, July's sales rose 2.4%, again well short of market consensus, which had predicted a 6% rise. The ONS also noted July's sales are up 5.8% on the pre-coronavirus pandemic level in February 2020. Food store sales volumes fell by 1.5% in July, following an increase in the previous month, when sales had been boosted by the start of the Euro 2020 football championship. Non-food stores saw a fall of 4.4% in sales in July from June, driven by falls in second-hand goods stores and computer and telecoms equipment stores.
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BROKER RATING CHANGES
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JPMORGAN RAISES HIKMA PHARMACEUTICAL TARGET TO 3000 (2700) PENCE - 'OVERWEIGHT'
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MORGAN STANLEY RAISES BABCOCK INTERNATIONAL TO 'OVERWEIGHT' ('EQUAL-WEIGHT') - PRICE TARGET 410 (260) PENCE
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COMPANIES - FTSE 100
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AstraZeneca said "positive" results from its Provent Phase III trial show its AZD7442 treatment "achieved a statistically significant reduction in the incidence of symptomatic Covid-19, the trial's primary endpoint." AZD7442, Astra noted, is a combination of two long-acting antibodies. It reduced the risk of developing symptomatic Covid-19 by 77% compared to a placebo. The trial accrued 25 cases of symptomatic Covid-19 at the primary analysis, and pointed to no cases of severe Covid-19 or Covid-19-related deaths in the trial, versus two deaths from the placebo. "AZD7442 is the first antibody combination, non-vaccine, modified to potentially provide long-lasting protection that has demonstrated prevention of Covid-19 in a clinical trial," Astra said.
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COMPANIES - FTSE 250
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UK retailer Marks & Spencer said it has made a strong start to its financial year that began on April 4, with improving sales and profit. M&S said the easing of restrictions has led to an "encouraging" performance. In the 19 weeks to August 14, total revenue was up 29% from a year ago, and up 4.4% on the same period in financial 2020, meaning two years ago and before the pandemic began. This has been led by an outperformance in Food sales, which are up 11% on a year ago and up 9.6% on two years ago, with retail park locations trading strongly. Clothing & Home sales are up 92% year-on-year, but are still 2.6% below financial 2020. "The change in our approach to trading, including more focussed ranges, fewer promotions and a substantially smaller summer sale, has resulted in full price sales up about 9% on financial 2020," M&S explained. Looking ahead, M&S expects adjusted pretax profit at the upper end of its guided range of GBP300 million to GBP350 million. "Although there has likely been an element of pent-up consumer demand in trading to date, we believe this performance provides strong confirmation of the beneficial effects of the last 18 months 'Never the Same Again' changes," the retailer added.
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COMPANIES - MAIN MARKET AND AIM
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Irish building materials firm Kingspan reported a "remarkably strong" first half, with revenue surging on the back of high demand. Pretax profit in the six months to June 30 rose to EUR297.5 million from EUR177.5 million a year before, with trading profit up 64% to EUR329 million. Revenue increased 41% year-on-year to EUR2.92 billion from EUR2.07 billion. Kingspan declared a 19.9 euro cents dividend for the first half, after withholding payment last year. "Despite inflation in our input costs, effective price management has helped increase trading margins, with a stand out performance in our largest division - insulated panels. Our strategy of expanding through acquisition and diversifying geographically has continued, with ten acquisitions made during the period across four continents, and a robust balance sheet positioned to support future growth," Chief Executive Gene Murtagh said.
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UK online retail investment platform interactive investor has invited several investment banks to propose an initial public offering in London that could value the company at up to GBP2 billion, Sky News reported Thursday. Sky News reported that the fund supermarket has started pitching a potential 2022 flotation to several banks, although according to bankers a formal decision has yet to be made, and will depend on market conditions. Should a flotation take place, it is likely that the Manchester-based firm would be valued in a range of GBP1.5 billion and GBP2.0 billion. Sky News described ii as the second largest fund supermarket, beaten only by FTSE 100 constituent Hargreaves Lansdown, however, it operates differently by using a flat-fee subscription model. For the six months ended June 30, ii reported a 19% rise in net revenue year-on-year to GBP76.1 million from GBP63.8 million, with a 33% rise in new clients to 31,667.
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COMPANIES - GLOBAL
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US regulators on Thursday filed a new lawsuit accusing Facebook of maintaining an illegal monopoly in social networking, reviving the case two months after it was dismissed by a federal judge. In the amended complaint, the Federal Trade Commission said Facebook's dominance "is protected by high barriers to entry," and that "even an entrant with a superior product cannot succeed against the overwhelming network effects enjoyed by an incumbent personal social network." The lawsuit filed in federal court in the US capital said Facebook used "anticompetitive acquisitions" of potential rivals such as Instagram and WhatsApp to protect its dominance. FTC officials said the deals amounted to "illegal buy-or-bury" schemes. "Facebook lacked the business acumen and technical talent to survive the transition to mobile. After failing to compete with new innovators, Facebook illegally bought or buried them when their popularity became an existential threat," said acting FTC competition bureau chief Holly Vedova in a statement. The lawsuit, which could take years to go through the courts without a settlement, calls for the court to order "divestiture of assets," including WhatsApp and Instagram, to restore competition.
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Aiming for a bigger presence in US brick-and-mortar retail, Amazon.com plans to open "several" multi-purpose shopping venues similar to department stores, the Wall Street Journal reported Thursday. The stores will sell household items, electronics and apparel, showcasing Amazon's private-label merchandise, the newspaper said, citing people familiar with the matter. Some of the first stores are expected in California and Ohio, according to the report. The move would come on the heels of Amazon's 2017 acquisition of the Whole Foods Market grocery chain for USD13.7 billion, which significantly expanded the e-commerce firm's presence in physical retail.
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Friday's Shareholder Meetings
Zegona Communications PLC - GM re sale of Euskaltel investment
Auction Technology Group PLC - GM re LiveAuctioneers acquisition
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By Tom Waite; thomaslwaite@alliancenews.com
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