(Alliance News) - Renishaw said on Wednesday it has decided to conclude its formal sales process after failing to receive a satisfactory takeover approach.
The firm put itself up for sale in March - triggered by Executive Chair David McMurtry and Non-Executive Deputy Chair John Deer, the company's founders, indicating they wanted to sell their combined 53% stake.
Renishaw said its board has reviewed a number of proposals with its advisers, but board members now have unanimously concluded that "none would meet the board's objectives of delivering an outcome that satisfactorily met the interests of all stakeholders".
Back in May, Bloomberg had reported that potential bidders for Renishaw had been put off by a steep price tag and list of ownership demands. Bloomberg said Hexagon AB, Schneider Electric SE and Siemens AG all had taken a look.
Renishaw dropped out of the FTSE 100 index last month, demoted to the FTSE 250. Its current market capitalisation is GBP3.64 billion. The stock was up 0.3% early Wednesday.
McMurtry and Deer said they remain committed to Renishaw and have no intention of selling their shares on the market for the foreseeable future.
"At the start of this process we made it very clear that, with the board, we were focused on ensuring that we find the right new owner for our business. Whilst the formal sale process did not result in a new owner for Renishaw, we are satisfied that it ensured a thorough and rigorous process that enabled us to evaluate a wide range of potential buyers," the two said.
The engineering firm added that it has seen a strong trading performance in its final quarter, and finished the financial year with a "record" order book. Renishaw expects revenue for the year that ended June 30 to be in a range of GBP562 million to GBP567 million, and adjusted pretax profit around GBP116 million to GBP121 million.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.5% at 7,137.16
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Hang Seng: down 0.8% at 27,855.25
Nikkei 225: closed down 1.0% at 28,366.95
DJIA: closed down 208.98 points, or 0.6%, at 34,577.37
S&P 500: closed down 8.80 points, or 0.2%, at 4,343.54
Nasdaq Composite: closed up 0.2%, or 24.32 points, at 14,663.64
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EUR: flat at USD1.1824 (USD1.1829)
GBP: up at USD1.3805 (USD1.3798)
USD: up at JPY110.73 (JPY110.57)
Gold: down at USD1,803.29 per ounce (USD1,804.50)
Oil (Brent): up at USD74.86 a barrel (USD74.74)
(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
1100 CEST EU summer interim economic forecast
1400 EST US FOMC meeting minutes
1630 EDT US API weekly statistical bulletin
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Halifax reported a slowdown in UK house price growth in June, as the stamp duty holiday starts to wind down. House prices jumped 8.8% on an annual basis last month, slowing from May's 9.6% rise. On a monthly basis, prices fell 0.5% - the first monthly decline since January. "It is important to put such a moderate decrease in context, with average prices still more than GBP21,000 higher than this time last year, following a broadly unprecedented period of gains," said Halifax Managing Director Russell Galley. "With the stamp duty holiday now being phased out, it was predicted the market might start to lose some steam entering the latter half of the year," he added.
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German industrial production unexpectedly declined for a second straight month in May, figures from Destatis showed. Production in industry fell 0.3% on a monthly basis in May, following a revised 0.3% fall in April. Output had been expected to grow 0.5% in May, according to FXStreet. Markets had expected growth of 0.7% for April's reading. Year-on-year, the jump was 17% - another disappointment, with markets having eyed an acceleration to 35% growth after a 28% jump in April. The data comes a day after it was revealed German new manufacturing orders fell month-to-month in May, in a surprise that massively missed market expectations.
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BROKER RATING CHANGES
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BERENBERG CUTS WM MORRISON SUPERMARKETS TO 'HOLD' ('BUY') - TARGET 254 (202) PENCE
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BERENBERG INITIATES SHAFTESBURY WITH 'BUY' - TARGET 725 PENCE
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BERENBERG INITIATES CAPITAL & COUNTIES WITH 'BUY' - TARGET 200 PENCE
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JEFFERIES RESUMES IG GROUP WITH 'BUY' - TARGET 1050 PENCE
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COMPANIES - FTSE 100
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Oil major Royal Dutch Shell unveiled plans to bump up shareholder returns. It will "move to the next phase of its capital allocation framework" and increase total shareholder distributions to within the range of 20% to 30% of cash flow from operations, starting at the second-quarter results announcement. This is due to strong operational and financial delivery, combined with an improved macro-economic outlook, it said. In the second quarter, Shell expects to have further reduced net debt, though the extent of this will be moderated by working capital movements. "In conjunction with the increased distributions, Shell will retire its net debt milestone of USD65 billion and will continue to target further strengthening of its balance sheet and AA credit metrics. 2021 cash capex will remain below USD22 billion," said Shell.
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COMPANIES - FTSE 250
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Casino operator Rank Group said it has signed a new two-year GBP25 million revolving credit facility with Lloyds Bank. The new bank facility is in addition to Rank's existing GBP55 million RCF and remaining GBP108.4 million term loan.
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Pub operator JD Wetherspoon reported improving trading patterns following the easing of lockdown restrictions, though still expects to post a full-year loss. Between April 12 and May 16, when only outdoor hospitality was allowed to resume in England, around 500 of its pubs reopened and like-for-like bar and food sales were down 49% when compared with the pre-pandemic 2019 financial year. This drop improved to 15% for the period May 17 to July 4, when pubs were fully open. As at Sunday, 850 Wetherspoon pubs were open out of a total of 860, with the bulk of the shuttered pubs being those at airports. For the May 17 to June 10 period, before the Euro football tournament started, like-for-like sales were down 8.1%. From June 10 to July 4, during the tournament, they were down 21% - with Wetherspoons noting its pubs have largely not televised the matches. "The company continues to expect to make a loss for the year ending 25 July 2021," said Chair Tim Martin. "In a trading update of 19 January 2021, the company's principal 'scenario' estimated sales in the financial year starting 26 July 2021 to be in line with financial year 2019, which remains our current best estimate, on the basis that restrictions are ended, as the government currently intends."
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Vistry said its first half performance was "significantly" ahead of internal expectations. The housebuilder highlighted a step-up in its average weekly private sales rate to 0.76 in the period, up sharply on 0.45 a year ago and the pre-pandemic rate of 0.69 in 2019. "Importantly we are seeing sustained demand for units scheduled to complete in Q4 2021, post the end of the Stamp Duty holiday. With this strong demand, prices have increased across all geographies that we operate within," it noted. Housebuilding completions increased to 3,126 in the half from 1,235 a year ago, and Vistry is on track to deliver an adjusted Housebuilding gross margin for 2021 of around 22%. Vistry has a forward sales position of GBP2.7 billion, with 93% of forecast 2021 total Housebuilding units and Partnership mixed tenure units secured. As such, the company is confident it will meet consensus market expectations for 2021 and also retained its outlook for 2022. "Market trends remain positive and we are seeing good demand for completions beyond the end of the Stamp Duty holiday. There is some pressure across the material supply chain in terms of price increases and extended lead times, but we are working well with our partners to ensure successful delivery of our build programme and expect this position to ease through the second half. House price inflation is more than offsetting any cost," said Vistry Chief Executive Greg Fitzgerald.
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Housebuilding peer Redrow also sounded upbeat on Wednesday amid a "strong" sales market. Redrow said reservations per outlet per week for the financial year ended June 27 amounted to 0.70, compared with 0.67 for the 2020 year and 0.63 for the 2019 one. The continuing strong sales market, combined with the tapering of the UK stamp duty holiday at the end of June, has resulted in Homes turnover in the regional businesses being ahead of expectations, it said. Redrow now expects turnover for the recently ended financial year to be around GBP1.94 billion, up from GBP1.34 billion the year before and approaching 2019's pandemic-free level of GBP2.11 billion. Redrow also expects an operating margin in excess of 15.5%, compared with 11.1% the year before and 19.5% two years ago. "The group has entered the 2022 financial year with a very strong order book and the sales market remains robust. As a result, despite the earlier completion of the PRS block referred to above, the group expects 2022 turnover to be above GBP2 billion," said Redrow.
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Wednesday's Shareholder Meetings
AVEVA Group PLC - AGM
Downing Strategic Micro-Cap Investment Trust PLC - AGM
Manx Financial Group PLC - EGM
Shires Income PLC - AGM
Smartspace Software PLC - AGM
Steppe Cement Ltd - AGM
Tanfield Group PLC - AGM
Wincanton PLC - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
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