(Alliance News) - London West End property firms Shaftesbury and Capital & Counties Properties on Monday confirmed they are in advanced talks over a potential all-share merger.
The merger would create a real estate investment trust with a combined portfolio of 2.9 million square feet of lettable space located in Covent Garden and Chinatown in central London.
The merger is expected to be structured as an acquisition of Shaftesbury by Capco; however the final terms have not been finalised, and a firm offer has not yet been made.
Under the merger's terms, shareholders in Shaftesbury excluding Capco would own 53% of the combined firm, while Capco's own shareholders would have a 47% interest. Capco currently holds a 25% stake in Shaftesbury.
Shaftesbury has a market capitalisation of GBP2.2 billion, while Capco's equity is valued at GBP1.41 billion.
The combined company would be led by Jonathan Nicholls as chair, Ian Hawksworth as chief executive officer, and Situl Jobanputra as chief financial officer.
At Shaftesbury, CEO Brian Bickell would step down after 11 years in the role once the deal was completed, while at Capco, Chair John Staunton would retire.
Shaftesbury shares were down 3.9% early Monday, while Capco shares were down 6.7%.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.3% at 7,365.11
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Hang Seng: Hong Kong market closed for holiday.
Nikkei 225: closed down 2.5% at 26,319.34
S&P/ASX 200: closed down 1.2% at 7,120.70
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DJIA: closed down 98.60 points, or 0.3%, at 32,899.37
S&P 500: closed down 0.6% at 4,123.34
Nasdaq Composite: closed down 1.4% at 12,144.66
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EUR: down at USD1.0497 (USD1.0576)
GBP: down at USD1.2263 (USD1.2355)
USD: up at JPY131.34 (JPY130.34)
GOLD: down at USD1,870.60 per ounce (USD1,886.77)
OIL (Brent): down at USD111.66 a barrel (USD112.74)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Monday's key economic events still to come
1100 BST Ireland industrial production and turnover
1100 BST Ireland live register
1000 EDT US monthly wholesale trade
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China's export growth slowed in April to its lowest level in almost two years, customs data showed, as a Covid resurgence shuttered factories, sparked transport curbs and caused congestion at key ports. Export growth plunged to 3.9% on-year last month, the Customs Administration said. While this was above analysts' expectations of 2.7% growth according to a Bloomberg poll, it marked the lowest rate since June 2020. Import growth was flat in April, an improvement from a 0.1% contraction in March, as Chinese consumers remain hesitant under a welter of restrictions across the country.
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Millions of people in Beijing stayed home on Monday as China's capital tries to fend off a Covid-19 outbreak with creeping restrictions on movement. Beijing residents fear they may soon find themselves in the grip of the same draconian measures that have trapped most of Shanghai's 25 million people at home for several weeks. Officials there have said the eastern powerhouse city is winning its battle against China's worst outbreak since the pandemic began. Yet the Shanghai lockdown has intensified, causing outrage and rare protest in the last major economy still glued to a zero-Covid policy. In Beijing, subway stations and offices were empty during rush hour Monday morning across Chaoyang – the city's most populous district – after officials stepped up a work-from-home order on Sunday over rising Covid cases.
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Japan's services sector posted a return to expansion territory in April, figures from Jibun Bank and S&P Global showed, allowing the wider private sector to edge upwards to a five-month high. The au Jibun Bank services purchasing managers' index rose to 50.7 points in April, from 49.4 in March, rising above the 50.0 no change mark, indicating that the sector has moved barely into expansion territory. Data indicated a recovery in business activity due to the lifting of pandemic related restrictions still remaining, and a rise in export sales through growth in markets outside of China. Figures from Monday last week showed that the headline manufacturing PMI dipped to 53.5 in April from 54.1 in March, indicating slower growth. As a result, the composite PMI rose to 51.1 in April from 50.3 in March, as a stagnation of new orders eased pressure on the private sector's capacity and allowed for work on outstanding business to take place.
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BROKER RATING CHANGES
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Barclays cuts Rathbones to 'equal weight' (overweight) - target 2,200 pence
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Barclays raises Ryanair price target to 18 (17.20) EUR - 'overweight'
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Jefferies cuts Glenveagh Properties to 'hold' (buy) - price target 1.24 (1.44) EUR
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COMPANIES - FTSE 100
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Chief Executive Officer Peter Brooks-Johnson will leave the company after the announcement of full-year results in February of next year. Brooks-Johnson has been with Rightmove for 16 years. The company will start a search for his successor. Rightmove said trading in the year to date has been as expected and its expectations for all of 2022 are unchanged.
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COMPANIES - FTSE 250
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Speciality chemicals firm Victrex reported a drop in profit in the first half but did see a bounce in sales in what it called a "strong" performance. In the six months to March 31, pretax profit slipped 6% to GBP43.6 million from GBP46.6 million in the same period a year prior. Victrex blamed the drop on a GBP4.6 million exceptional item cost relating to a one-off software implementation expense. "The company has commenced a multi-year implementation of a new cloud-based [enterprise resource planning] system. The company forecasts to spend approximately GBP17 million on the implementation, which will deliver benefits to both customer interactions and internal business processes," Victrex explained. Revenue was up 6% to GBP160.1 million from GBP150.9 million. Sales volume increased 8% to 2,264 tonnes from 2,087 tonnes. Chief Executive Jakob Sigurdsson said: "This is a strong first half, with further improvement across all end-markets, good progress in our Medical business as elective surgeries return in greater numbers and improved average selling prices compared to the second half of 2021."
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Cybersecurity firm NCC Group has appointed auditor EY's head of cybersecurity to be its new chief executive. Mike Maddison will replace Current CEO Adam Palser, who will step down in mid-June. NCC also said its second half trading has been strong and now expects revenue to be "substantially" higher than the year before and also the first half. In the six months to November 30, the company's first half, revenue was GBP150.1 million. NCC said the growth was "driven by the acquisition of IPM and accelerating Assurance revenue growth through the second half of financial 2022." IPM was acquired by NCC in June 2021 for USD220 million.
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Energean said it has made a commercial gas discovery at its Athena exploration well, offshore Israel. Energean owns 100% of the well. It noted a gross hydrocarbon column of 156 metres was encountered in the primary target, with indications it holds recoverable gas volumes of 8 billion cubic metres of natural gas. Chief Executive Mathios Rigas said: "We are delighted to announce this new gas discovery at Athena and the potential of the wider Olympus area. We are considering a range of strategic commercialisation options both for a standalone and wider Olympus area development, including domestic and multiple export routes."
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COMPANIES - SMALL CAP
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Kosmos Energy had a "strong" first quarter, with a sharp jump in revenue coming from increased oil prices and production. In the three months to March 31, Kosmos improved to a net income of USD1.4 million from a USD90.8 million loss a year prior. Total revenue surged to USD659.1 million from USD176.6 million. Oil & gas production expenses rose to USD124.7 million from USD45.8 million. Chair & Chief Executive Andrew Inglis said: "Kosmos had a strong first quarter operationally and financially, with production at the top end of guidance and free cash flow of around USD220 million. We are continuing to invest in our differentiated portfolio which has the potential to grow production around 50% between 2022 and 2024 while increasing the gas weighting of our portfolio." Total net production in the first quarter hit 72,600 barrels of oil equivalent per day. "This production growth combined with a reduction in capital spending as these projects come online should allow Kosmos to generate material, sustainable cash flow for its shareholders," Inglis added.
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Longboat Energy said it has farmed-in to two additional exploration prospects on the Norwegian Continental Shelf with Austrian oil and gas firm OMV for about USD12.4 million. As part of the agreements, Longboat has acquired a 20% working interest in Oswig and Velocette. The wells are expected to be drilled in the summer of 2022 and the second quarter of 2023. "The transaction seeks to build on Longboat's recent exploration success at Kveikje, Egyptian Vulture and Rodhette by adding two material wells, increasing its net un-risked mean resources by 45 million barrels of oil equivalent to 110 million barrels of oil equivalent across four firm exploration wells drilling in the next 12 months," Longboat added.
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Morrisons and EG Group have both tabled final offers to secure a rescue deal for collapsed retailer McColl's. The convenience chain fell into administration on Friday, plunging the future of its 1,100 shops and 16,000 staff into doubt. Forecourt operator EG – whose owners also run supermarket giant Asda – had been favourites to complete a rescue deal for McColl's. However, it is understood that both EG and Morrisons both tabled late improved offers prior to the administrators' Sunday 6pm deadline for offers, PA reported. It is understood that EG has bowed to pressure to look after McColl's pension liabilities, in a move that means that its 2,000 members will avoid a cut of up to 20% to their promised pensions over their lifetimes, PA said.
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Monday's shareholder meetings
Aviva PLC - AGM and GM re proposed capital return
Midwich Group PLC - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
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