(Alliance News) - Video game services provider Sumo Group on Monday said it has agreed to a takeover offer by Chinese technology giant Tencent Holdings that values Sumo's equity at GBP919 million.
Existing shareholder Tencent offered 513 pence per share in cash for the Sheffield, England-based provider of creative and development services to the video game industry, a 43% premium to Sumo's closing price on Friday of 358.00p. The stock was up 43% to 511.36p on Monday.
Tencent already owns 8.8% of Sumo and, including these shares, has support for its offer representing 33.4% of Sumo's equity. It has been a shareholder since 2019.
"The board of Sumo firmly believes the business will benefit from Tencent's broad videogaming eco-system, proven industry expertise and its strategic resources, which will help secure and further the aspirations and long-term success of Sumo," Non-Executive Chair Ian Livingstone explained.
Livingstone noted that Sumo joined AIM at the end of 2017 with a share price of 100p.
"The board of Sumo considers that the acquisition is in the best interests of all stakeholders in the company and intends to unanimously recommend this offer to shareholders," he said.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 1.2% at 6,921.73
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Hang Seng: down 1.8% at 27,514.86
Nikkei 225: closed down 1.3% at 27,652.74
DJIA: closed down 299.17 points, or 0.9%, at 34,687.85
S&P 500: closed down 32.87 points, or 0.8%, at 4,327.16
Nasdaq Composite: closed down 115.90 points, or 0.8%, at 14,427.24
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EUR: soft at USD1.1800 (USD1.1810)
GBP: down at USD1.3751 (USD1.3788)
USD: down at JPY110.01 (JPY110.15)
GOLD: down at USD1,804.43 per ounce (USD1,813.55)
OIL (Brent): down at USD72.85 a barrel (USD73.27)
(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 CEST EU construction output
1000 EDT US NAHB housing market index
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UK Prime Minister Boris Johnson has appealed to people to exercise their new freedoms with caution as most mandatory lockdown restrictions in England are finally lifted. Social-distancing rules which, in one form or another, have governed people's lives for over a year finally ended on Monday morning at one minute past midnight. Face masks are no longer mandatory in shops and on public transport, limits on gathering have gone and the work from home guidance has ended. Nightclubs, theatres and restaurants can fully reopen, while pubs are no longer restricted to table service only. But with Covid-19 cases continuing to soar and renewed warnings about the pressure on the NHS, there was no mood of celebration in government. Johnson is spending so-called "freedom day" self-isolating at his official country residence at Chequers after being "pinged" by NHS Test & Trace following a contact with Health Secretary Sajid Javid, who subsequently tested positive for the virus. Johnson and Chancellor Rishi Sunak, who also met Javid on Friday, initially tried to get round the requirement to quarantine by saying they would join a daily workplace testing programme being trialled by the Cabinet Office. However they were forced into a hasty U-turn amid widespread public anger at their "special treatment" while tens of thousands of people were being forced to miss work or school and stay home.
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BROKER RATING CHANGES
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RBC RAISES FRESNILLO TO 'OUTPERFORM' (SECTOR PERFORM) - PRICE TARGET 975 (950) PENCE
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JPMORGAN RAISES TRAVIS PERKINS TO 'OVERWEIGHT' (NEUTRAL) - PRICE TARGET 2,000 (1,600) PENCE
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BERENBERG RAISES NEWRIVER TO 'BUY' ('HOLD') - TARGET 115 (90) PENCE
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COMPANIES - FTSE 100
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AstraZeneca said Imfinzi has been approved in China for the treatment of extensive-stage small cell lung cancer. Small cell lung cancer is a highly aggressive, fast-growing form of lung cancer, Astra said. The approval by China's National Medical Products Administration was based on positive results from the Caspian phase three trial, with safety and efficacy in the China cohort of patients consistent with the global results.
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COMPANIES - FTSE 250
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Ultra Electronics reported a stronger-than-expected first half, leaving the aerospace and defence engineering company confident on its prospects. Revenue for the six months to July 2 slipped 2.1% to GBP404.5 million from GBP413.1 million a year before. However, on an organic basis, revenue rose 4.7%. The revenue performance was a strong one "particularly given the mainly Covid-19 driven operational inefficiencies and supply chain disruption experienced in Q1 2021, which are now broadly resolved." Pretax profit jumped 55% to GBP46.2 million from GBP29.8 million. Looking ahead, Ultra Electronics said its focused strategy and improved execution allows for increased confidence in delivering above-market growth.
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Synthomer boosted its 2021 earnings guidance following good trading momentum in its first half. The chemicals company said it has continued to see strong trading momentum across the business with volumes and unit margins ahead of a year ago in all divisions. The Nitrile latex business has been performing well, it added, driven by "exceptional demand" due to the pandemic. As a result, Synthomer now expects 2021 earnings before interest, tax, depreciation and amortisation in excess of GBP500 million, compared to its previous guidance of above GBP450 million. In 2020, the company recorded Ebitda of GBP259.4 million. "Synthomer continues to expect that the Nitrile latex business will return to more normalised levels during 2022," it added.
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Moody's Investors Service on Friday announced that it has downgraded Tate & Lyle's debt rating to Baa2 from Baa3, with a stable outlook, due to doubts by the credit rating agency on the food ingredients company's decision to divest control over its North American sweeteners division for USD1.3 billion. The rating reflects Tate & Lyle's announcement last week it will sell a controlling stake in a new company and its subsidiaries, comprising its Primary Products business in North America and Latin America and its interests in the Almidones Mexicanos and DuPont Tate & Lyle Bio-Products joint ventures.
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COMPANIES - MAIN MARKET AND AIM
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All Active Asset Capital said it is in "constructive discussions" with Audioboom about a possible offer for the podcasts producer at GBP12.00 per share. If an offer is made, AAA said, it would consist of 12.5 new AAA shares and 200p in cash per Audioboom share. This would value Audioboom shares at GBP12.00 each, a premium of 36% to Friday's closing price of 885p. That would make the offer worth about GBP188 million. AAA has received irrevocable undertakings to accept such an offer in respect of 4.1 million Audioboom shares, representing 26% of its share capital. "The directors believe the combination of AAA and Audioboom would create a compelling portfolio of innovative, high growth technology investments that could create significant new accretive value for the shareholders of both companies in the future," said AAA. There can be no certainty that any firm offer will be made, it stressed. Separately, AAA said that Allenby has resigned as nominated advisor and broker due to a conflict of interest. AAA shares remain suspended, and it has one month to appoint a new nomad under AIM rules.
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Monday's Shareholder Meetings
Arricano Real Estate PLC - AGM
Biffa PLC - AGM
Cairn Energy PLC - GM re acquisition of Western Desert interests
Comptoir Group PLC - AGM
Equiniti Group PLC - GM re acquisition by Earth Private Holdings Ltd
Inspecs Group PLC - AGM
JKX Oil & Gas PLC - AGM
Live Co Group PLC - AGM
NAHL Group PLC - AGM
Spire Healthcare Group PLC - GM - re scheme for Ramsay takeover offer
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By Tom Waite; thomaslwaite@alliancenews.com
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