LONDON BRIEFING: UDG Healthcare accepts GBP2.6 billion takeover offer

(Alliance News) - Healthcare services provider UDG Healthcare has agreed to be taken over in a deal worth GBP2.78 billion, it said Wednesday.

Nenelite, an affiliate of private equity manager Clayton, Dubilier & Rice, offered to buy UDG for 1,023 pence per share, representing a premium of 22% to Tuesday's closing price of 842.0p.

This values FTSE 250-listed firm's share capital at GBP2.61 billion and implies an enterprise value of GBP2.78 billion. It also implies a 17.2x enterprise value multiple to UDG's adjusted earnings before interest, tax, depreciation and amortisation.

UDG directors unanimously recommended the offer to shareholders. Kabouter Management LLC, with a 5.5% stake, has provided a letter of intent to vote in favour of it.

"UDG has transformed since disposing of its supply chain business in 2015, through a combination of sustained long-term organic growth and strategic bolt on acquisitions, adding additional capabilities and expanding the UDG group's geographic footprint into a leading healthcare services provider," commented UDG Chair Shane Cooke.

"While the UDG board remains confident in the long-term fundamentals of the group, we believe that this is an attractive offer for UDG shareholders, which secures the delivery of future value for shareholders in cash today."

UDG also reported first-half results to March 31 on Wednesday. Pretax profit rose by 5% to USD65.1 million from USD62.3 million a year before, despite a 5% revenue decline to USD661.4 million from USD693.6 million. It declared no interim dividend, compared to 4.46 US cents a year ago, due to the takeover offer from CD&R.

UDG Healthcare shares were up 22% early Wednesday at 1,028.00 pence. The wider FTSE 250 was up 0.5%.

Here is what you need to know at the London market open:

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MARKETS

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FTSE 100: up 0.4% at 6,972.07

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Hang Seng: up 0.5% at 28,153.04

Nikkei 225: closed down 1.6% at 28,147.51

DJIA: closed down 473.66 points, or 1.4%, at 34,269.16

S&P 500: closed down 36.33 points, or 0.9%, at 4,152.10

Nasdaq Composite: closed down 12.43 points, or 0.1%, at 13,389.43

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EUR: down at USD1.2134 (USD1.2165)

GBP: down at USD1.4133 (USD1.4150)

USD: up at JPY108.80 ((JPY108.50)

Gold: up at USD1,832.48 per ounce (USD1,829.77)

Oil (Brent): up at USD68.73 a barrel (USD68.08)

(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

1000 CEST France IEA oil market report

1100 CEST EU industrial production

0830 EDT US consumer price index

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The UK economy shrank at the start of 2021 as virus restrictions damped economic activity, particularly in the service sector. Gross domestic product is estimated to have contracted 1.5% in the quarter to March on a sequential basis, reversing 1.3% growth in the final quarter of 2020. However, Wednesday's figure was slightly ahead of consensus, according to FXStreet, of a 1.6% fall. "Compared with the same quarter a year ago, when the initial economic impacts of the coronavirus pandemic began to show, the UK economy fell by 6.1%," the Office for National Statistics said. The UK economy is now 8.7% smaller than its pre-pandemic size, the statistical body added.

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Germany's annual inflation rate ticked up for the fourth month in a row to stand at 2.0% in April, Destatis said. This was in line with the flash result released a fortnight ago, as was April's month-on-month rise of 0.7%. The annual rate ticked up from 1.7% in March, and now stands at more than double the 1.0% price growth reported for January. The country exited 2020 in deflationary territory. The harmonised index of consumer prices - calculated for ECB comparison purposes - rose 2.1% year-on-year and 0.5% on the month before.

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BROKER RATING CHANGES

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GOLDMAN SACHS RAISES GLAXOSMITHKLINE PRICE TARGET TO 1,890 (1,810) PENCE - 'BUY'

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JPMORGAN RAISES ASHTEAD GROUP PRICE TARGET TO 5,050 (4,300) PENCE - 'OVERWEIGHT'

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GOLDMAN SACHS RAISES ASTON MARTIN TO 'NEUTRAL' ('SELL') - TARGET 1,982 (807) PENCE

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COMPANIES - FTSE 100

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Diageo said it is recommencing its return-of-capital programme to shareholders following a strong trading performance. The company said its performance in North America has remained "particularly strong", while Europe has benefited from robust off-trade sales. The distiller said it now expects organic operating profit growth to be at least 14% in the current financial year, slightly ahead of organic net sales growth. As a result of its trading performance, Diageo said it will restart the return-of-capital programme of up to GBP4.5 billion to shareholders that was first announced back in July 2019. It is initiating the second phase of the programme of up to GBP1.0 billion to be completed by the end of the 2022 financial year. As such, it has entered into an agreement with UBS to buyback shares worth up to GBP500 million until November 12.

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Contract caterer Compass Group reported a steep drop in interim revenue and profit due to coronavirus restrictions across its markets. Revenue for the six months to the end of March fell 32% to GBP8.4 billion, with pretax profit collapsing to GBP133 million from GBP787 million. "As expected, Covid continued to negatively affect our performance during the first six months of the year. Revenue remained at around 71% of our 2019 revenues as containment measures were extended over the winter months," the company said. More positively, the firm noted that its second quarter operating margin was at 4.2%, 20 basis points ahead of its pre-close trading update and an increase of 150 basis points from the first quarter. Compass said it expects a gradual improvement in revenue in the third quarter and the margin should be between 4.5% and 5.0%.

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Coca-Cola HBC said it has made a good start to 2021, with forex-neutral revenue growth of 2.7%, or 6.1% like-for-like, driven by Sparkling and Energy, emerging markets and the at-home channel. On a reported basis, net sales revenue fell 4.0%. Volumes were up 1.5%, or 4.7% like-for-like, the soft drinks bottler noted, with Sparkling and Energy together growing 11%. "The speed and shape of recovery from the pandemic remains uncertain, but Q1 puts us on track to achieve our 2021 guidance for a strong recovery in FX-neutral revenues, along with a small increase in EBIT margin," said Chief Executive Zoran Bogdanovic.

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Flutter Entertainment said Matt King has resigned as CEO of US arm FanDuel. King, in post for the past four years, will remain while a search is made for his successor. "As previously announced, the Flutter board has been assessing the potential merits of listing a small stake in FanDuel in the US. Whilst Matt's departure will affect the timing of any potential US listing, the board will continue to keep this option under review," Flutter said.

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COMPANIES - GLOBAL

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Toyota Motor reported a rise in annual income leading to an increased full-year payout, while electric vehicle sales are expected to soar in the coming year. The Aichi, Japan-based automotive manufacturer posted net income of JPY2.282 trillion, around USD20.96 billion, in the year ended March 31, up 8.1% from JPY2.111 trillion in 2020. Sales revenue fall 8.9% to JPY27.214 trillion from JPY29.866 trillion, due to a 8.0% fall in automotive sales revenue and a 30% fall in "all other businesses". Looking ahead, net income in 2022 is expected to come in at JPY2.300 trillion, representing a 2.4% increase, while sales revenue is set to rise 10% to JPY30.000 trillion. Toyota also noted that electrified vehicle sales are set to more than double in 2022.

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Amazon.com boss Jeff Bezos has sold off more of his shares in the online retailer to the tune of USD6.7 billion during May. Bezos has parted with some two million Amazon shares in the last few days, according to documents from the US Securities & Exchange Commission. The sales came in three tranches - and came soon after Amazon had presented gleaming figures for the first quarter. Bezos had already sold off Amazon shares on a large scale several times. In February and November 2020, he sold shares worth more than USD7 billion. Bezos founded Amazon in 1994 and remains the largest individual shareholder in the firm despite the sell-offs, as he retains a stake of around 10%. The 57-year-old plans to step down as chief executive of Amazon in the third quarter and will become an executive chairman instead.

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Wednesday's Shareholder Meetings

Allied Minds PLC - AGM

Antofagasta PLC - AGM

Bigblu Broadband PLC - AGM

BP PLC - AGM

Cenkos Securities PLC - AGM

Centaur Media PLC - AGM

Cineworld Group PLC - AGM

ContourGlobal PLC - AGM

FBD Holdings PLC - AGM

Gresham House PLC - AGM

Impact Healthcare REIT PLC - AGM

Just Eat Takeaway.com NV - AGM

KAZ Minerals PLC - GM re re-registration as private limited co

LMS Capital PLC - AGM

Marshalls PLC - AGM

National Express Group PLC - AGM

Nippon Active Value Fund PLC - AGM

Osirium Technologies PLC - GM

Primary Health Properties PLC - AGM

Rentokil Initial PLC - AGM

Robert Walters PLC - AGM

Savills PLC - AGM

Secure Trust Bank PLC - AGM

Spirax-Sarco Engineering PLC - AGM

Standard Chartered PLC - AGM

TP ICAP Ltd - AGM

UK Oil & Gas PLC - AGM

Uniphar PLC - AGM

Ultra Electronics Holdings PLC - AGM

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By Tom Waite; thomaslwaite@alliancenews.com

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