(Alliance News) - Stock prices in London opened lower on Tuesday with a flurry of merger and acquisition activity that saw Biffa receive a takeover offer, while Ted Baker shares sank after its preferred bidder walked away.
The FTSE 100 index was down 9.10 points, or 0.1%, at 7,599.12. The mid-cap FTSE 250 index was down 61.78 points, or 0.3%, at 20,444.73. The AIM All-Share index was down 2.19 points, or 0.2%, at 977.41.
The Cboe UK 100 index was down 0.1% at 757.74. The Cboe 250 was down 0.3% at 18,147.62, and the Cboe Small Companies was down 0.2% at 14,765.25.
In mainland Europe, the CAC 40 in Paris was down 0.5% and the DAX 40 in Frankfurt was down 0.6%.
In the FTSE 100, Rio Tinto and Anglo American were the best performers, both up 1.5%, after Jefferies raised the miners to 'buy' from 'hold'.
British Land was up 1.4% after Barclays double-upgraded the property company to 'overweight' from 'underweight'.
At the other end of the large-caps, JD Sports Fashion was the worst performer, down 2.6%. The UK Competition & Markets Authority provisionally found that Elite Sports, JD Sports and Rangers Football Club broke competition laws by fixing the prices of some Rangers-branded products from September 2018 to July 2019.
In response, JD Sports said it intends to recognise a provision of around GBP2 million in its financial statements for the 52 weeks to January 29, 2022. This represents the best estimate of the liability payable, including associated legal costs, it explained.
In the FTSE 250, Biffa was the standout performer, up 28% at 416.40 pence. The waste management company received a series of "unsolicited and indicative" proposals from private equity firm Energy Capital Partners.
ECP's proposal is for a possible offer at a price of 445 pence per Biffa share in cash, valuing the company at around GBP1.35 billion. The offer is a 37% premium to Biffa's closing price of 325p on Monday. Biffa said its board has concluded that should a firm offer be made on the same financial terms as the proposal it would be "minded to recommend it" to Biffa shareholders.
Elsewhere, Ted Baker plunged 20% after the fashion retailer was informed by its preferred bidder late Monday that it does not intend to proceed with an offer for the company.
The bidder, whom Ted Baker hasn't named, indicated that its reason for not proceeding was not linked to its due diligence review of the company, Ted Baker explained.
The London-based seller of clothing and accessories said it will now go back and look at other proposals received as part of its formal sale process, but there can be no certainty that an offer will be made.
Ted Baker kicked off a formal sales process in April. At the time, it had said that Sycamore Partners Management LP, the New York-based private equity firm whose approaches had triggered the sales process, was participating. However, Ted Baker later confirmed that Sycamore was no longer participating in the sales process.
interactive investor's Victoria Scholar commented: "It is no secret that UK high street retailers have been struggling in recent years amid the rise of e-commerce low-price-point competitors like Pretty Little Thing and boohoo, leading to the collapse of once fashion giant Top Shop. Ted Baker already had a difficult time with another potential acquirer after US private equity firm Sycamore Partners issued three takeover proposals but eventually walked away, leading to a plunge in its share price.
"With record low UK consumer confidence, the cost-of-living crisis, the possibility of a recession and shaky equity markets, it is understandable that Ted Baker is desperate for a buyer and explains why investors are shunning the stock."
In Asia on Tuesday, stocks were mixed. Tokyo's Nikkei 225 index closed up 0.1%. The Shanghai Composite ended up 0.1%, while the Hang Seng index in Hong Kong was down 0.4%. The S&P/ASX 200 in Sydney ended down 1.5%.
The dollar was higher across the board. The pound was quoted at USD1.2485 on early Tuesday, down from USD1.2528 at the London equities close Monday.
The euro was priced at USD1.0678, down from USD1.0688. Against the Japanese yen, the dollar was trading at JPY132.80 in London, up sharply from JPY131.61.
Brent oil was priced at USD120.33 a barrel Tuesday morning, up from USD119.27 at the London equities close Monday. Gold stood at USD1,844.14 an ounce, unmoved from USD1,844.10.
Tuesday's economic calendar has a UK PMI reading at 0930 BST, and eurozone investor confidence at 0930 BST.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
Copyright 2022 Alliance News Limited. All Rights Reserved.
Rio Tinto (RIO)
Anglo American (AAL)
British Land (BLND)