ABF sticks with guidance
Primark-owner Associated British Foods (ABF) reiterated its 2023 expectations in a trading update. Chairman Michael McLintock said that the company still forecasts “significant growth in sales”, but a fall in adjusted operating profit and adjusted earnings per share, compared to last year. He added that Primark trading has been “encouraging” in the first couple of months of the new financial year, that the company expects food business profits to be ahead of 2022, and that cost volatility has declined, although “we continue to expect further significant input cost inflation”. ABF shares were flat in early trading. CA
Regulator moves to block Microsoft deal for Activision
The US Federal Trade Commission will sue to block Microsoft’s (US:MSFT) $75bn acquisition of US game developer Activision Blizzard. The regulator is concerned Microsoft will restrict rivals’ access to Activision games to drive users to its cloud gaming platform Xbox Game Pass.
A lot of the attention is around Activision’s Call of Duty franchise. The release of the most recent game in the series was one of the most successful of all time. The FTC is worried Microsoft will eventually make the game only available on its Game Pass platform. To soothe these concerns, Microsoft signed an agreement promising Nintendo 10 years of access to Call of Duty but no deal is in place with Sony.
However, the FTC is still unconvinced about Microsoft’s long-term intentions. “Microsoft has already shown that it can and will withhold content from its gaming rivals,” said Holly Vedova, director of the FTC’s Bureau of Competition.
Activision’s share price dropped 1.7 per cent on the day of the announcement and is trading 29 per cent below the offer price. The market clearly isn’t confident the deal will go through but there is still a long way, and a lot of time in court, to go. AS
Pendragon suitor parks interest
Shares in motor retail group Pendragon (PDG) dropped by 27 per cent after suitor Hedin Mobility said it was no longer interested in making an offer for the company.
Sweden’s Hedin confirmed in September it had approached Pendragon about a 29p-a-share cash offer for the company, after which Pendragon said it would conduct a strategic review “consider all options to maximise stakeholder value”. However, on Friday Hedin said it no longer planned to make an offer, citing “challenging market conditions” and the uncertain economic outlook.
In response, Pendragon’s board said it would continue to explore its options, adding that Hedin’s approach had “highlighted the value” of the company. It also said underlying pre-tax profit for this year would be in line with expectations.
Pendragon’s shares fell to 20.6p a share. MF
Sun shines on K3 Capital
US private equity firm Sun Capital Partners is in advanced talks with professional services group K3 Capital (K3C) about a 350p share offer for the company.
A bid at that price values the business at £257mn – a 16.7 per cent premium on the previous day’s closing price and a 31 per cent uplift on the average price during the preceding three months, K3 Capital said on Thursday afternoon.
The company said its independent directors would likely recommend an offer, if one is made. Sun Capital is still conducting due diligence. Shares in the company, which made a pre-tax profit of £12.7mn on revenue of £70.7mn in the 12 months to 31 May, closed 8 per cent higher on Thursday at 325p, down 4 per cent since the start of the year. MF
Aggreko agrees £122mn offer for Crestchic
Aggreko, a private equity-backed provider of power and temperature control systems, has agreed a deal to buy Crestchic (LOAD) for £122mn.
The 401p-a-share offer is a 13 per cent premium on the previous day’s closing price, or a 44 per cent uplift on the 279p the shares were trading at when Aggreko first made its approach to Crestchic’s directors in mid-November, the company said.
Crestchic makes and sells load banks and transformers that are used to maintain off-grid power sources. Their use in data centres has been a key source of demand, which has led to the company issuing several earnings upgrades over the course of the past year.
Associate editor Simon Thompson recently identified Crestchic as a potential takeover target, while day trader Michael Taylor highlighted the value in its shares in October.
The company’s shares jumped by 11 per cent on the news to 397p. They have more than doubled in value since the start of this year.
Aggreko had been listed on the London Stock Exchange until the company accepted a £2.3bn offer from private equity firms TDR Capital and I Squared last year. MF
Berkeley’s sales slashed by a quarter
Sales at luxury residential developer Berkeley (BKG) have dropped 25 per cent in the five weeks since the end of September in yet another sign that the housing market is headed for a downturn. The company posted a drop in profits thanks to a dip in revenue and an increase in sales costs in its results for the six months to 31 October.
Earlier this month, Nationwide recorded the biggest monthly fall in house prices in two years. Savills (SVS) predict house prices will drop 10 per cent next year. ML
Share buyback at Man
Man Group (EMG) is to buy back $125mn (£102mn) of shares over the next 12 months as the company returns excess capital to shareholders, in a move that boosted the shares by 7 per cent on a quiet trading day. The programme will involve buying back and cancelling 78 million of Man Group’s shares after the decision to do so was authorised at the last annual general meeting. JH.
Porvair shares boosted by profit expectations
Porvair (PRV) said it expects earnings to be ahead of market forecasts, with revenue for its financial year to the end of November likely to be 18 per cent higher than the prior year.
The maker of specialist filtration equipment said “sound underlying profitability” had been complemented by favourable currency movements during the year, with net cash at the year end up 77 per cent to £18.1mn, despite spending around £8mn on capex, dividends and acquisition costs.
Tightening environmental and clean water regulation and the growth in analytical science have been key drivers of sales, the company said.
Porvair’s share price rose by 7 per cent in early trading. MF