he high-stakes pursuit of Ladbrokes owner Entain was the main focus for London investors today after the FTSE 100 index company confirmed an approach from DraftKings pitched at £28 a share, equivalent to more than $22 billion.
It told investors it is considering the proposal amid huge interest in the rapidly-expanding US sports betting market.
The FTSE 100 index, meanwhile, rallied by a bigger-than-expected 1% to return above the 7,000 threshold as a bond deal by China’s Evergrande eased immediate worries over its future to help the top flight build on turnaround Tuesday’s 1% improvement.
FTSE 100 gains over 100 points
The FTSE 100 has closed up 102 points, or 1.5%, at 7083. The index has climbed back above the 7000 mark after Chinese real estate giant Evergrande announced it had reached a deal on debt repayments due today. Fears that China’s second largest property developer could default on its mammoth debt pile sent stock markets around the world sinking on Monday.
Here are the big stories of the day:
• PZ Cussons, the consumer goods firm behind Carex hand soap and St Tropez tanning lotion, has sunk 3.7% after reporting a drop in sales and warning on rising costs. “We are trying to work lots of levers to offset [these cost rises] and protect margins,” chief executive Jonathan Myers told the Standard. “Where necessary there will be price increases, but we are really trying to avoid this.”
• LVMH, the French luxury group behind Louis Vuitton and Moet champagne, has announced plans to hire 25,000 young people. The company said the plan was in response to the COVID-19 pandemic, which has hurt job prospects for young people. The stock is up 1.2% in Paris, likely buoyed by relief about the Chinese economy linked to Evergrande.
• India’s Serum Institute — the world’s largest vaccine manufacturer — has invested £50 million in Oxford Biomedica. Shares are up over 9% in London. Oxford Biomedica makes the AstraZeneca vaccine and plans to expand its facilities with the new investment.
• Investors await the latest update from the US Federal Reserve later today. The Fed will publish a statement at 6pm UK time. Analysts expect the central bank to warn about growing challenges to the global economy recovery caused by supply chain issues, inflation, and other macroeconomic issues.
That’s all from us today, have a good evening and see you again tomorrow.
Ladbrokes owner mulls DraftKings approach
This represents a sizeable 46% premium to Monday night’s closing price, but DraftKings faces a significant hurdle in Entain’s US partner MGM Resorts International, which made its own takeover approach earlier in the year.
The latest proposal from DraftKings, which follows an earlier approach pitched at £25 a share, offers the FTSE 100 company’s shareholders 630 pence in cash with the rest coming from new DraftKings Class A common shares.
Entain said: “The board of Entain will carefully consider the proposal and a further announcement will be made as and when appropriate. Shareholders are urged to take no action at this time.”
Pret A Manger cheers improved trading in London and eyes expansion
News from a non-listed company in the hospitality sector: Pret A Manger is looking to open more UK sites.
Boss Pano Christou has called the last fortnight in London “a bit of a turning point” in terms of trade bouncing back from the pandemic, and his firm is planning 200 more UK branch openings.
The sandwich chain’s City shops are now trading at over 70% of their pre-pandemic levels, and a lot of that growth has come in the last few weeks.
Improved sales will come as a relief after customer numbers plunged during the pandemic, with Pret A Manager permanently closing around 30 sites last year.
Accounts filed this week at Companies House will show revenue for 2020 was £299 million, down from £708 million a year earlier.
Read the full story HERE.
Investors on the sidelines
It’s been a volatile week so far in the London market, with Monday’s contagion fears triggered by China’s debt-laden property firm Evergrande followed by Turnaround Tuesday and a rise of more than 1%.
The FTSE 100 index is set to open 10 points higher at 6,991, although this is more likely to reflect the reluctance of investors to commit new money ahead of big statements from the US Federal Reserve later today and the Bank of England tomorrow.
Investors will be looking for clues over when the Federal Reserve will begin to taper economic support, possibly as soon as December.
Asian markets posted modest losses overnight, suggesting sentiment may be stabilising after the turbulence earlier in the week.
Watching the dots
Today’s statement from the Federal Reserve won’t just be closely watched for signals on when the central bank might begin tapering of economic support.
The dot plot, which charts the timelines for rate hikes or cuts, could trigger a further rally for the US dollar if it shows more Fed members moving interest rate hiking expectations into 2022 from 2023.
Oanda’s Jeffrey Halley said: “We may not get a taper tantrum lite from tapering comments, but we could from a more hawkish dot plot. I’ve long given up hope that US bond yields will react materially, but we could see a further extension to the US dollar rally and equities and commodities probably won’t have a good day at the office.”
In the June meeting there were seven dots indicating a rates lift off in 2022, so an increase could also be interpreted as signalling a faster taper.
Michael Hewson, of CMC Markets, added: “The one fly in the ointment given the risks emanating from events in China is whether the Fed adopts a less hawkish stance in order to buy itself some time until the situation becomes clearer.”
Miners lead FTSE 100 charge
The FTSE 100 index has made a stronger-than-epxected start, rising almost 1% or 67.82 points to 7,048.80 thanks to a big rebound for mining stocks.
Shares in the likes of BHP, Anglo American and Antofagasta have fallen sharply in recent weeks due to lower prices for iron ore and copper. However, the trio surged 4% today on hopes that China’s embattled real estate group Evergrande, which triggered a sharp market sell-off on Monday, will strike a deal over a bond interest payment due imminently.
There was no surprise to discover Entain at the top of the FTSE 100 risers board, with the Ladbrokes owner’s shares up 9% or 197p to 2,458p after confirming the details of a takeover approach.
The share price remains well short of the 2,800p being offered by DraftKings, partly because most of the US firm’s proposal is in shares and also due to the potential for a veto from Entain’s US partner MGM Resorts.
Paddy Power pops on Kentucky deal
Kentucky has been pursuing PokerStars for over a decade after accusing the site of letting Kentucky residents gamble on its site between 2007 and 2011. Flutter acquired PokerStars through its merger with the Stars Group last year.
Flutter today agreed to pay $200 million (£146 million) to settle the case, alongside $100 million already forfeited as bond. Kentucky has agreed to stop pursuing Flutter in response.
The settlement is much lower than the $1.3 billion Flutter was ordered to pay last December by the Kentucky Supreme Court, following a length legal battle. Flutter had challenged that ruling in the US Supreme Court but pursued a remediated settlement alongside that process.
Shares in bowling alley business Ten Entertainment on the up
Bowling alley group Ten Entertainment today said the staycation boom resulted in “exceptional” trading over summer.
The AIM-listed listed firm, which has 46 centres, including in Acton and Croydon, reported a £10.8 million pre-tax loss for the six months to June 27. It had to close sites for part of that period owing to lockdowns.
But it added that comparable sales over the past three months have leapt.
It cautioned that current strong demand is “likely to moderate to high single digit [growth] in 2021 as the staycation bubble subsides”. But the full year outlook is still ahead of previous management expectations.
The shares rose 8.24p to 263.24p.
AZ jab maker Biomedica £50million cash boost
Oxford Biomedica today announced a £50million cash injection from the world’s biggest vaccine maker.
The Oxford University spin-off, which has been pumping out tens of millions of doses of AstraZeneca’s Covid-19 jab, said the cash from India’s Serum Institute – in return for a 3.9% stake – would enable it to expand its research and manufacturing capacity.
The investment caps a bumper six months for the biotech, led since 2008 by CEO John Dawson, which generated underlying profits of £27.1million on revenues of £81.3million, up 139% on the first half.
It will be used to almost double the available lab and manufacturing space within its 84000sq ft Oxbox plant – a converted Royal Mail sorting office – and to recruit another 120 staff, taking the headcount to around 850.
Revenues for the half were “largely driven” by its tie-up with Astra, expected to reach £100million this year.
But the company is using its strong balance sheet and enhanced profile to expand its own pipeline of genetic therapies and to further develop the viral vectors used to deliver cancer, cystic fibrosis and other drugs produced by partners including Novartis, Orchard Therapeutics and Bristol Myers Squibb.
Dawson today did his best to dampen speculation he may be considering a move after more than a decade at the helm: “We’ve nothing to update the market on at this point in time. I’m here, I’m keen and I’m working hard,” he said.
Shares are up 52% so far this year, and rose 6% this morning to 1566.0p, making it the top gainer on the FTSE250 and valuing the firm at around £1.3billion.
Carex owner PZ Cussons monitoring ‘early warning signals’ for supply disruption
Jonathan Myers, who is pursuing a long-term turnaround strategy at the listed company, told the Standard it is facing “unprecedented” raw materials price hikes, as well as seeing the overall cost of shipping and trucking goods to the UK from Asia and Africa rise by around 10%.
Myers said: “We are trying to work lots of levers to offset [these cost rises] and protect margins. Where necessary there will be price increases, but we are really trying to avoid this.”
Read the full story HERE.