Royal Mail takeover clears major hurdle, Canal+ makes UK market debut, Computacenter CFO departs suddenly, Bitcoin hits $106,000, activists put pressure on Johnson Matthey, Entain hit and Saga hopes Ageas deal will boost insurance arm

“The FTSE 100 dipped 0.2% to 8,285 despite the best efforts of the pharma and banking sectors to take the UK index forwards. Energy stocks acted as a drag while Diageo also gave up some of its recent gains,” says Russ Mould, investment director at AJ Bell.

“Chinese consumers still aren’t splashing the cash, representing yet more evidence that Beijing’s economic stimulus programme isn’t cutting the mustard. Chinese retail sales grew by 3% in November, well below the 4.6% consensus estimate. That’s a big miss and puts even greater pressure on the government to be more creative with its efforts to drive household consumption.”

Royal Mail / International Distribution Services

“The UK government has approved the sale of Royal Mail’s parent company International Distribution Services to EP Group.

“Getting the green light from the government and an agreement in principle with unions clears some of the biggest hurdles for Daniel Kretinsky’s efforts to buy Royal Mail and its parent company.

“Shareholders still need to vote on the takeover and there is no certainty that it will sail through. However, it feels as if any opposing shareholders would have already expressed their dissatisfaction by now.

“There are no alternative bids on the table and this is proving to be one of the most complicated takeovers in years, which suggest shareholders might be ready to take the money and move on.

“EP Group is offering 370p per share. While certain shareholders have suggested IDS’s overseas parcels arm is worth at least 350p per share, EP Group might argue that the UK component (Royal Mail) doesn’t deserve a chunky price given the work involved to fix it.”

Canal+

“Vivendi has entrusted the UK with its media production business Canal+, floating the Paddington producer on the London Stock Exchange with a label that might as well have said, ‘please look after this bear’.

“Canal+’s listing needs to be successful for both Vivendi and the reputation of the UK stock market. Vivendi needs to prove to investors that it was right to break up the business, based on the principle that its component parts could, in time, be worth more individually than together.

“Choosing London for Canal+ is important as it is the biggest company to join the UK stock market since changes to the listing rules in the summer and under the newly installed Labour government. If Canal+ does well, it could act as a shop window for other big names to float in London and help replenish the pot that has been shrunk by takeovers and delistings.

“Canal+’s shares opened at 290p but soon eased back to 252p. Volatility was expected as certain investment funds which held Vivendi may be restricted to French-listed stocks and so they are forced sellers of Canal+.

“It’s common for demerged stocks to experience share price wobbles in the first few days as a standalone listed company as investors who inherited the stock decide if they want to stay or go. It can take a few weeks or months before the shareholder register shifts to individuals who want to hang around longer term.”

Computacenter

“The UK stock market only has a small selection of mid or large-cap tech-related stocks and these names are constantly under the microscope.

“Computacenter fell more than 6% after a mysterious announcement that its chief financial officer had left immediately by mutual agreement. The fact he is still eligible to receive a bonus for the year implies he is not categorised by HR as a ‘bad’ leaver, yet the sudden departure creates a lot of uncertainty.

“There is no explanation as to why he has gone and that’s troubled the market. There is now a guessing game as to whether Computacenter has found something lurking in the closet or there’s another reason why the CFO has gone.”

Bitcoin

“Another day, another bitcoin rally. The crypto briefly flew above $106,000 after Donald Trump reiterated the potential for the US to create a national stockpile of bitcoin. That’s fired up traders and investors to believe we could see a big buying spree once Trump returns to the White House. The crypto market is driven by anticipation and excitement levels are at fever pitch.”

Johnson Matthey

“The largest investor in chemicals group Johnson Matthey is calling for a strategic review of the business which could include its sale. Standard Investments’ criticisms are lent credibility by the poor performance of the share price and weak and inconsistent earnings over several years.

“Having built on its leading position in catalytic converters, Johnson Matthey sought to diversify given the potentially existential threat a shift to electric vehicles might mean for this area of business.

“Its attempts to do so have been uneven at best, with the company forced to exit its ill-fated battery venture in 2021. Standard Investments argue its hydrogen arm is going down the same road.

“The investor accuses Johnson Matthey of complacency – citing weak performance under the six- and two-and-a-bit-year tenures of the chair and CEO respectively.

“The market seems to welcome Standard Investments’ intervention and that may hint at the potential for success in its efforts to secure new voices on the board and radically shake-up the business.”

Entain

“A company would never want the words ‘money laundering’ anywhere near it and that’s why news from gambling outfit Entain is potentially damaging.

“The Ladbrokes owner is being taken to court by the Australian regulator, significantly the first time it has launched civil proceedings against an online betting company, over serious non-compliance with the country’s money laundering and anti-terrorism financing laws.

“This doesn’t look to be a one-off incident, with Entain on the block for not conducting appropriate checks on 17 high-risk customers and allegedly helping them obscure their identities. The company’s recent history is chequered – it had to pay out a large sum last year for failing to prevent bribery at a former Turkish subsidiary and paid out fines over anti-money laundering failures in the UK in 2022.

“An Australian crackdown has seen other operators pay out material sums in fines and Entain faces a nervous wait to find what, if any, damage will be done to the balance sheet and its reputation by any eventual judgement.

“This issue could hang over the business for some time to come as proceedings at Australia’s federal court could take a good while to reach a conclusion. This could weigh on recently appointed CEO Gavin Isaacs’ attempts to turn around the business.”

Saga

“Shareholders will hope Saga’s insurance partnership with Belgian institution Ageas will remove an anchor on its share price and free it up to take sail as a successful travel and finance brand.

“Saga’s business model involves selling tailored services to a growing over-50s demographic. However, it has endured a litany of issues since its IPO more than a decade ago.

“While its travel and cruises divisions were the problem during the pandemic, more recently it is the insurance business which has struggled. In that context, putting it in the hands of an experienced operator, as well as receiving a useful injection of cash, has been well-received by the market.

“Saga wants to use partnerships to exploit the value of its brand but without having to employ so much capital. In theory, this could increase the scope for growth and should also help trim a hefty debt pile.

“This seems a sensible approach and the Ageas deal is an important step forward. However, the business has a long way to go to fix its balance sheet and repair its credibility with the market, with the post-IPO highs for the share price a distant fleck on the horizon.”

These articles are for information purposes only and are not a personal recommendation or advice.