HomeServe on Thursday said it has agreed to be taken over by Brookfield Infrastructure Partners in a deal worth £4.08 billion.
Brookfield has offered 1,200 pence per share in cash for each HomeServe share. This represents a 71% premium to HomeServe’s closing price on March 23, being the last business day before the start of the offer period, and is 14% above Wednesday’s closing price of 1,053.65p.
HomeServe shares were up 11% to 1,168.00p early Thursday, while the wider FTSE 250 index was down 1.3%.
The HomeServe directors intend to recommend unanimously that shareholders back the deal.
‘Whilst the HomeServe board did not solicit an offer from Brookfield, they believe that the acquisition, at 1,200 pence per HomeServe share, reflects the strength of the HomeServe business and its future prospects,’ the home repairs and improvements company said.
Brookfield Infrastructure is a listed infrastructure company of Toronto- and New York-listed Brookfield Asset Management Inc, which has $725 billion in assets under management.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 1.1% at 7,353.25
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Hang Seng: down 2.3% at 20,160.96
Nikkei 225: closed down 1.9% at 26,402.84
S&P/ASX 200: closed down 1.7% at 7,064.50
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DJIA: closed down 1,164.52 points, 3.6%, at 31,490.07
S&P 500: closed down 4.0% at 3,923.68
Nasdaq Composite: closed down at 4.7% at 11,418.15
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EUR: down at $1.0480 ($1.0497)
GBP: down at $1.2345 ($1.2402)
USD: up at JP¥128.53 (JP¥128.21)
Gold: down at $1,814.47 per ounce ($1,817.50)
Oil (Brent): up at $110.61 a barrel ($109.83)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Thursday’s key economic events still to come
1000 CEST EU euro area balance of payments
1100 CEST EU construction output
1100 BST UK CBI industrial trends survey
0830 EDT US jobless claims
1000 EDT US home sales
1030 EDT US EIA weekly natural gas storage report
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UK Chancellor Rishi Sunak has called on businesses to ‘invest, train and innovate more’ to help boost productivity and improve the long-term prosperity of the UK. In a speech to the CBI on Wednesday evening, Sunak said he stands ready to do more to help families cope with the impact of rising inflation. However, he also spoke of a ‘perfect storm’ of supply shocks rocking Britain, warning that ‘the next few months will be tough’. Speaking at the annual dinner of the business organisation, the chancellor told businesses ‘we are on your side’ and called on them to help increase productivity and enterprise, adding: ‘We need you to invest more, train more, and innovate more.’ He said he will help business achieve these goals by cutting tax. ‘In the autumn budget we will cut your taxes to encourage you to do all those things,’ he said.
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US President Joe Biden leaves Thursday for South Korea and Japan to cement US leadership in Asia at a time when the White House’s attention has been pulled back to Russia and Europe – and amid fears of North Korean nuclear tests overshadowing the trip. The visits are being touted as proof that the US is building on recent moves to cement its years-long pivot to Asia, where rising Chinese commercial and military power is undercutting decades of US dominance. But highlighting competing demands from two sides of the world, Biden will meet at the White House with the leaders of Finland and Sweden to celebrate their applications for joining NATO before he boards Air Force One for Seoul. The Democrat is headed to South Korea, then Japan on Sunday to hold summits with the leaders of both countries, as well as joining a regional summit of the Quad – a grouping of Australia, India, Japan, and the US – while in Tokyo.
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BROKER RATING CHANGES
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Jefferies cuts Burberry price target to 1750 (1950) pence - ’hold’
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Goldman Sachs raises Watches of Switzerland to ’buy’ (neutral)
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COMPANIES - FTSE 100
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Postal operator Royal Mail said there is ‘downside risk’ to consensus expectations for the year ahead after registering a drop in annual profit. Revenue for the financial year that ended March 27 rose 0.6% to £12.71 billion from £12.64 billion, with its domestic UK arm registering a 1.6% sales decrease but GLS revenue up 4.4% in sterling terms. However, pretax profit dropped 8.8% to £662 million from £726 million. In its UK unit, adjusted operating profit jumped 21% with the margin up 90 basis points, but European and North American parcel operation GLS reported a 4.5% decline in profit on sterling terms with a 80 basis points margin drop. Royal Mail proposed a final dividend of 13.3 pence, taking its full-year payout to 20p. This is double on the 10p paid out the year before. Looking ahead, it said current adjusted operating profit consensus of £303 million sits within range of potential outcomes but ‘with downside risk’. This would be down sharply on the £758 million posted for the recently ended financial year. ‘Whilst a difficult environment persisted over the last year, with operational challenges caused by Omicron and tight labour markets, we continued to see financial tailwinds from the pandemic, which are now dissipating. We also have clear headwinds as we enter 2022-23, such as weakening GDP and growing inflationary pressures,’ said Chair Keith Williams.
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Scottish Mortgage Investment Trust reported a net asset value total return of minus 13% for the 12 months to March 31, lagging its benchmark, the FTSE All-World Index, which returned positive 13%. ‘There was cause for optimism as the global economy reopened following the initial period of lockdown. However, it did so in a stuttering fashion that brought with it the spectre of higher inflation and rising interest rates. These factors, together with concerns about Chinese regulation and Russia’s assault on Ukraine, spread fear amongst markets and significantly reduced the valuations of many growth companies,’ the investment firm said.
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International Consolidated Airlines Group said it has agreed to order 50 shorthaul jets from Boeing. IAG will buy 25 737-8200 and 25 737-10 aircraft, plus 100 options. The planes, worth $6.25 billion at list prices, will be delivered between 2023 and 2027 and can be used by any airline in the group, which includes British Airways, Iberia, Aer Lingus and Vueling. IAG didn’t disclose the price paid but said it has negotiated a ‘substantial discount’ from the list price of $120 million per B737-8200 and $130 million per B737-10. IAG said it will choose finance options closer to delivery time. ‘The addition of new Boeing 737s is an important part of IAG´s shorthaul fleet renewal,’ said IAG Chief Executive Luis Gallego. ‘These latest generation aircraft are more fuel efficient than those they will replace and in line with our commitment to achieving net zero carbon emissions by 2050.’
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COMPANIES - FTSE 250
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Budget airline easyJet said it expects to fly near pre-pandemic capacity in the coming months as it reported a narrowed interim loss. easyJet reported a surge in revenue to £1.50 billion in the half-year to March 31 from just £240 million in the Covid-hit prior-year period. Its pretax loss narrowed to £557 million from £645 million. The firm posted a headline pretax loss of £545 million, slimming from £701 million. This was towards the bottom end of its previously guided range of £535 million to £565 million. easyJet benefited from a relaxing of Covid restrictions in the period, flying increased capacity - with passenger revenue soaring to £985 million from just £170 million year-on-year - and demand returning, though there was a temporary Omicron blip during the winter. Looking ahead, easyJet expects to operate 90% of pre-pandemic capacity in the third quarter and said that fourth-quarter capacity on sale represents 97% of pre-virus levels. ‘The airline industry has recently been experiencing operational pressures, which mainly impacted easyJet through early April...Despite this, bookings continue to be strong as we have seen demand, post the impact of the Omicron variant, returning with the removal of travel restrictions,’ it said.
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Darktrace, noting recent media reports, said it sees ‘no link’ between the firm and the civil actions against Mike Lynch by Hewlett Packard. The Telegraph late Tuesday reported that Darktrace’s strategy chief was part of a group of executives who helped to misrepresent the success of software company Autonomy, which was acquired by Hewlett-Packard Co back in 2011. The Telegraph reported Darktrace Chief Strategy Officer Nicole Eagan has been named as ‘part of a clique’ in a fraud ruling at the UK High Court. The Telegraph noted Eagan was marketing chief at software company Autonomy, when it was sold to Hewlett-Packard in 2011. Autonomy Co-Founder Mike Lynch has been accused of deliberately overstating the value of his business before it was acquired by the American technology firm. Lynch also co-founded Darktrace. Darktrace in a statement said: ‘Neither Darktrace nor any of its acting executives was a party to the civil proceedings. Neither Darktrace nor its acting executives are the target of any investigation.’ It added its trading and outlook remain unchanged.
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Marks & Spencer has reportedly warned the UK government that an online sales tax would do more harm than good for the high street. In February, the government launched a consultation into possibilities for an online sales tax to ease the business rates burden on high street stores. In a letter to Chancellor Rishi Sunak, reportedly seen by the BBC, M&S Chief Financial Officer Eoin Tonge said: ‘Introducing an additional tax on retail, already overburdened, will simply mean retailers cut their cloth accordingly. ’This rationalisation will always start with the least profitable parts of a business, which, in the case of multi-channel retailers, will more often than not be high street stores.‘ He said that would not benefit high street stores, but cause them ’damage‘.
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Thursday’s shareholder meetings
Bigblu Broadband PLC - AGM
Brand Architekts Group PLC - GM re takeover of InnovaDerma
Capital & Regional PLC - AGM
Computacenter PLC - AGM
Cornish Metals Inc - GM re equity raise
Dialight PLC - AGM
Ebiquity PLC - AGM
Eqtec PLC - AGM
Essentra PLC - AGM
Fevertree Drinks PLC - AGM
Gamma Communications PLC - AGM
Genuit Group PLC - AGM
Headlam Group PLC - AGM
Inchcape PLC - AGM
InnovaDerma PLC - GM re takeover by Brand Architekts
Irish Residential Properties REIT PLC - AGM
K3 Business Technology Group PLC - AGM
Light Science Tech Holdings PLC - AGM
Live Co Group PLC - GM
McColl’s Retail Group PLC - AGM
musicMagpie PLC - AGM
Network International Holdings PLC - AGM
Next PLC - AGM
Pharos Energy PLC - AGM
Property Franchise Group PLC - AGM
Rotala PLC - AGM
Smart Metering Systems PLC - AGM
St James’s Place PLC - AGM
Tyman PLC - AGM
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