UK insurer Esure (ESUR), the firm behind the Sheila’s Wheels brand, has agreed to be bought out by Bain Capital Private Equity in a £1.21bn deal. This is confirmation after news of talks broke late morning on Monday, sending the stock soaring more than 30%.
That caps interest in financial figures, also out on Tuesday, which show a hefty fall in pre-tax profit for the six months to 30 June. They show pre-tax profit of £36.1m, down from £45.1m a year ago.
The company says that this includes a £14m impact from adverse weather related claims costs stemming from the Beast from the East storms last winter. The shares head almost 4% higher to 277.2p, closing in on the take out price being offered by Bain Capital of 280p per share in cash.
It is otherwise a fairly quiet day for corporate news with the UK’s leading markets making modest early trade gains on Tuesday. The FTSE 100 index adds around 17 points to 7,659.48, while the FTSE All Share and AIM All Share are also up a bit.
FINE IN THE POST FOR ROYAL MAIL
One bit of news that really stands out is the record fine being handed out to UK mail delivery business Royal Mail (RMG) by industry regulator Ofcom ‘for a serious breach of competition law’. The company has been fined £50m for discriminating against Whistl, its only major competitor delivering letters.
Royal Mail has been trying for months to offset falling letter volumes by delivering more parcels as consumers embrace online shopping.
But Royal Mail is not taking the penalty lying down and plans to fight the charge by lodging an appeal with the Competition Appeal Tribunal. No fine is payable until the appeals process is exhausted. At this stage investors seem ready to shrug off the news, Royal Mail shares barely moving, nudging just 0.6p, or 0.13%, lower to 461.7p.
Leading the FTSE 100 higher on Tuesday is engineering turnaround specialist Melrose Industries (MRO), which is trying to change the fortunes of its latest acquisition GKN, the auto and planes parts business.
Melrose, one of Shares running Great Ideas, sees its stock nudge around 1.6% higher in early deals to 220.4p, although there is no new news to go on.
UNIONS PUTTING THE SQUEEZE ON COPPER OUTPUT
Going the other way is Chilean copper producer Antofagasta (ANTO), topping the blue-chip loser board, down 4.5% at 909.6p. That’s a reaction to a 16% slump in first half earnings before interest, tax, depreciation and amortisation and rising trade tensions that are clouding the short-term copper demand outlook.
Elsewhere, FTSE 250 chemicals group Elementis (ELM) sees its share price jump 7.5% to 274.8p, presumably on analyst optimism. Notes singing the praises of the group’s prospects issued by number crunchers at JP Morgan, Numis Securities and Berenberg earlier today seem to be capturing the attention of investors.
Distribution business John Menzies (MNZS) fails to impress investors despite reporting a 15.4% jump in half year profit. The logistics business has been benefiting from higher cargo volumes and new contracts in its aviation business.
But the company has also had to write down the value of its newspapers business.
Shares in Menzies nudge 2p higher to 647p.