Investors have a couple of interesting takeovers to concentrate on in early trade on Friday as lender Provident Financial (PFG) and Cathedral City cheese maker Dairy Crest (DCG) recommend bids to shareholders.
Provident, the £1.3bn business behind Vanquis credit cards, accepts a £1.3bn offer tabled subprime lending peer Non-Standard Finance (NSF). Interestingly, NSF was founded in 2014 by John van Kuffeler to take over consumer finance businesses, and he was also one of the original founders of Provident Financial, acting as its chief executive and chairman over the years.
But this deal is likely to be controversial in the eyes of many Provident shareholders since it is an all-share deal (meaning there’s no cash hand out) and is pitched at 511p per share, almost exactly the level the stock was already trading at.
Provident stock had traded at above the £10 mark just a year ago. The deal is likely a response to troubled times for the Vanquis lender after a series of profit warnings in 2017.
Unsurprisingly the Provident Financial share price is largely unmoved today at 514.2p, which suggest that investors have limited belief that a rival offer will emerge. Investors owning more than 50% of Provident Financial's shares have agreed to accept the offer, according to NSF, including Woodford, Invesco and Marathon.
KEYS TO THE CATHEDRAL TO BE HANDED OVER
The Dairy Crest deal may also attractive criticism that another British brand is to fall into overseas hands. Shares in the company have jumped more than 12% to 625p after it agreed a deal which will value each of its shares at 620p in cash.
The implied £975m offer comes from Canada's Saputo, one of the top 10 dairy processors in the world but importantly, with limited European operations.
The former FT-owner saw pre-tax profit for 2018 jump 18% to £498m despite headline and underlying revenue declines.
‘We have a lot still to do, but we expect company wide sales to stabilise this year, and grow again in 2020 and beyond,’ is how chief executive John Fallon sees the future.
UK MARKETS IN POSITIVE TERRITORY
Overall UK markets are on the front foot in early trade on Friday despite a losing session Stateside and in Asia overnight.
The FTSE 100 is up around 18 points at 7,185.17 at 9am, with the mid cap FTSE 250 and junior AIM market also in positive territory.
In the US on Thursday, Wall Street ended in the red, with the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all ending 0.4% lower. Asian markets also fell during the overnight session as deteriorating global economic growth and a lack of any fresh progress in US-China trade talks weigh on sentiment.
UK challenger banks are in focus after Metro Bank (MTRO) bagged a £120m cash sum from a competition cash pool. Taxpayer-backed Royal Bank of Scotland (RBS) set up a £775m fund to boost competition in the sector under the terms of its bail-out package with the then government.
£280m has now been parcelled out, including Metro’s £120m windfall, driving shares in the bank close on 5% higher to £13.65, valuing the business at just over £1.3bn.
But the opposite is true for CYBG (CYBG), the owner of Clydesdale, Yorkshire and Virgin Money. Its share price slumps more than 6% to 185.3p (worth £2.6bn) after it failed to win any of the RBS fund cash.
BUYS AND SELLS
Motorways crash barriers supplier Hill & Smith (HILS) nudges 10p higher to £11.88 after announcing the acquisition of specialist bollards maker ATG Access. The deal has been struck at £22.5m in cash with ATG’s owners, LDC and private shareholders.
The non-core sale will bring in approximately £95m cash for the UK company, money that will be used for general operational plans. The sale is subject to the OK from regulators although this is not anticipated to be a problem.