UK stocks closed higher on Tuesday after global markets regained some poise after steep falls on Monday. The continuation of merger activity also lifted investor sentiment.
At the close the FTSE 100 index of leading shares was 1% higher at 6,981.
Some reports put the value of the offer at $20 billion, compared with Entain’s enterprise value of $18 billion. The owner of Ladbrokes rejected an $11 billion all-stock offer from MGM Resorts in January.
The firms argue a combination would be ‘a strategically compelling proposition with significant growth and cost synergies’. Annual cost savings are projected at £35 million, with a third coming from network efficiencies, a third from technology and scheduling and a third from office rationalisation.
National Express shares gained 7.6% to 240.1p while Stagecoach shares soared 27% to 86.4p.
Following a 20% rise in first half turnover to £7.1 billion, the firm increased its second half revenue forecast and lifted its pre-tax profit guidance to between £910 million and £950 million, compared with a consensus forecast of £907 million.
The group also raised its interim dividend by more than a third to 3.8p per share and announced a £300 million share buyback. However, the shares dropped 5% to 349.9p after the firm warned of shortages of certain building materials.
The pay-out will take the form of a £79 million or 35p per share special dividend followed by a share buyback programme starting next month. The shares dipped 0.2% to £16.86.
The firm reported ‘solid’ trading in July and August, strengthening its confidence in the full year outlook despite input price inflation and material shortages. The shares dropped 11.3% to 44.2p.
Global catering and foodservice group Compass (CPG) said its fourth quarter revenues were slightly ahead of expectations, returning to around 86% of 2019 levels thanks to the return of big sporting events.
The firm is ‘encouraged’ by the prospects for growth, with most of its sectors continuing to perform well, although it cautioned the recovery in its Business & Industry business remained uncertain due to the pace of office reopening varying around the world. The shares dropped 2.3% to £14.51.
The firm reported continued strong momentum into the second half and said full year profits would be ‘substantially ahead of consensus’, lifting the shares 3.4% to 151p.
Funeral services firm Dignity (DTY) posted flat first half revenues and a 10% drop in pre-tax earnings, but said it was ready for regulatory change ahead of the official deadline with new governance, processes, products and infrastructure to meet the new rules.
Dignity also said it had reviewed and adapted its pricing, launching competitively priced funerals in the UK ‘to lower the cost of dying’ for families. The shares fell 2.8% to 722p.
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