IWG receives bid from Terra Firma
Serviced office group IWG (LON:IWG) has received a bid from private equity firm Terra Firma, the latest in a flurry of interest for the group.
IWG, previously called Regus, has seen approaches from US property firm Starwood Capital, UK private equity firm TDR Capital and US buyout firm Lone Star but no deals have been signed. At the end of last year, Canadian private equity firm Onex and Brookfield Asset Management also made a joint approach which was rejected by IWG.
The serviced office sector has been hotting up of late, facing increasing competition from the likes of WeWork, which is backed by SoftBank and has been valued at $20 billion.
IWG has offices in about 3,000 locations in 114 countries around the world, operating under brands including Regus and Spaces.
Countrywide shares plunge 20pc on weak earnings
Shares in estate agent Countrywide dropped over 20 percent at market open on Monday, after the group reported weaker earnings than initially expected.
Longer transaction cycles and a subdued market had held back earnings, which will be lower than in the same period last year. The group also confirmed its intention to raise fresh funds in a bid to slash its debt burden
Adjusted earnings are now expected to be around £20 million lower in the first half, Countrywide said. In the first half the group posted an adjusted ebitda of just £28.1 million, after a “ disappointing year”.
“Our focus remains on building back the sales pipeline and we expect to substantially close the pipeline gap by the end of the year. We will provide full year guidance and a detailed recovery plan at the interim results on 26 July 2018,” the company said.
Shares in Countrywide (LON:CWD) are currently trading down 21.72 percent at 61.45 (0938GMT).
House of Fraser confirms branch closures and 6000 job losses
In the midst of waning consumer confidence, House of Fraser has confirmed plans to close 31 of its 59 branches within the next year – among that number, are their prime location outlet in Oxford Street and headquarters in Baker Street.
After 169 years, the high street retailer is seeking a Company Voluntary Arrangement (CVA) to avoid becoming the latest horror story, in the crisis that has hit UK high street retailers hard in 2018. The CVA could see as many as 6000 staff lose their jobs as branches begin to close at the start of 2019.
This step is seen as necessary and perhaps inevitable in the wake of what was described in their investor presentation as a ‘perfect storm of circumstances’. While some factors such as low consumer confidence can be felt across the board, House of Fraser – along with Marks and Spencer and Toys ‘R’ Us – has suffered greatly at the hands of a diminished footfall, which sparked losses as great as 44 million GBP by the end of 2017.
Regarding the measures proposed by the CVA, Chairman Frank Slevin commented, “Whilst closing stores is a very difficult decision, especially given the length of relationship House of Fraser has with all its locations, there should be no doubt that it is absolutely necessary if we are to continue to trade and be competitive.”
Going forwards, more widespread discussions will be had about the nature of CVAs, as while House of Fraser Limited received the 75% votes of approval to allow the CVA to go ahead, they faced fierce opposition from landlords on their proposal of lower rent on their remaining sites after 2019. Alongside the CVA, Hamleys owner C. Banner International is preparing to invest 70 million GBP, and buy a 51% stake of what remains of the business.
EU retaliates to US tariffs, trade war escalates
The European Union has introduced tariffs on $3.2 billion (£2.4 billion) worth of US goods.
The tariffs came into force on Friday and are viewed to be in retaliation for the imported steel and aluminium tariffs that were imposed by the Trump administration earlier this month.
The 25 percent tariff will be placed on US products such as whiskey, tobacco, Harley Davidson motorcycles (NYSE: HOG) and peanut butter. A 50 percent tariff has been placed on footwear, certain clothing, and washing machines.
On Thursday, European Commission president Jean-Claude Juncker said to the Irish Parliament that the US imposed tariffs went “against all logic and history.”
“Our response must be clear but measured,” he added. “We will do what we have to do to rebalance and safeguard” the EU.
The tariffs enforced by the EU affect mainly goods produced in Republican states in order to affect the President’s party in the run-up to the November midterm elections.
The US tariffs on steel and aluminium not only affect the EU but also Canada, Mexico, India and other allies.
Canada announced plans to impose retaliatory tariffs on C$16.6 billion (£9.5 billion) worth of US exports from 1 July. Two weeks ago, Mexico put tariffs on $3 billion worth of American products.
Speaking on Thursday, Trump told a crowd in Duluth, Minn: “You look at the European Union, they put up barriers so that we can’t sell our farm products in. And yet they sell Mercedes (ETR: DAI) and BMW (ETR: BMW), and the cars come in by the millions. And we hardly tax them at all.”
A CNN poll showed that people in the US would rather maintain a good relationship with ally countries than impose tariffs on foreign goods. One-quarter of the poll’s respondents said they would prioritise high tariffs over strong relationships with trade partners.
Greece reaches hard-fought debt relief deal with Eurozone
Greece reached a hard-fought debt relief deal with Eurozone nations, after talks that continued into the early hours of Friday morning.
The deal gives Greece more time to repay its €96.9 billion worth of loans, which were agreed after the country’s debt situation spiralled out of control. The period for repaying the loans has been extended, with Greece paying little or no interest.
The finance ministers of 19 Eurozone nations met on Thursday night to discuss the final stages of Greece’s eight-year bailout program, and the agreed deal has been hailed as “historic”.
EU Economic Affairs Commissioner Pierre Moscovici said it would be the end of Greece’s debt crisis.
Greece faced serious financial difficulties back in 2010, when an initial plan to manage its budget deficit was agreed. Greece’s economy has since stabilised, but its debt still stands at around 180 percent of GDP.
Greek prime minister Alexis Tsipras has been pushing hard for austerity measures, sending wages down by nearly 20 percent over the period and welfare payments cut by 70 percent.
Finance Minister Euclid Tsakaloto said, “I think Greece is turning a page.”
“I think that it has all the building blocks there to leave the programme with confidence that we can access the markets, that we can implement our growth strategy and turn the agenda away from one of fiscal adjustment, which has been completed, to one of growth.
“So I think it is a historic moment as people have said, a momentous moment.”
Imaginatik announces partnership with leading European winery
Innovation management software company Imaginatik (LON:IMTK) plans to develop its growth strategy in partnership with a European wine producer, sending shares up 10 percent in early trading.
The producer, which it declined to name, is ‘one of the leading, award-winning wineries of the world’, and has chosen Imaginatik’s Innovation Central tool to develop and deploy its growth strategies.
“We are very proud to have been selected as this award-winning winery’s change and innovation partner and to have the opportunity to contribute to its ongoing success,” said Shawn Taylor, Chief Financial Officer of Imaginatik.
“It is an early success in our sales team’s drive to expand deeper into additional territories.”
He added: “The cloud-based nature of our software means that it is deployable anywhere in the world, and with the majority of our revenue being derived from the US we have a proven ability to support international customers.”
Imaginatik shares soared 10 percent at market open, but are now trading down 0.99 percent at 0.50 (0954GMT).
Morning Round-Up: EU markets up, Opec deal uncertain
The markets got off to a good start on Friday morning, with the FTSE 100 trading up 0.4 percent higher in early trading.
The FTSE 250 is also trading up, with the positive sentiment spreading across Europe. The DAX is soaring, up 2.54 percent, with Spain’s IBEX 35 up 0.35 percent and the CAC40 up 0.40 percent
According to Fiona Cincotta, Senior Market Analyst at City, European markets have been defying the trend set by US stocks.
“Concerns over the fallout of the US-China trade war have seen the Dow Jones Industrial Average close down for eight consecutive sessions while the Nasdaq sank 0.9 percent on Thursday, the biggest single-day fall since April.
“The pound is 0.42 percent stronger against the dollar building on a 1% increase late Thursday as the Bank of England voted to keep rates unchanged. Although the rate decision was not a surprise the unexpected hawkish vote ended up giving sterling a boost.”
The FTSE is being aided by rising oil shares. BP (LON:BP) and Shell are up 0.3 percent, reflecting higher prices for crude oil.
Iran is looking set to scupper Opec’s oil agreement, having said it was unlikely to agree to boost oil production with the group.
Saudi Arabia and non-Opec Russia want to raise production by 1 million barrels per day after calls from the US, China and India to lower the price of crude oil. However, US sanctions on Iran could push down their output.
Next Fifteen shares up on big account wins
Shares in communications group Next Fifteen (LON:NFC) rose over 2 percent on Friday morning, after organic revenue growth lent a boost to the start of the financial year.
The group’s new financial year has seen previously strong trading patterns from the previous quarter continue, with organic revenue growth remaining in the high single digits. Recent acquisitions are all performing well, according to the statement, with the addition of major accounts like Just Eat, Samsung and AB InBev giving the board confidence for the year ahead.
“Next 15 is pleased to report that it has made a good start to the new financial year with a continuation of trading patterns from the previous quarter,” chief executive Tim Dyson said in speech notes for the company’s annual general meeting.
Shares in Next Fifteen are currently trading up 2.15 percent at 522.00 (0903GMT).
Playtech shares edge up on Italian deal green light
Shares in gambling software developer Playtech (LON:PTEC) edged up on Friday, after the Italian financial market regulator approved their takeover of Snaitech.
Consob gave the go ahead to the mandatory takeover offer for the remaining shares of Snaitech not owned by the group, in the wake of its €846 million takeover bid.
Playtech acquired 70.6 percent of Snaitech in April, before buying another 10.3% of shares. They’ve now got the green light to buy the rest of the shares and take control of the whole company.
The acceptance period will start on Tuesday morning and end on 23rd July and the consideration, equal to Euro €2.19 per share, will be paid to the tendering shareholders on 30 July. If certain conditions were met, the acceptance period would be reopened for a further five trading days starting from 31 July.
Playtech’s takeover will consolidate the group’s presence in Italy, one of Europe’s largest and growing gaming markets.
Shares in Playtech are currently up 0.74 percent at 763.00 (0849GMT). Airbus may move operations out of the UK on hard Brexit fears
Airbus said on Friday that it may be forced to move its operations out of the UK, as fears of a ‘hard Brexit’ take their toll.
The group said they were not making a statement as part of “project fear”, but instead a “dawning reality”.
Its current plans to build aircraft wings in British factories may be ditched over concerns that EU regulations will no longer apply from March 2019. Airbus hinted that it may opt to transfer production to North America, China or another European country.
Airbus is currently a major employer in the UK, with 14,000 people working at 25 different sites across the country. When asked about the potential impact of a no-deal with the EU, BBC Radio 4’s Today programme Tom Williams, chief operating officer of Airbus Commercial Aircraft, said today:
“We are seriously considering whether we should continue that development or we should find alternate solutions.”
In the group’s Brexit risk assessment, it said a no-deal – leaving the single market and customs union without a deal – would “lead to severe disruption and interruption of UK production”.
“This scenario would force Airbus to reconsider its investments in the UK, and its long-term footprint in the country,” it added.
Airbus (EPA:AIR) shares are currently trading up 0.99 percent at 99.57 (0832GMT).