Britvic, the UK-based soft drinks manufacturer, has confirmed it recently rejected a takeover proposal from Danish brewing giant Carlsberg. The offer, valuing Britvic at £1.25 billion, marks the second attempt by Carlsberg to acquire the company in less than a fortnight.

On 11 June, Carlsberg tabled an unsolicited cash offer of 1,250 pence per share for Britvic’s entire issued and to-be-issued ordinary share capital. This followed a previous bid of 1,200 pence per share on 6 June, which was also rejected by Britvic’s board.

Britvic’s board unanimously rejected the latest proposal on 17 June. The company stated that the offer “significantly undervalues Britvic and its current and future prospects”.

Britvic shares were 10% higher at the time of writing.

“Britvic believes its products are probably the best soft drinks in the world because it is not letting Carlsberg rock up and buy the company on the cheap,” said AJ Bell investment director Russ Mould.

“Trading on just 15 times earnings before revealing the bid approach, Britvic is a classic example of a company that quietly got on with the job. There was no glamour around its products, investors didn’t hype up the stock, and it sat quietly on the UK market slowly growing sales and revenue. Often, it’s only when something is taken away that you miss it, and investors might take that view if Britvic was gobbled up and delisted.

“Carlsberg is not the first company you would suggest when trying to compile a list of potential buyers for Britvic. It is known for selling beer and lager, but there have been hints it wanted to diversify.

“A ‘Beyond Beer’ strategy is in place and has seen the company explore other avenues such as hard seltzers. Britvic would effectively act as a springboard to accelerate that diversification and take the company into an adjacent market.

Under UK takeover rules, Carlsberg now faces a deadline of 19 July to either announce a firm intention to make an offer or declare it will not proceed. This timeline can be extended with the consent of the Takeover Panel.

Rockhopper Exploration plc (LON: RKH) has announced the receipt of its first payment in the monetisation of its Ombrina Mare Arbitration Award. The company confirmed that all precedent conditions for the transaction, initially revealed on 20 December 2023, have been met.

The oil and gas exploration firm has received €19 million of the €45 million Tranche 1 payment. The remaining €26 million has been allocated to a specialist arbitration funder, which had previously covered all costs related to the arbitration process. This payment fully discharges Rockhopper’s liabilities under its 2017 litigation funding agreement.

Rockhopper stands to receive additional payments from Tranches 2 and 3 of the Award, contingent on a successful annulment outcome. The company also noted that success fees of approximately €4 million are owed to its legal representatives if the claim is won and Italy being required to pay damages of €25 million or more.

Following this initial payment, Rockhopper’s cash balance has risen to approximately $27 million. This influx of funds significantly bolsters the company’s financial position, potentially providing more flexibility for future operations and investments.

“We are delighted to have received the Tranche 1 payment under the Ombrina Mare monetisation agreement,” said Samuel Moody, CEO.

“This cash gives us the strongest balance sheet we have had for a number of years, and we remain confident in the merits of our legal case as we await the decision of the Ad Hoc Panel on the annulment request from the Italian Republic.”

The Trading Statement at yesterday’s AGM for Futura Medical (LON: FUM), the consumer healthcare company behind the award-winning Eroxon® product, was bullish.

The £108m capitalised group specialises in the development and global commercialisation of innovative and clinically proven sexual health products.

Futura’s Lead Product

Its lead product is Eroxon, has been developed for the treatment of Erectile Dysfunction, which is the only topical gel treatment for ED available over the counter.

ED impacts 1 in 5 men globally across all adult age brackets, with about half of all men over 40 experiencing ED and 25% of all new diagnoses being in men under 40.

The company considers that Eroxon, which helps men get an erection in ten minutes, addresses significant unmet needs in the ED market.

Global Distribution Potential

The company has distribution partners in place in a number of major consumer markets including Haleon in the US, which is the largest market for ED in the world, and with Cooper Consumer Health in the European market. 

Importantly, it reported that it was working closely with Haleon, the global consumer healthcare company, on the preparation for the US launch of Eroxon within the next eight months or so.

Considering the size of the company’s target market, along with the initial feedback that the company has received in the markets where it has so far launched, has given its Management great confidence as it looks to make Eroxon® available to more people across the globe and on the path towards profitability in the next 12 months.

AGM Statement

Chairman Jeff Needham stated that:

“FY24 continues to progress well, as previously reported in the Group’s full year results in April.

At the time of the results announcement, we stated that we expected full launches in at least ten countries including key European markets such as France, Italy and Spain during the first half of 2024.

The Company can confirm that these launches have successfully taken place. The Company also confirms that revenues remain in line with market expectations for FY2024.

We also expect further launches in the second half of FY24 in both Europe and Rest of World and therefore plan to give updated guidance on trading FY24 at the time of our Interim results in September.”

Analyst View

Seb Jantet at Liberum Capital rates the group’s shares as a Buy, with a Price Objective of 131p, almost four times higher than the current market price.

His estimates for the current year to end December are for sales of £10.0m (£3.0m), while it is expected to slash its pre-tax loss by some 70% to £2.1m (£6.9m).

However, profits are just around the corner – with Jantet estimating £18.0m sales next year, helping to pump up some £2.6m in profits, worth 0.9p per share in earnings.

For the group’s 2026 trading year the analyst sees £24.0m revenues working to jack up a far healthier £4.1m of pre-tax profits, worth 1.4p per share.

The analyst concludes that Futura starting to generate meaningful EBITDA will remove the final barrier to broader institutional ownership.

My View

In the last year or so these shares have been as high as 67p and as low as 23p.

Now at just 35.90p I consider that there is massive upside potential for the group’s shares, which will become evident as the corporate newsflow increases up to the US launch.

By that time the shares could well have doubled.

The FTSE 100 spiked higher on Thursday after the Bank of England announced it would hold rates at 5.25% but said the decision was ‘finely balanced’ suggesting we could well see borrowing costs fall in the coming months.

The Bank of England Monetary Policy Committee voted 7-2 to hold rates, with members opting to wait for further data before deciding to cut rates. UK CPI inflation fell back to the BoE’s target 2% yesterday but this hasn’t been enough to shift the dial on rates on this occasion.

However, the commentary would suggest an August rate cut is a likelihood should inflation remain at or around current levels between now and their next meeting.

The suggestion interest rates could be cut in August sent the pound lower and the FTSE 100 in immediate aftermath to trade 0.3% higher.

The Monetary Policy Committee voted by a majority of 7-2 to maintain #BankRate at 5.25%.
Find out more: https://t.co/1nN6lt3Feu pic.twitter.com/QfcBpmvXyT

— Bank of England (@bankofengland) June 20, 2024

Michael Brown Senior Research Strategist at Pepperstone provided insight into the BoE’s thinking proposing the first rate cut comes in August followed by one more before the end of the year.

“The next move in Bank Rate remains likely to be a cut, probably at the next meeting in August, as the MPC continue to “keep under review” how long to maintain the current level of restriction,” said Michael Brown.

“Such a cut, however, hinges on the disinflation process continuing, and the June CPI figures not bringing any nasty surprises. That said, such a cut is unlikely to be a unanimous decision, with the MPC’s hawks likely still concerned about intense earnings pressures, and sticky services prices. These concerns should, more broadly, see the pace of policy normalisation after the first cut remain relatively gradual, with just one further 25bp cut, probably in November, the base case for the remainder of 2024.”

The prospect of rate cuts later this year fired up the interest rate-sensitive sectors, including housebuilders, REITs and consumer stocks on Thursday.

Land Securities jumped 3% while Barratt Developments gained 2.8%.

The prospect of consumers having a little more spare cash in their pockets will be more than welcomed by retailers and investors jumped into JD Sports shares sending the stock more than 2% higher.

Ocado shares were the worst-performing FTSE 100 stock – sinking 12% – after announcing it was pausing go-live of operations with a partner in Canada.

NatWest has swooped on Sainsbury’s banking assets in one of the bank’s most notable acquisitions in UK retail banking since the financial crisis.

Sainsbury’s had previously announced it was seeking to streamline its business by restructuring its financial services business, so today’s announcement makes a lot of sense for both parties.

Sainsbury’s will retain its Argos Financial Services, which isn’t included in the deal. Once the transition is finalised, the transaction is expected to return capital of £250m to Sainsbury’s. 

“The decision to phase out these operations isn’t a surprise, but shows the grocer’s willingness to grasp the nettle and refocus on its core business,” said Sophie Lund-Yates, lead equity analyst, Hargreaves Lansdown.

“Competition in the supermarket space is fierce and remaining competitive is a very expensive undertaking, and one Sainsbury’s has fared better at than feared. Other finance assets, including ATMs and travel money are remaining in Sainsbury’s fold, as their capital light and profitable models remain attractive to the group.

“Around £2.5bn of assets are making their way to NatWest, via credit cards and unsecured lending. The change shouldn’t make too much difference to existing customers, and from NatWest’s perspective, the deal makes a lot of sense, but is unlikely to markedly move the dial.”

Bridgepoint Advisers has made a recommended £626 million cash bid for Alpha Financial Markets Consulting (Alpha FMC), the London-listed financial service consultancy.

Alpha FMC would be the latest UK-listed company to be snapped up by private equity groups seeking out undervalued companies.

Under the proposed deal, Alpha FMC shareholders would receive 505p per share in cash. This represents a premium of 50.7% to Alpha FMC’s closing share price of 335p on 30 April 2024.

The 505p per share offer prices Alpha FMC at approximately 15.3 times its pre-IFRS 16 adjusted EBITDA of £39.9 million for the year ended 31 March 2024. On a post-IFRS 16 basis, the multiple is 14.5 times adjusted EBITDA of £42.2 million.

Bridgepoint sees Alpha FMC as an ideal addition as the sector is expected to benefit from digital transformation, increasing regulation, product complexity, cost pressures and growth in assets under management.

Bridgepoint has extensive experience investing in specialist consulting firms as well as expertise across asset management, insurance and financial technology. Its investments in this space include eFront, Calypso, Kyriba and Fenergo.

The 505p per share final offer will not be increased unless a rival bid emerges or with UK takeover regulator consent. Alpha FMC’s board is recommending that shareholders accept the “fair and reasonable” offer.

YouGov investor had a nasty shock on Thursday after the research and data group slashed its revenue forecasts and issued disappointing profit guidance. 

In March of this year, the company buoyed investors with talk of £650m revenue in the medium term as the benefits of an acquisition were felt. 

Fast forward barely three months and the company has blamed lower data product sales bookings for full year revenue not exceeding £327m.

YouGov shares tanked over 30% as a result of the negatively revised guidance on Thursday. With shares trading at 540p, the YouGov stock is significantly below 52-week highs set in February 2024.

YouGov said sales of its data products were slow and some of the integration of a recent acquisition may slip into the next financial year. Suggesting to investors they could achieve revenues of £650m in the medium term now seems somewhat premature.

“Casual observers of YouGov might assume the company would enjoy a bumper time during the election but its polling operation makes a relatively modest contribution to group revenue,” said AJ Bell investment director Russ Mould.

“The data analytics side is more important and this is where the company is struggling. The company invested for an expected acceleration of growth in the second half of its financial year which, in classic fashion, failed to materialise.”