Meggitt agrees £6.3bn takeover by US tech company Parker-Hannifin

Liam Roche
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Meggitt agrees £6.3bn takeover by US tech company Parker-Hannifin

Meggitt shareholders will stand to earn 800p per share, a 71% premium on last week’s close

Meggitt, the British aerospace company, has agreed a takeover deal from Parker Hannifin, its American rival.

It is the latest in a string of approaches for UK-listed companies from buyers based overseas.

If the deal goes ahead, Meggitt shareholders will stand to earn 800p per share, amounting to a premium of 71% on last week’s close.

The board of the FTSE 250 engineering company has unanimously recommended that shareholders accept the 800p-per-share deal.

“Meggitt is one of the world’s foremost aerospace, defence and energy businesses, leading the market with a strong portfolio of technology and manufacturing capabilities, and holding a significant amount of intellectual property,” said the Meggitt chairman, Sir Nigel Rudd.

“While Meggitt is currently pursuing a strong, standalone strategy which will deliver value to shareholders over the long term, Parker’s offer provides the opportunity to significantly accelerate and de-risk those plans, while continuing to deliver for shareholders.”

The bid comes amid a flurry of bids for UK companies by US buyers, specifically in the defence sector.

Recently, the UK government has been keeping a close eye on Cobham’s private-equity backed takeover of Ultra Electronics.

In addition, Senior, the FTSE 250 aerospace and defence group, rejected an approach by Lone Star, the US investment firm.

Parker would nearly double its aerospace operation with the acquisition of Meggitt, the company that supplies the UK government.

Parker has made a series of legally binding pledges to the government to guard Meggitt’s operations.

Following the downturn caused by the pandemic, Meggitt was forced to cut 1,800 jobs as Covid-19 ravaged the travel sector.

The company has also confirmed that it swung to a profit for H1 2021 as it continued on its path to recovery.

The Meggitt share price is up by 56.85% on Monday to 735.80p, blowing past the previous record high of just under 700p.

Flurry of takeover activity causes lifts UK markets

Liam Roche
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Flurry of takeover activity causes lifts UK markets

The FTSE 100 is up by 0.98% to 7,100.99 during the morning session on Monday amid a new wave of takeover activity.

The FTSE 250 hit a new record high of 23,305 as its cohort of mid-cap stocks is seen to be better hunting ground for takeover targets than the large cap FTSE 100 index.

“Aerospace and defence components group Meggitt has become the latest target for an overseas buyer, and one pitched at a very generous 70.5% premium to last Friday’s closing market price,” says Russ Mould, investment director at AJ Bell.

The bid for Meggitt, together with well-received numbers from HSBC and rumours about a potential counterbid for Morrisons, helped to push up the FTSE 100.

“With a 6% gain, the top FTSE 100 riser was Melrose Industries on positive read-across from Meggitt given it also has interests in the aerospace and defence sector, having bought GKN in 2018. It would be interesting to see if this predator becomes prey, as Melrose has historically been the one doing the bidding,” Mould added.

Existing FTSE 250 bid target Sanne received an offer from private equity group Apex at 920p per share, having previously been subject to 830p, 850p and 875p per share offers from Cinven.

“We’ve seen quite a few private equity suitors having to raise their offers this year as companies and shareholders push back on initial approaches, saying they are too low. Private equity firms have a reputation for trying to get a bargain, but their tactics have been fully exposed this year and it now seems rare for the first offer to be the winning one.”

FTSE 100 Top Movers

Melrose Industries (6%), IAG (4.22%) and JD Sports (3.87%) are ahead of the rest a couple of hours into trading in August.

Trailing the UK’s top 100 companies at the back is Fresnillo (-1.91%), Pearson (-1.23%) and Smith and Nephew (-0.89%).

88 Energy announces Philip Byrne as new chairman

Liam Roche
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88 Energy announces Philip Byrne as new chairman

Byrne is a petroleum geologist with over 40 years’ experience in the industry

88 Energy (AIM:88E) announced on Monday that Philip Byrne has been appointed as Non-Executive Chairman and to the board of the oil exploration company.

Byrne will replace Michael Evans, who retired after seven years in the role.

The new 88 Energy Non-Executive Chairman, Phil Byrne, commented: “I am delighted to be joining the 88 Energy team at this exciting time. The Company’s suite of world-class acreage on the North Slope of Alaska offers huge potential for shareholder value in my eyes. I look forward to assisting the management team in the drive to unlock this value through our appraisal and exploration activities over coming seasons.”

Byrne is a petroleum geologist with over 40 years’ experience in the international oil and gas industry.

The AIM-listed company made two additional appointments in order to boost the management team. Robert Benkovic has been hired as 88 Energy’s new new chief operating officer, while Joanne Kendrick is a new-non-executive director.

Benkovic is a petroleum engineer and subsurface manager with almost 25 years’ experience across the oil and gas industry. Previous industry roles he has held include Group Manager, Reservoir Engineering at Inpex Corp, Kharaib Section Head at Maersk Oil, Reservoir Engineering Expert and Senior Reservoir Engineer at Apache Corp, Senior Petroleum Engineer at Schlumberger and Petroleum Engineer at Origin Energy.

While Kendrick is currently a Non-Executive Director of Buru Energy Limited and Sacgasco Limited and has previously held Board and senior management positions with various international oil and gas companies including more recently as Managing Director and CEO of Blue Star Helium.

The 88 Energy share price is up by 7.19% during the morning session on Monday.

HSBC profit soars on recovery from pandemic

Liam Roche
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0
HSBC profit soars on recovery from pandemic

HSBC’s pre-tax profit reaches $10.8bn (£7.8bn)

HSBC confirmed on Monday its decision to pay an interim dividend after its pre-tax profit surged to $5.1bn during Q2.

The FTSE 100 bank continued to cancel provisions made in order to cover credit losses during the pandemic as it saw an improvement in the economic outlook.

HSBC’s profit before tax for H1 rose to $10.8bn (£7.8bn), up from $4.3bn year-on-year.

The bank confirmed it had been profitable across all regions during the period.

Noel Quinn, Group Chief Executive, said: “These are good results that reflect the return of growth in our main markets and marked progress in the execution of our strategy. We were profitable in every region in the first half of the year, supported by the release of expected credit loss provisions.”

“Our lending pipeline began to translate into business growth in the second quarter and we further strengthened that pipeline during the half. This performance enables us to pay an interim dividend for the first six months of 2021.”

“I’m pleased with the momentum generated around our growth and transformation plans, with good delivery against all four pillars of our strategy. In particular, we have taken firm steps to define the future of our US and continental Europe businesses, and further enhanced our global Wealth capabilities.”

HSBC reinstated its dividend payout following the economic recovery in two of its key markets, Britain and Hong Kong.

The bank will pay an interim dividend of $0.07 per share after the Bank of England gave a green light to do so last month.

HSBC cancelled an additional $300m of provisions made for bad debts during the pandemic in Q2. Over the course of the year, HSBC cancelled $700m of reserves. This means the total of its increase reserves now stands at $2.4bn.

The HSBC share price (LON:HSBA) is up by 1.57% during the morning session on Monday.

New AIM admission: Big Technologies goes to huge premium

Andrew Hore
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New AIM admission: Big Technologies goes to huge premium

Big Technologies has developed remote monitoring technology which is mainly used in the criminal justice sector and is sold on a subscription basis. This means that it has recurring revenues and contract wins are enabling it to grow rapidly. Big Technologies has never permanently lost a customer.
One of the attractions is the high gross margins of the business, although they have declined in the short-term as the company gears up for further growth. Even so, pre-tax profit is still growing faster than revenues. Like-for-like revenues grew by 60% in the first quarter.
In three days of trading t...

New standard listing: Spinnaker Acqusitions targets sustainable acquisition

Andrew Hore
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0
New standard listing: Spinnaker Acqusitions targets sustainable acquisition

Spinnaker Acquisitions is a shell that has been brought to the market by the same team that floated Spinnaker Opportunities, which eventually acquired cannabis products supplier Kanabo (LON: KNB).
Spinnaker Acquisitions is seeking to use shares to acquire a business in the sustainability and energy transition services markets. The existing board would not run the business being acquired but it would offer advice and direction. The first acquisition would provide a base for further purchases. The valuation of the initial acquired business is likely to be between £5m and £30m.
The share price ha...

Deliveroo announces plans to pull out of Spain

Liam Roche
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0
Deliveroo announces plans to pull out of Spain

Spain accounted for fewer than 2% of Deliveroo’s overall sales in H1 2021

Deliveroo (LON:ROO) is weighing up the possibility of ceasing its services in Spain because of the high costs involved in operating in the country.

The food delivery company added on Friday that it may seek to focus its resources on other markets by expanding into new locations.

“The company has determined that achieving and sustaining a top-tier market position in Spain would require a disproportionate level of investment with highly uncertain long-term potential returns,” Deliveroo said in a statement.

A spokesperson for Deliveroo specifically said that Spain’s employment rights law was not the reason, although it was confirmed that it did contribute to the earlier than initially expected withdrawal.

Back in March the Spanish government revealed its intention to give employment rights to workers food delivery companies and similar platforms in what was a landmark ruling.

According to Deliveroo, Spain accounted for fewer than 2% of its overall sales in H1 2021.

The Deliveroo share price is up by 2.77% on Friday following the announcement.

The London-listed food delivery company operates in 12 markets across Europe, as well as Hong Kong, with around 50% of its revenue coming from the UK and Ireland.

The Deliveroo share price surged towards the end of June as a UK court ruled that the people who deliver the food on bikes are self-employed. The ruling was passed by three judges who came to a unanimous agreement.

“Concern about the company’s reliance on the gig economy model was one of the factors which contributed to its disastrous IPO in March,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

Problems continue for the ECB as CPI rises

Liam Roche
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0
Problems continue for the ECB as CPI rises

CPI reached 2.2%, surpassing expectations

EU GDP surpassed expectations of 1.5%, reaching 2% for the quarter gone, according to Eurostat.

Among the EU nations for which data are available for Q2 2021, Portugal, up by 4.9%, recorded the highest increase compared to the quarter before.

Consumer price index (CPI), a measure that examines the weighted average of prices of a basket of consumer goods and services, reached 2.2%, 0.2% above analysts’ expectations.

The news comes amid concerns over inflationary pressures across the world and the potential impact.

Commenting on EU GDP and CPI, Jesús Cabra Guisasola, Associate at Validus Risk Management, said: “The eurozone economy expanded at a rate not since in decades, with GDP during Q2 rising at 2%. The strongest rebounds came from the southern countries as the economies continue lifting restrictions for the summer season. In addition CPI numbers in the Eurozone rose in July 2.2% and came above the market expectations of 2.0%. However, the core CPI was lower compared to a month ago and in line with most forecasters at 0.7% vs 0.9% in June.”

Similar to the Fed, Guisasola does not expect today’s news to compel the ECB to change its stimulus measures aimed at boosting the EU.

“Nevertheless, we do not expect these figures would change the ECB’s plan to continue supporting the economy with favourable financing conditions in the coming months, as the institution recently signalled the regions still a “long way to go” to recover from the pandemic. Moreover, the central bank recently changed its inflation target by letting the CPI to move above or below the 2% level when needed.”

The dollar lost ground against the euro over the past as the Fed took a dovish tone, according to Guisasola.

“On the FX market, the dollar has depreciated against the euro in recent days after the dovish tone from the Fed, and the disappointed Q2 GDP numbers from the US released yesterday, where the economy posted a growth lower than expected.”

Eurozone inflation fell in June amid a fall in the price of oil, according to data published last month.

Inflation across the EU was down by 0.1% from May to 1.9% in June.

The figure matched the European Central Bank’s inflation target of below but close to 2%.

SolGold share price set to close in the red for fifth consecutive week

Liam Roche
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0

SolGold Share Price

The SolGold share price (LON:SOLG) is down by 2.92% on Friday, as the emerging copper-gold major looks set to close in the red for the fifth week in a row. Over the past month the SolGold share price gave away 6.67%, now trading at 26.6p per share. Investors may be concerned over the recent trajectory, while others may be excited by the possibility of buying the dip. The hierarchy at SolGold remains optimistic about the near-term outlook of the company.

Outlook

SolGold is confident it will put forward strong results for the remainder of the current year.

The current quarter will see increased active exploration activity at SolGold’s regional exploration projects with preparations advancing for the commencement of drilling at the Rio Amarillo and Sharug projects, SolGold said in its recent update, while drilling at the Porvenir and Blanca projects is currently underway.

About SolGold

SolGold is a leading resources company focussed on the discovery, definition and development of copper and gold deposits. The London-listed company, with 76 concessions covering approximately 3,100km², is the largest and most active concession holder in Ecuador and is aggressively exploring the length and breadth of this highly prospective and gold-rich section of the Andean Copper Belt which is currently responsible for c40% of global mined copper production.

SolGold employs a staff of over 800 employees of whom 98% are Ecuadorean.

Budget day could be in 2022 as Rishi Sunak avoids naming day

Liam Roche
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0
Budget day could be in 2022 as Rishi Sunak avoids naming day

In recent years budgets have been postponed until March due to unprecedented events

Rumours are circulating that chancellor Rishi Sunak will delay his budget until 2022.

The speculation came after Sunak asked the Office for Budget Responsibility (OBR) to prepare an economic forecast to be put to parliament at the end of October.

It is customary for the OBR’s release to come with a budget or spending review, however, Sunak did not announce either.

It was reported earlier in July that Rishi Sunak is considering delaying the budget until the spring, as there will be a clearer picture of the UK’s economic outlook.

This is especially true at the present time as the furlough scheme is set to end, while inflation and tax breaks are on the horizon, meaning there will be a great day of economic upheaval.

Since 2017 yearly budget are supposed to take place in October or November to allow time to implement tax changes before the new tax year begins in April.

More recently budgets have been postponed until March due to unprecedented events including elections and the coronavirus pandemic.

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