Below are the key headlines from today’s updated papers, featuring the Financial Times, The Times, The Telegraph, The Daily Mail & more - see the full Press section here.
Liberum in £100 million sale talks as rules leave ‘broking broken’. A long-awaited shake-up of the City’s broking market moved a step closer today when it emerged that Macquarie is in talks to buy Liberum for a rumoured £100 million. Liberum is regarded as one of a group of high-quality small cap brokers likely to get snapped up by bigger parents as revenues are squeezed by Mifid II, new rules that force investors to pay directly for research rather than have it bundled in with investment banking services. Liberum has 40 analysts in London, while Macquarie has 30. Liberum made a profit last year of £6.4 million on sales of £50.6 million, which makes a £100 million price tag appear expensive. City sources say brokers , Peel Hunt and Investec (INVP)could all be bought. N+1 Singer may also be for sale. Cenkos Securities (CNKS), Canaccord Genuity and Shore Capital Group Ltd. (SGR) are also candidates. In September reports emerged that Banco Santander had made an approach for Peel Hunt, but no deal has happened yet. Panmure Gordon, one of the oldest City names, is now owned by Qatar and an investment fund led by former Barclays man Bob Diamond. One executive at a Liberum rival said: “Mifid is putting pressure on everyone. Anyone who says they are benefiting from it is a liar. You need a parent with deep pockets to survive.” Another broker said: “Consolidation is inevitable. The secondary market isn’t what it was and there’s not enough M&A, fundraisings or floats to plug the gaps — and what there is gets snaffled by Rothschild or Goldman. Broking’s broken.”
Nearly a quarter of all pubs have closed down since the financial crisis – and Birmingham has seen the biggest decline. Almost one in four pubs in the UK have closed down over the past ten years, with cities like Birmingham and Manchester having witnessed some of the highest number of closures, new official figures have showed. Confirming an already well-known trend, data show there are now around 39,000 pubs in the UK, a 23% decline compared to the 50,000 in 2008. Small, independently owned pubs have seen the highest number of closures, while the number of larger pubs is steadily rising, the Office for National Statistics said.
Polar Capital Holdings (POLR) bears £1 billion hit after US tech stocks struggle. Fund manager Polar Capital felt the wrath of the US “Tech Wreck” last month after funds fell by more than £1 billion because of the market sell-off. The firm on Monday said the market plunge — prompted by big falls from the likes of Amazon and Google — led assets under management down to £13.6 billion versus £14.7 billion at the end of September. Performance fees were also around £9 million lower. The October slide was more pronounced becaue of Polar’s high exposure to the US tech sector, including the Faang stocks (Facebook, Apple, Amazon, Netflix and Google): nearly one-third is invested in tech shares with a further 17% in US-traded securities. “The team has been slightly underweight [to Faang stocks] and we do have a lot of exposure to tech,” said chief executive Gavin Rochussen. He added fund levels at the end of October were still above the six-month average
ektan (DI) (NKTN) floated in late 2014 at 256p with a value of £50.1 million but it quickly became apparent that the firm had oversold itself and its stock nosedived to 134p within a year. Gary Shaw, who was chairman at the time and has just finished a spell as interim chief executive, blamed the bad start on an over-excitable broker from Panmure Gordon and the appointment of David Gosen as boss in January 2015. Gosen, who could not be reached for comment, left in January 2016 and since then the company has undertaken the slow and painful process of turning its fortunes around. Nektan, which will be run by former US gambling veteran Lucy Buckley from next week, has grown its revenues from just £500,000 in 2015 to £13.2 million last year and is on course for £19.4 million this year. The firm makes bespoke casino gambling platforms for customers which include BetVictor and The Sun. Brokers at Stockdale believe the firm has made rapid progress in the past three years and that it is moving towards becoming “investable”. The company’s major growth markets are in Asia and Africa but there are also signs activity is taking off in the US after the Supreme Court this year struck down a federal law banning any sports betting. Nektan’s revival is working and now is the right time to buy
Sky News reported that Melrose Industries (MRO) had received low-ball bids on the Powder Metallurgy unit prompted a wobble in the share price today. The offers reportedly tabled by private equity suitors at £1.6 billion are about £400 million short of the £2 billion price tag banded around in the market. Some analysts looked on the bright side, saying it demonstrated Melrose’s toughness as negotiators. Royal Bank of Canada’s Mark Fielding said: “Melrose management are strict on asset valuation and are unlikely to sell if current, slightly more uncertain market conditions have weighed on bids for Powder Met”. He thinks an extra £200 million might sway Melrose to accept the offer.
Norwegian oil firm DNO launches hostile ‘low-ball’ takeover bid for AIM-listed Faroe Petroleum. Norwegian oil and gas firm DNO has launched a hostile takeover bid for Faroe Petroleum (FPM), sending shares in the oil producer up by more than 25%. The bid comes after speculation about a possible offer in April, when DNO started to build up its 28.8% stake in Faroe, making it the biggest shareholder. DNO said it is offering shareholders 152p per share – a 20.8% premium to the AIM-listed firm’s closing share price of 125.8p on Friday. This values the company at £608million.
Hotel Chocolat cuts through the High Street’s struggles as it hails ‘hugely encouraging’ debut in Japan. Hotel Chocolat Group (HOTC) shares were given a boost today after the retailer said its first store in Japan had opened ‘with aplomb’. The UK-based chocolate chain has put down roots in the market as part of a broader mission to expand internationally. Its debut shop is located at Japan’s largest shopping centre – the Aeon Lake Town shopping mall in Tokyo.
East London-based Cake Box sees sales jump as retailer keeps opening shops despite high street gloom. Cake Box Holdings (CBOX), an East London firm which makes egg-free, personalised spongy cakes, has bucked the high street gloom with growing sales and profits as it keeps opening up shops. In its first financial update since going public last year, Cake Box said revenues rose 44 per cent to £8.3million in the six months to the end of September, driven by a ‘record’ number of store openings. Like-for-like sales rose 4.4%, while online sales rose 86% to £1.99million. The firm, which has franchises dotted around the country from Glasgow to Southampton, said it opened 15 new stores in the six months, bringing the total number to 101. New openings include ilton Keynes, Northampton and Derby.
Pharma company Vectura Group (VEC) has taken a £40m hit after one of its clinical trials in asthma failed at the final hurdle. The respiratory specialist was testing whether a steroid called budesonide was more effective in helping people with severe asthma when administered through its smart nebuliser, a machine that helps patients breathe in medicine as a mist. The results from the trial showed the drug/device combination, called VR475, did not improve symptoms compared with both a placebo and those patients taking the steroid as a pill or in a standard inhaler. Vectura has decided to ditch the programme and will take a £40m hit on its pre-tax profits as a result.
