Friday , April 28 2017
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FT Opening Quote: Panmure Gordon confirms Bob Diamond’s takeover

Summary:
Panmure Gordon confirms Bob Diamond’s takeover; Berkley signals strong profits; Amec wins US Airforce contract. FT Opening Quote is your early Square Mile briefing. You can sign up for the full newsletter here. Lossmaking stock broker and investment bank Panmure Gordon has accepted a takeover offer from Bob Diamond’s investment firm Atlas and the investment vehicle of the Qatari royal family, it confirmed today.Panmure’s directors unanimously recommended the bid of 100p per share, a 68.1 per cent premium to the company’s undisturbed share price which values it at £15.5m.Atlas Merchant Capital, which was created by the former Barclays chief executive, will control a majority stake in Panmure after the acquisition, with QInvest maintaining its current 43 per cent.The company has already

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Panmure Gordon confirms Bob Diamond’s takeover; Berkley signals strong profits; Amec wins US Airforce contract. FT Opening Quote is your early Square Mile briefing. You can sign up for the full newsletter here.

Lossmaking stock broker and investment bank Panmure Gordon has accepted a takeover offer from Bob Diamond’s investment firm Atlas and the investment vehicle of the Qatari royal family, it confirmed today.

Panmure’s directors unanimously recommended the bid of 100p per share, a 68.1 per cent premium to the company’s undisturbed share price which values it at £15.5m.

Atlas Merchant Capital, which was created by the former Barclays chief executive, will control a majority stake in Panmure after the acquisition, with QInvest maintaining its current 43 per cent.

The company has already received commitments to vote in favour of the deal from 60 per cent of shareholders.

Tamim Al-Kawari, QInvest chief executive, said:

We have been major investors in Panmure Gordon for more than seven years and are excited about this opportunity to work with Atlas to develop the business, alongside its management team and employees, and to assist it in fulfilling its potential.

The housebuilder Berkeley Group expects profits for the year to April to come in “at the top end of analysts’ expectations” despite a slowing housing market in London, the market in which it specialises.

The group said on Friday that “the housing market in London and the southeast has now stabilised”, and that despite slower sales overall since the vote to leave the EU, January and February saw sales ahead of those in 2016.

For the seven months since the vote, reservations are down 16 per cent, it said in a trading statement. However, Berkeley said it remained on track to generate £3bn of pre-tax profit in the five years to April 2021.

The group, known for its high-end London homes, is closely watched for signs of the health of that market and recently set up a new office in Birmingham, its first outside London and the southeast in more than a decade. This follows two years of declining appetite for new-build homes in central London, and a broader slowdown since the Brexit vote.

However, Berkeley said: “Enquiry levels remain robust, cancellation rates are at normal levels and pricing continues to be resilient and above business plan levels.” Its forward order book will stand above £2.6bn by April 30, the end of its financial year, Berkeley expects.

Analysts on average expect pre-tax profits of £404m for the year to April 2017, but some projections range as high as £442m.

A busy week for Amec.

Fresh from news that Wood Group, the Aberdeen-based oilfield services company, has launched a £2.2bn bid to buy it, Amec Foster Wheeler says it has snagged a contract worth up to $950m with the US Air Force, to “sustain and improve Air Force and other Department of Defense installations”.

Some of the work includes unexploded bombs and radiological waste, but the contract also also means the company will compete for a range of construction and renovation orders, some “in environments that can be remote and challenging around the world”.

From Lombard:

Unilever dismissed Kraft-Heinz’s approach as the embodiment of short-termism, with the tacit backing of its long-term holders.

Now, chief executive Paul Polman, previously a firm opponent of share buybacks, is holding his nose and thinking of raising debt to repurchase Unilever shares and froth up earnings per share. As a short-term ploy to appease those who might have aligned themselves with Kraft-Heinz, it might work. But it may get up the noses of Unilever’s most loyal backers, who fret that repurchases are an unimaginative use of company funds that mainly sweeten executives’ pay packages.

Larry Fink, boss of BlackRock which is Unilever’s biggest shareholder, warned in January that the US habit of repurchasing stock was an indication that companies were “succumbing to the pressures of short-termism in place of constructive, long-term strategies”.

His words echo research from McKinsey, the consultants, that shows share buybacks rarely prop up share prices for long and do little in the long run for shareholder returns. Companies that generate enough cash to buy back shares can usually put it to better uses, says McKinsey. Investing at an attractive return on capital will always create more value over time than repurchasing shares.

Unilever has an honourable history in earning sector-beating returns on capital. It would be a shame if it jeopardised those returns — particularly by borrowing to pay short-term investors for their shares. It is time to take a deep breath.

Have a relaxing weekend.

Beyond the square mile

Asia Pacific equities were mixed as the week drew to a close, with Sydney’s S&P/ASX 200 down 0.2 per cent, Tokyo’s Topix index off 0.4 per cent and the Hang Seng index in Hong Kong up 0.2 per cent.

The dollar index — a measure of the greenback against a basket of currencies — was down 0.1 per cent on Friday at 100.25 after hefty falls over the previous two days.

Oil prices were little changed in the Asian afternoon session on Friday after late volatility in the US on Thursday. Brent crude, the international benchmark, was up 0.1 per cent at $51.80 a barrel, while US marker West Texas Intermediate notched a 0.2 per cent gain to $48.86.

Gold was flat in Asia trading at $1,226 per ounce.

Intraday

In the US, index futures predict the S&P 500 will shed 1.5 points to 2,379.8, when trading gets under way later in New York.

Corporate earnings reports out today include GBL, Fraport, Pargesa and Eurazeo.

The economic calendar for Friday is not without its charms (all times London):

09.00: Italy trade balance
10.00: eurozone trade balance and construction output
11.00: Poland producer price inflation, retail sales, industrial output
14.00: Belgium consumer confidence

The markets at 07:50

Asian markets
Nikkei 225 down -68.55 (-0.35%) at 19,522
Topix down -6.84 (-0.43%) at 1,566
Hang Seng up +3.53 (+0.01%) at 24,292

US markets
S&P 500 down -3.88 (-0.16%) at 2,381
DJIA down -15.55 (-0.07%) at 20,935
Nasdaq up +0.71 (+0.01%) at 5,901

European markets
Eurofirst 300 up +10.85 (+0.73%) at 1,489
FTSE100 up +47.31 (+0.64%) at 7,416
CAC 40 up +27.90 (+0.56%) at 5,013
Dax up +73.31 (+0.61%) at 12,083

Currencies
€/$ 1.08 (1.08)
$/¥ 113.29 (113.30)
£/$ 1.23 (1.24)
€/£ 0.8729 (0.8707)

Commodities ($)
Brent Crude (ICE) down -0.07 at 51.67
Light Crude (Nymex) down -0.02 at 48.73
100 Oz Gold (Comex) up +0.60 at 1,227
Copper (Comex) down -0.01 at 2.65

10-year government bond yields (%)
US 2.54%
Germany 0.47%

CDS (closing levels)
Markit iTraxx SovX Western Europe +1.39bps at 19.22bp
Markit iTraxx Europe -1.72bps at 70.55bp
Markit iTraxx Xover -6.49bps at 277.89bp
Markit CDX IG -1bps at 62.04bp

Sources: FT, Bloomberg, Markit

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Siona Jenkins
Former Cairene; FT Middle east news editor. Views my own.

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