Home > UK share prices watch: M&A in focus on Monday

UK share prices watch: M&A in focus on Monday

July 29, 2019 By Tsveta Zikolova

Just Eat (LON:JE) and London Stock Exchange Group (LON:LSE) are today’s most notable UK share prices to watch this Monday, rallying and lending support to the broader market on the back of merger news. On a less positive note, Sports Direct (LON:SPD) has taken a hit after posting its delayed full-year results in after-market hours on Friday.

Just Eat and LSE soar on M&A

Just Eat has been today’s most prominent FTSE 100 riser this Monday after it agreed a merger deal with Dutch company Takeaway.com.  The all-share deal will see Just Eat shareholders own approximately 52.2 percent of the combined group, and values the London-listed group of 731 pence per share. The news comes after earlier this year, activist investor Cat Rock Capital Management urged Just Eat to merge with a rival.

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“Activist Cat Rock must be purring about this merger, something they’ve been pushing for some time,” said Neil Wilson, analyst at Markets.com, as quoted by Proactive Investors. “Activism is on the march in Europe (see Lazard’s latest) and we can expect further agitation from investors to deliver more value.”

The analyst, however, reckons that today’s deal gives “Just Eat and its interim CEO the perfect exit, whilst also creating a company with the scale and strength to take on” rivals Deliveroo, Uber Eats and Amazon. Just Eat’s share price is up by more than 30 percent in early afternoon trade, as compared with about a 1.5-percent gain in the Footsie.

M&A meanwhile is lending support to London Stock Exchange, whose shares are also rallying  it was in discussions with a consortium including certain investment funds affiliated with Blackstone as well as Thomson Reuters about a possible acquisition of Refinitiv Holdings. Under the key headline terms, it is expected that the FTSE 100 group would acquire Refinitiv for a total enterprise value of approximately $27 billion.

Reuters quoted analysts at Berenberg as commenting that while the size and complexity of the proposed deal made a detailed competition review almost inevitable, European competition rules were generally supportive of consolidation in information services.

“We do not anticipate any deal to fall foul of anti-trust concerns,” the broker pointed out. LSE’s shares are changing hands about 15.2 percent higher.

Sports Direct has also been among today’s UK share prices to watch, drifting lower in the wake of its full-year results late on Friday. Most notably, the company disclosed in the statement that it had received a payment notice from the Belgian tax authorities in the amount of €674 million.

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“We are disappointed how Friday played out but it’s far more worrying that Sports Direct now seems to be strategically snookered, checkmated and clean bowled,” analysts at brokerage Peel Hunt commented, as quoted by the Guardian, adding that the shares were “hard to value, but are surely only for the very brave”. Sports Direct’s share price has given up nearly nine percent so far today.

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UK share prices to watch tomorrow

With the earnings season in full swing, investors will have a lot to digest on the corporate front tomorrow, including energy major BP’s (LON:BP) second-quarter update which will come after the company reported a fall in profits for the first three months of the year amid weaker crude prices.

Centrica (LON:CNA) is also likely to be among tomorrow’s most notable UK share prices, with its interims set to follow reports that the British Gas owner is mulling over a dividend cut.

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“A drop in Centrica’s share price ahead of these results, raising the prospective yield to almost 14 percent, suggests the writing is on the wall. And it should wield the axe given a range of issues hampering profitability,” Richard Hunter from interactive investor commented in the run-up to the results, adding that even if the company halves its payout to shareholders, the shares would still yield nearly seven percent.

Consumer goods giant Reckitt Benckiser (LON:RB) is also reporting tomorrow, after recently agreeing a $1.4-billion settlement with the US over a probe into the sales and marketing of Suboxone Film by its former unit Indivior.

“A smooth set of half year results would be the ideal welcome gift for new boss, Laxman Narasimhan,” said Hargreaves Lansdown’s Nicholas Hyett, as quoted by Proactive Investors. “Reckitt needs to show it’s able to secure its piece of the US$25bn Chinese baby formula market.”

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