LONDON BRIEFING: Altice doesn’t plan BT takeover after 12% stake buy

(Alliance News) – Patrick Drahi’s Altice UK revealed on Thursday it has taken a 12.1% stake in telecommunications firm BT Group, a total of 1.2 billion shares, but doesn’t plan to make a takeover bid.

Altice is an owner and operator of telecom and broadband networks internationally, having built and developed significant networks in the US, France, Portugal and Israel. Billionaire Drahi founded Altice in 2002.

Altice UK has been established for the purpose of holding the shares in BT.

Altice said it “holds the board and management team of BT in high regard and is supportive of their strategy.” It has told the board it does not intend to make a takeover offer.

Based on BT’s Wednesday closing price of 183.15p, the Altice’s stake is worth around GBP2.2 billion.

“Altice UK has made this significant investment in BT as it believes that it has a compelling opportunity to deliver one of the UK government’s most important policies, namely the substantial expansion of access to a full-fibre, gigabit-capable broadband network throughout the UK,” it said.

BT, in response, said it welcomes all investors who recognise the long-term value of the business. “We are making good progress in delivering our strategy and plan,” it said.

BT shares were up 1.3% early Thursday.

Here is what you need to know at the London market open:

MARKETS

FTSE 100: marginally higher, up 1.02 points at 7,082.03

Hang Seng: down 0.2% at 28,684.95

Nikkei 225: closed up 0.3% at 28,958.56

DJIA: closed down 152.68 points, or 0.4%, at 34,447.14

S&P 500: closed down 7.71 points, or 0.2%, at 4,219.55

Nasdaq Composite: closed down 13.16 points, or 0.1%, at 13,911.75

EUR: down at USD1.2173 (USD1.2186)

GBP: down at USD1.4114 (USD1.4120)

USD: down at JPY109.46 (JPY109.60)

Gold: down at USD1,885.85 per ounce (USD1,890.50)

Oil (Brent): down at USD71.82 a barrel (USD72.36)

(changes since previous London equities close)

ECONOMICS AND GENERAL

Thursday’s Key Economic Events still to come

1345 CEST ECB interest rate decision

1430 CEST press conference with ECB President Lagarde

1100 BST Ireland consumer price index

0830 EDT US CPI

0830 EDT US jobless claims

1030 EDT US EIA weekly natural gas storage report

A delay to the planned lifting of lockdown on June 21 would “materially” hamper Britain’s economic recovery from the pandemic, a major business group has warned. The British Chambers of Commerce said the UK economy is in a “temporary sweet spot”, but there would be a big threat to the outlook from any government move to push back the lockdown road map, as well as from rising inflation. It cautioned this could derail the current rebound, which the BCC predicts will see the UK economy grow by 6.8% this year – the strongest since official records began. The biggest spending surge since 1988 is set to help the UK economy recover from a 1.5% contraction in the first quarter to grow by 4.1% between April and June as lockdown restrictions lift, according to the group. Prime Minister Boris Johnson is due to make a decision shortly on whether England can go ahead with full reopening on June 21.

BROKER RATING CHANGES

PEEL HUNT RAISES WHITBREAD TO ‘ADD’ – TARGET 3,600 PENCE

CITIGROUP CUTS PENNON TO ‘NEUTRAL’ (‘BUY’) – TARGET 1,072 (1,034) PENCE

PEEL HUNT RESUMES SENIOR PLC WITH ‘ADD’ – TARGET 168 PENCE

COMPANIES – FTSE 100

The Competition & Markets Authority has served an initial enforcement order over National Grid’s GBP7.8 billion acquisition of Western Power Distribution, Britain’s largest electricity distribution business, from US energy firm PPL, which was announced back in March. Separately, National Grid said it has hired Ian Livingston as a non-executive director. Livingston is the former CEO of BT and also minister of state for Trade & Investment in the UK government. Currently, he is a member of the House of Lords and chair of Dixon Carphone.

Online automotive marketplace Auto Trader reported a fall in annual revenue and profit, though reinstated its dividend. Revenue fell 29% to GBP262.8 million for the financial year that ended March 31, with trade revenue down 31% to GBP225.2 million following a decision to provide free advertising to retailer customers in April, May, December and February and at a discounted rate in June. Auto Trader’s pretax profit slumped 27% to GBP157.4 million. However, the company has decided to reinstate its capital allocation policy and proposed a final dividend of 5.0 pence, versus no payout a year ago. With no interim dividend, this 5p will be the total dividend for the year, up from 2.4p the year before. Auto Trader has started the new financial year in a strong position, it said, and expects to deliver deliver high single digit growth on the average revenue per retailer achieved in the 2020 financial year – meaning two years prior – with operating profit margins in line with 2020 levels. Average revenue per retailer for the recently ended financial year was GBP1,324, down 32% on GBP1,949 in the 2020 financial year. The operating profit margin fell to 61% from 70%.

Hazard detection and life protection technologies firm Halma bumped up its dividend as it reported full-year profit growth. Revenue dipped 2% in the financial year that ended March 31, to GBP1.32 billion from GBP1.34 billion, but pretax profit jumped 13% to GBP252.9 million. Halma noted a 5% decline in revenue over the first half improved to 2% growth in the last six months of the year. Profit, meanwhile, benefited from the disposal of Fiberguide Industries. Given the performance in the year, the total dividend was increased by 7% to 17.65p. This marks the 42nd consecutive year of dividend per share growth of 5% or more, Halma noted. “For the year ahead, we expect our markets to continue to recover, albeit at varying rates, while acknowledging that there are potential headwinds including currency, inflation, and supply chain constraints,” said Chief Executive Andrew Williams. He noted that organic constant currency revenue for the five months to the end of May was up 10% year-on-year. For the recently ended financial year, organic constant currency revenue was down 6%, with an 11% decline in the first half improving to a flat performance in the second.

COMPANIES – FTSE 250

Spread betting and contracts for difference platform CMC Markets more than doubled its annual dividend to 30.6 pence from 15.0p, as it reported a doubling as well in pretax profit, to GBP224.0 million from GBP98.7 million in the financial year that ended March 31. Net operating income rose by 63% to GBP409.8 million from GBP252.0 million.

COMPANIES – MAIN MARKET AND AIM

Amigo Holdings said it continues to mull all options after the UK High Court rejected its scheme to settle compensation claims. The provider of guarantor loans confirmed that, based on the expected volumes of complaints from current and past customers, without a scheme of arrangement to deal with complaints, the value of its assets are less than the amount of its liabilities, resulting in an insolvent balance sheet. Amigo said it continues to engage with the UK Financial Conduct Authority, which raised objections over Amigo’s scheme to the court, over an “appropriate way forward”. This could result in a revised scheme of arrangement or insolvency.

COMPANIES – GLOBAL

JBS, one of the world’s biggest meat processors, has paid bitcoin worth USD11 million in ransom to hackers to prevent any further disruption after a paralysing cyberattack believed to have originated in Russia. Hackers targeted the computer systems of Brazil-based JBS last week, impacting production and operations in the US, Australia and Canada, and issued a ransom demand to the global meatpacking giant. The company’s US subsidiary said Wednesday it had paid the equivalent of USD11 million to the attackers. “This was a very difficult decision to make for our company and for me personally,” said Andre Nogueira, chief executive officer of JBS USA. The company said it made the payment “to mitigate any unforeseen issues related to the attack and ensure no data was exfiltrated.”

The developer of the Keystone XL pipeline announced it would pull the plug on the controversial project months after the Biden administration revoked its permit. The project aimed to carry oil from the tar sands of Canada into the US. TC Energy said it terminated the Keystone XL pipeline project “after a comprehensive review of its options, and in consultation with its partner, the government of Alberta.” The developer said it suspended construction activities following the revocation of its presidential permit in January. “The company will continue to coordinate with regulators, stakeholders and Indigenous groups to meet its environmental and regulatory commitments and ensure a safe termination of and exit from the project,” it said in a statement. The move puts an end to a years-long battle between the oil industry and environmentalists which trickled into politics and US and Canadian courts.

Thursday’s Shareholder Meetings

Corero Network Security PLC – AGM

Equals Group PLC – AGM

Ergomed PLC – AGM

Gamesys Group PLC – AGM

Invesco Perpetual UK Smaller Companies Investment Trust PLC – AGM

Kings Arms Yard VCT PLC – AGM

MP Evans Group PLC – AGM

Parity Group PLC – AGM

RHI Magnesita NV – AGM

Sopheon PLC – AGM

Team17 Group PLC – AGM

Wm Morrison Supermarkets PLC – AGM

Yellow Cake PLC – GM re authority to issue new shares

By Tom Waite; thomaslwaite@alliancenews.com

Copyright 2021 Alliance News Limited. All Rights Reserved.

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