Bryce ElderRead Biography
Lately, M&A reporting has been going a bit gonzo. This week alone we’ve had a recruitment website claim that Occidental Petroleum was about to buy Apache (denied) and reports on a Spanish-language site that Reckitt Benckiser had outbid P&G in an auction to buy Church & Dwight (also denied). Meanwhile, the more reputed media were running with stories about Bayer bidding for Monsanto (first denied, then confirmed). This upsurge in bum steers, bogus denials and half-baked tales in obscure places makes FT Alphaville’s RAW warning ever more essential. Please, read the damn warning.
There’s something a bit funny about today’s profit alert from Mike Ashley’s Sports Direct International. Here it is in full: Since our interim results on 10 December 2015, we have seen a deterioration of trading conditions on the high street and a continuation of the unseasonal weather over the key Christmas period. As a result, we are no longer confident of meeting our adjusted underlying EBITDA target (before share scheme costs) of £420m for the full year. In light of these factors, and in anticipation of similar trading conditions between now and the end of April, management’s current expectation for the full year is for adjusted underlying EBITDA (before share scheme costs) of between £380m and £420m. So, four weeks after its interim results, Sports Direct has reset full-year guidance to imply a 6 per cent downgrade against consensus forecasts, based on the middle of the range. But note the brackets.
A J Sainsbury bear hug on Home Retail Group, the owner of Argos, has proved quite unpopular. News of Sainsbury’s November cash-and-shares offer to buy Home Retail led the grocer’s shares to be marked 5 per cent lower, cutting its market value by £300m — equivalent to nearly a third of the market cap of its target. Jefferies’s James Grzinic sums things up: