Must read: French politics, Bank of Japan, Tesla, Crest Nicholson
Our head of investment rounds up the morning's big news.
14th June 2024 09:11
by Victoria Scholar from interactive investor
GLOBAL MARKETS
European markets have opened mixed with the CAC 40 in France under pressure amid the political uncertainty.
Executive pay is in focus with Tesco (LSE:TSCO)’s CEO under fire over his near £10 million pay package, while Elon Musk gets his controversial record remuneration worth up to $56 billion approved by Tesla Inc (NASDAQ:TSLA) shareholders.
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As expected, the Bank of Japan kept interest rates on hold overnight but said it is considering reducing its purchases of Japanese government bonds (JGBs), lifting the Nikkei 225 into the green.
US futures are pointing to a mixed open after both the S&P 500 and Nasdaq closed at record highs for a fourth straight session.
CREST NICHOLSON
Shares in Crest Nicholson Holdings (LSE:CRST) have surged around 7% after the company said it rejected a revised £650 million all-share takeover bid from Bellway (LSE:BWY) on the grounds that the offer undervalued the homebuilder.
The bid represented a 19% premium to Crest Nicholson’s share price before the announcement, yet the group decided that offer was still too low. Takeover speculation has sent shares in Crest Nicholson sharply higher, reflecting the fact that investors are hoping that Bellway will return with another sweetened offer.
Before today’s jump, shares in Crest Nicholson were roughly flat year-to-date and were little changed year-on-year, underperforming the wider UK market, providing an opportunity for Bellway to make an offer while shares remain relatively cheap.
Crest Nicholson has had a tough time lately – just this week the company cut its dividend and announced a profit warning, predicting full-year earnings will drop by at least a third after reporting an 88% slide in half-year profit, driven by higher interest rates and sluggish demand. The weakness in its performance and the vulnerability of its shares makes Crest Nicholson more susceptible to takeover attempts.
Today’s update is the latest suggestion of consolidation in the sector after Barratt Developments (LSE:BDEV) and Redrow (LSE:RDW) announced plans for a £2.5 billion merger in February and Vistry Group (LSE:VTY) acquired Countryside in 2022 for £1.25 billion. UK housebuilders appear to be increasingly eyeing inorganic growth, looking to tie-up with rivals to combat pressures from the slowdown in developer deals and weak residential demand, weighed down by higher mortgage rates.
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