Our head of investment rounds up the morning's big news.
European markets have opened higher with the FTSE 100 trading above 7,900. Stronger commodities have lifted stocks like Anglo American (LSE:AAL), Rio Tinto Registered Shares (LSE:RIO) and BP (LSE:BP.) towards the top of the UK index ahead of China’s closely watched economic growth figures on Tuesday.
In the US, earnings season continues to take centre stage after JPMorgan Chase & Co (NYSE:JPM) results outpaced expectations on Friday thanks to the tailwind from rising interest rates, lifting shares by over 7% in its best session since 2020. US futures are pointing to a stronger open today stateside, reversing some of Friday’s losses after the major averages closed in the red despite strong earnings in the banking sector.
Having previously rejected four offers from Apollo, John Wood Group (LSE:WG.) said it is willing to engage with the private equity firm again. A fifth proposal has been submitted to the Board at a final price of 240p per share in cash, valuing the engineering services company at £1.66 billion. The deadline for a firm offer from Apollo has been extended from 19 April until 17 May. Speculation of a takeover has supported Wood’s shares this year, which are up over 49% to Friday’s close, with shares up a further 7% today.
This deal adds to the flurry of private equity M&A activity in recent days alongside Dechra Pharmaceuticals (LSE:DPH), Network International Holdings (LSE:NETW) and property company Industrials REIT Ltd (LSE:MLI). There is a sense among international investors that the UK is ripe with takeover targets. The recent rebound for the pound suggests opportunistic buyers need to make the most of sterling’s weakness before it appreciates further and is too late as the FX discount subsides.
SEGA / ROVIO
Sega Sammy Holdings is making an offer to acquire Angry Birds maker Rovio Entertainment for 706 million euros, or 9.25 euros a share, representing a 19% premium to Friday’s closing share price of 7.775 euros. In November, Israel’s Playtika made an offer for Rovio which was subsequently sweetened in January. However talks ended in March but there was speculation that another buyer could come to the table. M&A hopes have kept Rovio well supported in recent months with shares rallying by around 33% over the past six months to Friday’s close. Today’s announcement has lifted Rovio by a further 17.8%.
Shares in the Japanese gaming giant behind Sonic the Hedgehog shed over 4% during the overnight session in Asia, with shares pricing in the premium offer made for Rovio.
While Angry Birds has been an undeniable mega success with its mobile game, consumer products and even The Angry Birds Movie and a sequel, Rovio has struggled to replicate this with another blockbuster franchise, raising concerns about how the company plans to grow moving forward. Plus, a disappointing share price performance last year attracted potential bidders, hoping to swoop up the company at a discounted valuation.
Sega Sammy is hopeful of successful synergies thanks to its similarities in terms of target customers, style of games, and brands.
Shares in Royal Mail’s parent company International Distributions Services (LSE:IDS) are rallying over 5.5% after a deal was reached with the Communication Workers Union (CWU) this weekend over wages and employment terms.
The agreement marks an end to the period of heightened uncertainty for the group which has been grappling with industrial action including a series of nationwide strikes involving over 110,000 postal staff last year.
Shareholders have had a difficult time with this stock which has plunged from a high of around 591p in June 2021 to a low below 200p late last year. But the bulls have been gathering momentum, with shares rebounding by around 25% in the past six months to just shy of 250p. If the agreement marks an end to the recent strike action, this will be a major win for the company as it looks to shift its workers dispute to the rear-view mirror. Plus, there are hopes that the UK’s inflationary pressures will ease this year, also supporting real terms wage growth for workers and helping to alleviate the sense of discontent over pay.
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