Dealmaking in the City continues to enjoy an upturn after two property firms today unveiled a tie-up that will create a venture big enough for the FTSE 100 index.
Tritax Big Box, the owner of major warehouses used by retailers, will have a value of about £4 billion through its £924 million offer for UK Commercial Property REIT.
As well as the recent flurry of merger deals, traders are looking ahead to a busy week of economic updates including inflation figures in the UK and United States.
Market snapshot: FTSE 100 steady
08:34 , Daniel O’Boyle
Take a look at today’s market snapshot, as the FTSE 100 held steady in early trading
Burberry leads FTSE 100, NatWest and AstraZeneca under pressure
08:34 , Graeme Evans
The FTSE 100 index stands 1.59 points higher at 7574.17, led by a strong session for Burberry after its shares rebounded 3% or 40.5p to 1311.5p.
Frasers Group also put on 2% or 14.5p to 798p after the Sports Direct owner announced the launch of a new buyback programme worth up to £80 million.
Other risers included Lloyds Banking Group following a gain of 0.3p to 41.7p, whereas rival NatWest fell 1.8p to 208.9p ahead of Friday’s annual results.
AstraZeneca remained under pressure after last week’s results as shares in London’s second biggest company lost another 2% or 230p to 9531p.
The FTSE 250 outperformed the top flight through a rise of 128.40 points to 19,190.72, with UK Commercial Property REIT up 6% or 3.8p to 68p following a merger with Tritax Big Box.
Another 6 million passengers fly through Heathrow in January
07:58 , Daniel O’Boyle
Another 6 million people travelled through Heathrow Airport in January, with little sign that fears about flight safety or geopolitical events hit the West London hub.
But Heathrow bosses warned that the lack of VAT-free shopping for international travellers was continuing to hold back the UK. It has joined forces with two business groups, the British Chambers of Commerce and the Federation of Small Businesses, in an attempt to get Jeremy Hunt to reintroduce VAT-free shopping at the spring Budget next month.
The airport said: “While exports are thriving, Britain has shut the door on home grown growth, turning away international shoppers through the tourist tax and tarnishing the UK’s reputation as a competitive country to spend and do business with.”
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Warehouse firms to merge as Tritax Big Box offers £924 million for UKCM
07:39 , Michael Hunter
Tritax Big Box, the owner of a major warehouses used by retailers, has made a £924 million, all-stock offer for another real estate investment trust, UK Commercial Property REIT.
The deal would create the fourth-biggest company of its kind in the UK, brining together a property portfolio worth £6.3 billion and a market capitalisation of £3.9 billion.
Investors are being offered 0.444 of a new share in Big Box, which equates to 71.1p per share in UKCM based on Friday’s closing pice.
That represents a premium of almost 11% for UKCM investors and it is being backed by the board.
Big economic week ahead
07:39 , Daniel O’Boyle
Today kicks off a big week for UK economic data, with the most closely watched being Thursday’s GDP release, which will reveal whether the UK ended 2023 in recession.
Employment data will be on Tuesday and inflation on Wednesday, with January retail sales on Friday.
Inflation is set to rise, but unemployment is likely to remain at historically low levels. GDP is set to grow slowly in December. But the big question, whether fourth-quarter GDP grew, will be an extremely close call.
FTSE 100 seen higher after Wall Street record, Brent Crude at $82
07:12 , Graeme Evans
The FTSE 100 index is set to open higher after tech stocks drove a strong end to the week on Wall Street, with the S&P 500 closing above 5000 for the first time.
The start of this week is expected to be a quiet one, particularly with a number of Asian markets closed for the Lunar New Year or Japan’s National Day.
Events are likely to pick up from tomorrow, with the release of UK unemployment and wage figures followed by the monthly reading on US inflation.
IG Index reports that futures trading is pointing to a 0.2% or about 17 points rise to 7590. The gains follow a robust session for US markets after the S&P 500 closed 0.6% higher to stand at a record 5026.
In commodities, the price of Brent Crude today held firm at $82 a barrel while gold traded at $2024 an ounce.
Recap: Friday’s top stories
06:36 , Simon Hunt
Hold on to your hats. The tumbleweed has all blown away and the M&A gunslingers are back in town.
What a few days it has been for the dealmakers. On Wednesday we had the £2.5 billion tie-up between Barratt Developments and Redrow to create a £7 billion sector superheavyweight. On Thurday it emerged that FTSE 100 packaging giant Mondi is in talks with rival DS Smith about a potential £10 billion merger.
On Friday Tesco Bank being sold to Barclays for up to £700 million.
But is the flurry a sign of a sustained pick-up in M&A… or just a blip?
City advisers have been saying privately for some time that they expected something like this to happen early in 2024. So many stalled deals have been stuck on the runway for so long it was inevitable that once there was a break in the clouds there would be a rush to get them airborne.
That said, who knows what the landscape will look like in a Trump-Starmer era possibly just a few months away?
Maybe that is why the M&A pipeline is suddenly so full. That window of relative stability may only be a brief one.
Here’s a summary of our other top stories from Friday:
And in City Spy…
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