Maitland/AMO Morning Monitor – Monday 20 January 2020

20th January 2020

In the news

  • Department store chain Beales could go into administration as early as today
  • Report from the Financial Times finds that HS2 rail link could cost up to £106bn
  • Property group Intu suggests it is looking to raise up to £1bn

Politics today

  • The UK-Africa Investment Summit, led by Prime Minister Boris Johnson, begins with a reception at Buckingham Palace hosted by the Duke and Duchess of Cambridge

Stock market moves

Corporate announcements

* Maitland Client

  • BAE Systems plc announces that it has entered into a definitive Asset Purchase Agreement to acquire Collins Aerospace’s Military Global Positioning System business for $1.925bn in cash, subject to customary closing adjustments. As an asset purchase there is an expected tax benefit of c.$365m.
  • The Company has also entered into a definitive Asset Purchase Agreement to acquire Raytheon’s Airborne Tactical Radios business for $275m in cash, subject to customary closing adjustments.  As an asset purchase there is an expected tax benefit of c.$50m.
  • These two proposed acquisitions represent a unique opportunity to purchase high quality technology based businesses with market leading capabilities and long histories of pioneering innovation in their fields.
  • Charles Woodburn, CEO, said: “These proposed acquisitions present a unique opportunity to add high quality, technology focused businesses to our Electronics Systems sector. It’s rare that two businesses of this quality, with such strong growth prospects and close fit to our portfolio, become available. The strategic and financial rationale is strong and these proposed acquisitions, which are focused on areas of highest priority defence spending, will further enhance the Group’s opportunity for continued growth in Electronic Systems. We look forward to welcoming the employees of the two businesses to the Company, as we work together to help drive our business forward successfully.”
Anglo American PLC Recommended cash acquisition for Sirius Minerals
  • The boards of Anglo American plc, Anglo American Projects UK Limited and Sirius Minerals Plc are pleased to announce that they have reached agreement on the terms of a recommended cash acquisition pursuant to which Bidco shall acquire the entire issued and to be issued share capital of Sirius. The Acquisition is intended to be effected by means of a scheme of arrangement under Part 26 of the Companies Act.
  • The Offer Price represents a premium of approximately 34.1 per cent. to the Closing Price of 4.10 pence per Sirius Share on 7 January 2020.
  • The Acquisition values the entire issued and to be issued share capital of Sirius at approximately £404.9m.
  • Mark Cutifani, CEO of Anglo American, said: “Anglo American’s recommended offer provides greater certainty for Sirius’ Shareholders, employees and wider stakeholders, while bringing the prospects for the development of this potential Tier 1 Project closer to reality. We intend to bring Anglo American’s financial, technical and product marketing resources and capabilities to the development of the Project, which of course would be expected to unlock a significant and sustained associated employment and economic stimulus for the local area. The addition of the Project supports our ongoing transition towards supplying those essential metals and minerals that will meet the world’s evolving needs – in terms of the undoubted need for cleaner energy and transport, and providing infrastructure and food for the world’s fast-growing and urbanising population. Our development of the Project in the years ahead reinforces the quality of our portfolio and our long-term growth profile, further enhancing our ability to deliver leading returns on a sustainable basis and enduring value for all stakeholders.”
Fevertree Drinks PLC Year End Trading Update
  • Group revenue is expected to be £260.5m representing growth of c.10%.
  • This performance is below the Board’s expectations, primarily reflecting subdued Christmas trading in the UK.
  • The group’s key growth markets delivered a strong performance with sales accelerating in the second half in the US and Europe as well as a notable end to the year in Australia and Canada.
  • While the UK has performed below expectations, it has been a year when he groups has lapped exceptional comparators and despite that have retained its clear category leadership position and are very well placed to return to growth in 2020.
  • Tim Warrillow, CEO, said: “Despite the subdued end to the year in the UK, we have delivered a strong performance across many of our regions in 2019 and begin 2020 with real momentum in a number of key growth markets. Whilst the UK mixer category has clearly not been immune from the consumer belt tightening seen in recent months, we remain the clear category leader and have a strong platform to return to growth during 2020 and beyond. However this is a global opportunity which remains in its relative infancy in many markets. The trend towards premium spirits and premium long mixed drinks continues to gather momentum around the world. Fever-Tree is the no1 premium mixer globally and our performance in 2019 across US, Europe and as far afield as Australia and Canada highlights the fast-growing international strength of the business. Our decision to increase our investment in these regions and in particular in the US reflects our belief and excitement in the long-term opportunity ahead for the Group.”