Maitland/AMO Morning Monitor – Monday 5 July 2021
In the news
- Amazon executive Andy Jassey will take over from Jeff Bezos as CEO of Amazon, receiving a $214m stock package
- The Cyberspace Administration of China has ordered that ride-hailing giant Didi be take off domestic app stores days after the Group's $4.4bn New York IPO
- The CEO of Schroders has warned that private equity groups will continue their 'raid' on UK PLC unless there is a reform of City rules that will lighten the load on public companies
- Boris Johnson is set to hold a major press conference this afternoon to announce his decision to end most Covid-19 restrictions in England on 19 July
- House of Commons sits from 2.30PM with defense questions followed by any urgent questions or ministerial statements
- Health Secretary Sajid Javid will announce the government’s COVID roadmap plans
Stock market moves
- In Europe the FTSE100 and Stoxx 600 are both trading up in early hours.
- Asian markets finished mixed as of the most recent closing prices. The Shanghai Composite closed up, while the Nikkei led the Hang Seng lower.
- US stocks closed at new all-time highs on Friday with the S&P 500 and Nasdaq Composite closing up 0.8%. It came after jobs data for June came in better than expected, signalling a robust US recovery.
Corporate announcements* Maitland Client
Glencore PLC Appointment of new Chairman
- Tony Hayward will retire as Chairman and Kalidas Madhavpeddi will be appointed as the new Chairman on 30 July.
- Madhavpeddi joined the Board of Glencore in February 2020. He has over 40 years of experience in the international mining industry, including being CEO of China Molybdenum International. He started his career at Phelps Dodge, ultimately becoming Senior VP. He is currently a non-executive director of Novagold Resources Inc., Trilogy Metals Inc. and Dundee Precious Metals Inc.
- Kalidas Madhavpeddi said: “I am delighted to have been appointed Chairman at such an exciting time for the business. As the world transitions to cleaner forms of energy and mobility, our portfolio of commodities will allow Glencore to play a key role in helping us achieve the goals of Paris and play a key role in the ongoing energy and mobility transition.”
- JD Sports announces that it completed the transfer of DTLR Villa LLC, which is an existing 98.6% owned subsidiary based in the US, to Genesis Topco Inc, which is an existing 80.0% subsidiary based in the US and parent company of the sub-group which contains the Finish Line Inc and the Shoe Palace Corporation on 2 July 2021.
- This transfer to Genesis now brings all of the Group’s businesses in the US into one sub-group which will enhance the future operational collaboration between them.
- After customary working capital and other adjustments at completion, the total consideration payable by JD on the original acquisition of the Company was $504.4m, which was funded through a combination of existing cash within the Group and a drawdown of debt.
- Diversified Energy Company has completed the purchase of certain upstream assets and related infrastructure within its Central Regional Focus Area from Blackbeard Operating LLC.
- This enlarges the Company’s presence in its Central RFA with an entry into the Barnett producing area.
- For the Acquisition, Diversified paid total net consideration of approximately $166m after customary purchase price adjustments with a 1 April 2021 effective date.
- The Company funded the Acquisition through a combination cash on hand, including funds from its recent issuance of equity shares in May, and existing availability on the Company’s Revolving Credit Facility.
- Rusty Hutson, Jr., CEO, said: “Today’s announcement marks an important step in broadening our operating footprint within the Central Regional Focus Area. Closing this transaction marks our entry into the historic Barnett producing area, which offers an attractive area for future growth.”
- Following correspondence with the CMA, the CMA has confirmed that it has no further questions for Biffa in relation to the transaction at this time.
- Accordingly Biffa now expects to complete the transaction on 31st August 2021.
- The acquisition of Viridor’s Collections business and certain Recycling assets, expands the Group’s collections business and recycling capabilities while enhancing its leading position in UK sustainable waste management.
- 84 Catalogues acquired for $1.089bn taking the total Portfolio to approximately $2bn invested across 138 Catalogues.
- Operative NAV increased by 11.3% to $1.6829 per Share over the year (31 March 2020: $1.5114).
- Catalogue revenues highly resilient through COVID-19 pandemic and well placed for future growth with acceleration of streaming adoption.
- Annual dividend target increased by 5% to 5.25p per Ordinary Share.
- Merck Mercuriadis, Founder, said: “Against one of the most challenging backdrops of our lives, the Operative NAV per Share increased by 11.3% to $1.6829, which with dividends paid reflects a Total Operative Dollar NAV Return of 15.7%. This brings the Total NAV Return since IPO less than three years ago to 40.7%. This strong return evidences not only our ability to be able to buy and manage our culturally important and extraordinarily successful songs well but also the highly uncorrelated nature of proven songs.”
- Diversified Energy Company announces the conditional acquisition of certain Cotton Valley and Haynesville upstream assets and related facilities in the states of Louisiana and Texas from Tanos Energy Holdings III LLC.
- Concurrently, Oaktree Capital Management will co-invest in the Acquisition under the joint participation agreement announced on 5 October 2020, marking Oaktree’s inaugural participation in a transaction with Diversified and affirming their confidence in the Company’s recently defined Central Regional Focus Area.
- Total cash consideration for the Acquisition is $308m.
- Rusty Hutson, Jr., CEO, said: “Once complete, our Central RFA acquisitions will contribute over 30% of our production and Adjusted EBITDA.”
- The boards of directors of Wm Morrison Supermarkets PLC and Oppidum Bidco Limited have reached agreement on the terms of a recommended all cash offer by Bidco for the entire issued, and to be issued, share capital of Morrisons.
- Under the terms of the Offer, Morrisons Shareholders will be entitled to receive 254 pence for each Morrisons Share.
- The Offer values the entire issued and to be issued share capital of Morrisons at approximately £6.3bn on a fully diluted basis.
- Andrew Higginson, Chairman of Morrisons, said: “The Morrisons Directors believe that the Offer represents a fair and recommendable price for shareholders which recognises Morrisons’ future prospects…Fortress, CPP Investments and KREI all have strong track records and a long-term approach to investing. They are backing our strategy, our management and our people.”
- Apollo Global Management notes the recent press speculation in relation to Morrisons and confirms that it is, on behalf of certain investment funds managed by it, in the preliminary stages of evaluating a possible offer for Morrisons.
- No approach has been made to the Board of Morrisons. There can be no certainty that any offer will be made, nor as to the terms on which any such offer might be made.
- Since the Q1 2021 update, underlying trading in H1 2021 has been strong and ahead of expectations.
- The order book continues to grow and is significantly ahead of last year. The Group has also achieved good order intake in H1 2021 and orders for the full financial year are expected to be well ahead of 2020, driven by Maritime, Intelligence & Communications and Forensic Technology.
- Group revenue growth has been robust despite the previously announced mainly Covid-19 driven operational inefficiencies experienced in the Maritime SBU in Q1 2021 which are now broadly resolved.
- Simon Pryce, CEO, said: “We remain excited about the significant opportunity within Ultra to capture market share and accelerate growth through a combination of continued investment in our strong technology base and our ONE Ultra approach, whilst delivering much improved operational performance.”
- The initial portfolio consists of 46 active technology-led companies, which had an unaudited Initial Portfolio NAV of £103m (then comprising 45 active investments).
- The Company expects to raise at least £25m of gross primary proceeds. Primary proceeds will be used, inter alia, to fund further investments in existing portfolio companies and new investments, and to provide capital for Forward Advances.
- The IPO fundraise will include a Retail Offer through the PrimaryBid platform.
- Nic Brisbourne, Founder and CEO, said: “[A public listing means…] We’ll be able to invest more, for longer – and to build new products and services founders really need. For founders, it means more routes to growth – more choice, more control and more support. For investors, direct access to fast growing, innovative tech businesses through a well-established, well-managed and balanced portfolio.”