FTSE 100 Live February 21: Oil and gold ease on possible US-Russia summit, Clipper Logistics and John Menzies takeover talks
Biotech suffers stock destruction
Synairgen shares fell nearly 85% after asthma drug SNG001 underperformed in late-stage trials as a Covid-19 treatment.
The study of 623 hospitalized patients showed that those given Southampton University’s inhalant drug recovered no faster than those given a placebo.
Shares of the 20-year-old company soared 3000% when the potential use of SNG001 in front-line defense against Covid-19 was first identified in 2020, taking the trio of founders from university professors to paper millionaires.
They fell 162p to a low of 11.2p at today’s open before recovering to 26.6p.
CEO Richard Marsden said hospital care has improved significantly since the Phase 2 trials, which “may have impacted SNG001’s potential to show clinical benefit.”
He added: “Nevertheless, we have observed an encouraging trend in preventing the progression of serious disease and death that we strongly believe merits further investigation in a platform study.”
“We are now analyzing the entire dataset to better understand all the results.”
Bigger trials continue and Mark Brewer, an analyst at house broker finnCap, said that while launch schedules have changed, SNG001 is “by no means dead”.
He wrote: “In our opinion, the potential of SNG001 as a drug to reduce mortality and potentially for use in future pandemics has not changed.”
FTSE falls on tensions between Ukraine and Russia
The FTSE 100 is slightly lower in afternoon trade on Monday, weighed down by ongoing fears of a conflict between Russia and Ukraine. Russian steel miner Evraz and Russian precious metals miner Polymetal International are both at the bottom of the index of fears of sanctions.
There was cautious optimism this morning after French leader Emmanuel Macron brokered a meeting between the presidents of the US and Russia. However, that faded as the day progressed. A spokesman for British Prime Minister Boris Johnson told reporters at noon today: “The information we are seeing indicates that Russia intends to launch an invasion and that President Putin’s plan has already begun.”
The blue-chip index is down 28 points, or 0.4%.
British firms worth £3bn fall into foreign hands
THREE British firms worth almost £3billion together were set to fall into foreign hands today in the latest sign markets may be bracing for some post-Covid deal madness.
First, Clipper Logistics accepted an offer of 920 pence per share from US rival GXO Logistics, a deal that will see a key provider of supplies to M&S, John Lewis, JD Sports and Asda, go public.
John Menzies, the cargo group that works for airlines around the world, is following the same path.
It has accepted an offer of £558million from Kuwait firm Agility. That’s at a much-improved 608p per share, having rejected previous bids at 460p and 510p.
Meanwhile, the government has dropped its probe into the US SS&C’s £1.2bn takeover of robotic software group Blue Prism. It will be delisted from the London Stock Exchange in March.
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PurpleBricks hits all-time low
Shares in online real estate agent Purplebricks hit an all-time low of 19.3p today as the company faces the specter of a lawsuit from self-employed people seeking compensation for lost holiday pay and pension contributions.
Purplebricks’ share price has fallen 96% from its all-time high of 515p in August 2017. The company reported a loss of £20.2 million in the six months to October 2021 after costs rose after the company switched its business model to permanent employment of its sales force amid increased scrutiny of the treatment of workers in the gig- Economy.
The Morse Club crashes
Shares in sub-prime lender Morses Club have more than halved after its CEO unexpectedly resigned on the eve of a profit warning.
Paul Smith, who has been CEO since 2015, is stepping down from the board effective immediately. Current COO Gary Marshall is set to take his place, subject to regulatory approval.
The filings show that Smith dumped a significant portion of his stake in Morses last Friday. The company said it had received “no prior notification” of the sale, valued at around £194,000.
In the same statement, Morses Club said that year-to-date profits will come in 20% to 30% below expectations after rising costs for processing claims.
Morses blamed a “rapid” increase in the volume of recently filed applications. Claims are being made in spades by companies on behalf of customers who claim they have been treated unfairly.
Diplomatic efforts help stabilize FTSE 100
The prospect of a last-ditch Biden-Putin summit brought some relief to traders today as financial markets in Europe avoided further Ukraine-led volatility.
By the time it emerged that France had successfully brokered a possible meeting between the presidents of the US and Russia, there had been fears of another muted meeting.
The move halted upward pressure on oil prices and safe haven gold, while the FTSE 100 Index stood 24.04 points higher at 7537.66 after falling 1.9% last week.
However, sentiment among traders remains tense despite recent efforts to find a diplomatic solution to the Ukraine crisis. Russ Mold, Investment Director at AJ Bell said: “Investors, like everyone else, are scratching their heads trying to decipher the Russian leader’s endgame and until that is clear the jitters are likely to linger.
Amid geopolitical developments, travel and leisure stocks benefited from today’s plans to lift the UK’s Covid-19 restrictions, as British Airways owner IAG rose 2p to 163.6p and Rolls-Royce to 118.2p was a dime stronger.
But London’s main support came ahead of a busy week of corporate earnings from the financial sector. NatWest, which fell on Friday after cutting its cost-cutting target, rebounded 5.2p to 239.7p and HSBC rallied 8.9p to 553.3p before figures are due tomorrow.
The biggest loser was Baillie Gifford’s tech-focused Scottish Mortgage Investment Trust, which fell 3%, or 30.8p, to 984.2p, its lowest since October 2020.
Further pressure also came on security technology group Halma, whose shares are down more than 20% so far this year, prompting a major reversal. Halma announced today it is buying a US-based light metering company for £19.5m, but shares fell a further 21p to 2265p to leave shares at their lowest since March.
Veterinary drug company Dechra Pharmaceuticals had a mixed session, despite reporting a 50% rise in operating profit for the half. The shares initially traded 4% higher but were later 24p cheaper at 3760p in a further move to squash their chances of remaining in the FTSE 100 index beyond next month’s quarterly reshuffle.
The FTSE 250 index fell 32 points to 21330.54, with one of the best performers being cybersecurity firm Darktrace after a 6% recovery.
Inflation eats away at Finsbury Foods’ profits
The Mary Berry cake maker has suffered a 23% profit fall despite record sales as the company grapples with inflationary pressures and supply chain issues.
Cardiff-based baker Finsbury Foods, which also makes products under the Thorntons and Costa brands, saw sales rise 9% to 166.5m product choices in the six months to December 25.
But pre-tax profit fell to £5.7m from £7.4m. Chief Executive John Duffy cited “challenges posed by sudden and unexpected input cost inflation.” Staffing shortages and supply chain issues also weighed on performance.
Shares slipped 1.9p, or 2.1%, to 86.6p.
IPO platform Deliveroo raises $190 million
PrimaryBid, the platform that allows retail investors to participate in IPOs, has raised $190 million from Japanese investment giant SoftBank.
London-based PrimaryBid has raised the money from an investment round led by SoftBank’s Vision Fund 2. The start-up is said to be worth around $700 million in the transaction.
PrimaryBid’s technology allows companies to sell shares to retail investors during listings and rights offerings. Because of the complexity and expense of dealing with large numbers of retail investors, these large transactions have traditionally been reserved for large institutions.
To date, PrimaryBid’s platform has helped businesses raise over $1 billion in 200 transactions. The company’s most high-profile deal in the UK was backing Deliveroo’s disastrous IPO in March 2021.
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FTSE 100 higher, IAG up 3%
Optimism over a possible US-Russia summit helped the FTSE 100 index climb 52.32 points to 7565.94, up 0.7%.
Travel and leisure companies are most in demand, with British Airways owner IAG up 3%. Russian steelmaker Evraz is up 3% and there are improved sessions for stocks in the mining and financial sectors including Barclays and Anglo American.
Veterinary medicines company Dechra Pharmaceuticals, which was included in the FTSE 100 last year, rose 2% after reporting a 50% rise in operating profit for the half-year.
Security technology group Halma, whose shares have fallen more than 20% this year, rejoined the risers board by announcing a deal to buy a US-based light metering company for £19.5million. Shares rose 8p to 2294p.
The FTSE 250 Index was up 62.79 points to 21,425.39, with Wizz Air and easyJet up more than 2%. John Menzies is up 5p to 588p and Clipper Logistics is up 14% or 111p to 888p on their respective acquisition developments.
Back takeover deals for mid cap pairs
Prices have been agreed for acquisitions of aviation services provider John Menzies and online retail specialist Clipper Logistics.
Menzies was valued at £558million after its Edinburgh-based board backed an improved approach from Kuwait’s National Aviation Services at 608p a share.
Clipper Logistics, which processes online orders for major retailers, has agreed a £920million cash-and-shares approach from New York-listed GXO Logistics.
Both transactions are subject to completion of due diligence and other conditions.