BUSINESS LIVE: Currys takeover bid; Hipgnosis files claim against advisor; Morrisons plans price cuts

Richard Hunter, Head of Markets at Interactive Investor:

‘Early news in Britain focused on Currys, with the possibility that a bid from Chinese e-commerce company JD.com could send shares soaring 34%. This follows a report that Currys had rejected an approach from US private equity firm Elliott Investment Management last weekend, raising the possibility of a bidding war.

‘Lately, Currys has maintained its strong focus on factors within its control as it continues to reduce costs, while making additional savings across various expenditure items such as capital expenditure, depreciation and debt and interest payments.

At the same time, the sale of its Greek operations is on track to be completed before the end of the fiscal year and likely during this quarter. The sale is expected to result in net proceeds of £156 million, much of which is likely to be used to reduce the group’s current net debt position of £129 million.

‘Currys therefore expects to have a net cash position at the end of the financial year, while it will also have some additional flexibility with regard to a further reduction of the pension deficit. Elsewhere, the Nordic region, a thorn in the side of Currys, which accounts for around 40% of total sales, has shown some signs of marginal improvement in recent times.”

(PA) – A quarter of UK hospitality firms say they are running out of cash reserves, new research has found, as industry bosses have urged the Treasury to prioritize tax cuts for the sector.

The joint research from UKHospitality, the British Beer and Pub Association, the British Institute of Innkeeping and Hospitality Ulster revealed the increased cost pressures facing venues across the country.

The trade groups said British pubs, restaurants, hotels and cafes are in a “dangerous state” and need “urgent support” to prevent local businesses from closing for good.

The new data, collected from hospitality businesses between January 15 and February 1, shows that 25% of businesses surveyed have no cash reserves and a further 29% say they only have enough for three months.

The rising costs facing businesses mean almost two-thirds (64%) are not optimistic about their business’s prospects over the next 12 months, an increase of 6 percentage points compared to October 2023.

In response, 94% of businesses said reducing VAT should be a priority for the government.

In a joint statement, the industry groups said: “These results clearly show the dangerous state our pubs, restaurants, hotels and cafes are in.

“The fact that a quarter no longer have cash reserves is a real cause for concern.”

British shares are in turmoil this morning as dwindling hopes for interest rate cuts by global central banks weigh on sentiment.

Market sentiment is negative as investors have reassessed their interest rate cuts, with money markets now pricing in a rate cut of around 65 basis points (bps) against the Bank of England (BoE) this year, compared to around 72 basis points last week.

BoE chief economist Huw Pill said on Friday that he had so far seen only “fairly modest and preliminary evidence” that inflation would fall back to and remain at the central bank’s target of 2 percent.

However, AstraZeneca rose 3 percent after a combination of the drugmaker’s cancer drug Tagrisso with chemotherapy to treat a type of lung cancer was approved by the U.S. Food and Drug Administration on Friday.

The FTSE 250 added 0.1 percent, led by a 31.5 percent rise in Currys after Chinese e-commerce group JD.com said it is in the “very preliminary stages” of evaluating a potential bid for the British electronics retailer.

Oil and gas bosses will attend crisis talks this week over Labour’s plan to extend the windfall tax.

Industry group Offshore Energies UK (OEUK) said Labor leader Sir Keir Starmer’s policies would be a ‘hammer blow’.

Rolls-Royce is expected to report a huge profit of £1.4 billion this week as the turnaround plan under boss Tufan Erginbilgic continues.

City analysts predict that the British engineering firm, which makes aircraft engines, will see profits more than double in 2023 compared to the previous year.

Ex-Hipgnosis Songs Fund CEO Merck Mercuriadis and investment advisor HSM have declined to provide protection against any liability arising from an ongoing legal battle with a former Mercuriadis company.

“The company is concerned, having been assured by Mr. Mercuriadis and the investment advisor that these claims are without merit and that they intend to defend them vigorously, that the claim for damages has been denied,” HSF said in a statement.

‘The company now plans to bring a Part 20 claim in the High Court against the investment adviser, seeking full damages.’

The Morrisons boss has stepped up the supermarket’s price war with Aldi and Lidl to win back customers.

Morrisons lost its status as Britain’s fourth largest supermarket chain almost two years ago as shoppers switched to German discounters.

Last month, new CEO Rami Baitieh promised to lure back disillusioned consumers, admitting there was “work to be done.”

Currys has rejected a takeover bid from Elliot Advisors of 62 cents per share, saying the electronics retailer’s board rejected the US activist fund group’s bid as it had ‘significantly undervalued the business and its future prospects’.

The offer was at a significant premium to Currys’ closing price of 42.07p on Friday.