MARKET REPORT: Mondi eyes rival DS Smith as takeover talks grip City
Two of the largest London-listed paper and packaging companies are the latest to be engulfed in takeover fever.
Just a day after housebuilders Barratt Developments and Redrow outlined plans for a merger, FTSE 100 group DS Smith revealed it had received ‘a very preliminary expression of interest’ from major rival Mondi, although no proposal has been made.
Mondi is considering an offer and must indicate by March 7 whether it wishes to proceed.
Shares in DS Smith rose 9.8 per cent, or 27.5p, to 308.6p, valuing the company at around £4.27bn. Mondi, worth around £5.9bn, fell 3.3 per cent, or 45p, to 1336p.
DS Smith has been on the stock exchange since 1986 and makes products such as containers for cans and bottles, and packaging for food.
Takeover fever: FTSE 100 group DS Smith revealed it has received ‘a very preliminary expression of interest’ from rival Mondi, although no proposal has been made
Mondi has 22,000 employees in more than 30 countries. It makes wooden containers, printing paper and boxes for storing fruits and vegetables.
In the broader market, the FTSE 100 fell 0.4 percent, or 33.27 points, to 7,595.48, while the FTSE 250 fell 1.81 points to 19,102.72.
The Competition and Markets Authority is opening an investigation into Aviva, which last year agreed to acquire AIG’s UK life insurance business for £460 million.
The watchdog is concerned about ‘a substantial reduction in competition’. Aviva fell 1 percent, or 4.2p, to 420.7p.
On Britain’s High Street, Primark pledged to invest more than £100 million in stores and open three branches this year. Shares in its owner Associated British Foods rose 0.3 percent, or 6p, to 2,247p.
Rolex seller Watches of Switzerland reported a 3 percent drop in third-quarter sales to £397 million. Sales in the US rose 3 percent, but in Britain and Europe they fell 7 percent. It fell 2.5 percent, or 9.4p, to 372.4p.
Stock watch – Sanderson Design
luxury interiors group Sanderson Design fell 13%, or 16.5p, to 110p after poor performance in Britain.
Turnover fell 3.1% to £108.5m in the year to the end of January, while profits of £12m were slightly lower than the previous year. Business was tough in Britain, its biggest market, where sales fell 11% to £37.9 million.
It warned that trading in Britain and Europe will remain “challenging” amid a “moderate consumer environment”, and expects similar revenues and profits in the coming year.
Digital 9 Infrastructure – down 23.7 percent, or 5.5 cents, to 17.7 cents – suffered a setback after the data center and wireless network investor said the sale of its prized asset will be explored by the Icelandic Antitrust Authority.
The group agreed to transfer Verne Global to Ardian France SA in November for around £465m.
It expected the deal to be approved by the end of March, but it could be approved later than hoped.
Sales at Compass, the world’s largest catering company, rose 11.7 percent in the three months to the end of December as it maintained its guidance for the financial year.
It has spent £280 million buying companies in the period and last month agreed to buy Britain’s CH&CO for £477 million. Shares rose 2.8 percent, or 61p, to 2,211p.
Mining giant Anglo American reported a positive fourth quarter following strong copper production in Peru and record iron ore production in Brazil. Shares fell 0.9 percent, or 15p, to 1739.6p.
Advertising giant WPP rose 0.2 percent (1.6 cents) to 783.4 cents after buying a minority stake in new German agency OH-SO Digital.
Cosmetics company Revolution Beauty aims to achieve a turnover of £1 billion by 2030 and save £10 million over the next three years, but warned that sales for the year to the end of February are likely to rise less than expected.
Shares fell 8.9 percent, or 2.85p, to 29.15p.
And technology company Nanoco – up 1.6 per cent, or 0.32 cents, to 20.18 cents – received the latest proceeds from its £124 million settlement with Samsung after it alleged patent infringement and claimed the South Korean tech giant used its ‘quantum dot’ technology in televisions without permission.
Nanoco said yesterday that it has paid £58.8 million in the second tranche and will return between £33 million and £40 million to shareholders and use some money to invest in commercial opportunities and expand R&D.