MARKET REPORT: Private equity predators swoop on two more FTSE 250 firms

Private equity predators pounced on two other London-listed companies yesterday as the city was gripped by the takeover frenzy.

Shares in FTSE 250 payment provider Network International rose 23.2 per cent, or 56.4p, to 300p following an approach from a consortium of CVC Partners and Francisco Partner Funds.

After the market closed, Dechra Pharmaceuticals revealed it was in talks with private equity group EQT over a potential £4.6 billion deal.

The news came too late for traders to react, but after rising 3.4 percent, or 86p, to 2776p before the market closed, the stock will come into sharp focus when trading resumes.

The approaches are the latest swoops in London, fueling fears that British businesses are being bought cheaply. Some picked up as Covid hammered stock prices in what has been dubbed “pandemic looting.”

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: ‘Swoops by overseas buyers have undoubtedly caused concern among politicians, especially given the government’s efforts to attract more businesses to London. It is new evidence that British assets are considered cheap.”

Network International, based in Dubai and processing payments in the Middle East and Africa, said talks are “ongoing.” “There is no certainty that a bid for Network will be made,” it added.

It is now worth £1.3 billion. It was listed at 435p four years ago, worth £2.2 billion.

Veterans firm Dechra, which makes medicines to treat pets, has been a member of the London stock market since 2000. The proposed deal would pay its shareholders 4070p per share.

It will recommend the acquisition if the private equity group announces its firm intention to make an offer.

The FTSE 100 rose 0.2 percent, or 18.54 points, to 7,843.38, and the FTSE 250 rose 0.4 percent, or 67.4 points, to 19,070.13.

Homebuilders recovered after a double dose of good news. HSBC gave most stocks a buy rating and raised target prices by an average of 29 percent.

Stock watch – Churchill China

Ceramic maker Churchill China said things will be even better this year after a strong 2022.

The 228-year-old group, which supplies cutlery, mugs and plates to hospitality businesses such as hotels and caterers, saw sales rise 36 percent to £82.5 million last year.

And profits rose 52 percent to £9.1 million.

It increased its dividend payment to 31.5 pence last year, up from 24 pence in 2021. Shares were up 5.7 percent, or 70 pence, to 1310 pence.

And the Royal Institution of Chartered Surveyors pointed to a rebound in the property market later this year.

Barratt Developments rose 2.4 percent, or 11.1 pence, to 478.2 pence, Taylor Wimpey rose 2 percent, or 2.4 pence, to 120.45 pence, Redrow added 3.3 percent, or 15 .8 pence, to 493.4 pence and Bellway gained 2.9 per cent, or 64p, to 2306p.

At Darktrace, the cybersecurity firm warned that the deteriorating economic climate has made it more difficult to win new customers.

It meant annual recurring revenue for the full year was expected to grow at about 29 percent, well below previous expectations. It climbed 2.5 percent, or 6.1p, to 249.1p.

Oxford Instruments boss ends his seven-year tenure. Ian Barkshire is replaced by Richard Tyson, the CEO of TT Electronics.

Oxford makes components such as x-ray tubes, microscopes and technology to make semiconductor computer chips, and recorded a 22 percent increase in orders and sales in the US, Europe and Japan in the year to March 31. Shares rose 5.7 per cent, or 140p, to 2585p.

Finally, Diageo called time on its French and Irish listings after an investigation into the volume of shares traded, costs and administrative requirements.

The beverage giant behind Guinness, Johnnie Walker and Captain Morgan hopes to delist its shares from Euronext Paris and Euronext Dublin next month.

It retains its listings in London and New York. Shares rose 0.2 percent, or 8p, to 3684p.