Market report

Probe into Admiral pubs | FirstGroup tender | Google profits


5pm: Pubs, airlines and housing firms rise

Shares in pub chains JD Wetherspoon and Mitchells & Butlers were ahead 5.27% and 5.68%, respectively, after the Chancellor announced a new tax relief for pubs in the autumn Budget.

In a bid to simplify the alcohol tax system, which Sunak described as “outdated and full of historic anomalies”, the chancellor said the new system would follow the rule that the stronger the drink, the higher the rate.

Transport operator FirstGroup rallied 4.94% after confirming it would return £500m to shareholders through a tender offer at 105p a share.

Housebuilders Taylor WimpeyBerkeley and Barratt Developments gained 2.66%, 1.14% and 1.23% respectively, even after Rishi Sunak said residential property developers faced a new cladding tax.

10am: FTSE 100 heading lower

Blue chip shares were heading for their first fall of the week ahead of the Chancellor’s Budget statement, despite speculation that the Treasury expects the UK economy to grow by 7% this year, almost double the 4% predicted by the Office for Budget Responsibility.

The FTSE 100 was trading 24.14 points lower at 7,253.48.

9am: First fall in confidence

Scottish consumers were less confident than the rest of the UK across a range of measures in Q3, even as consumer confidence fell nationally for the first time this year, according to the latest Deloitte Consumer Tracker. 

Overall confidence in Scotland was dented by reduced optimism around personal finances, specifically in the level of debt and household disposable income.

7am: Pubs deal referred

The Competition and Markets Authority is to instigate a phase two investigation into Admiral Taverns’ £222.3 million acquisition of Hawthorn Leisure’s 674 pubs across the UK from NewRiver.

The deal would take Admiral’s  portfolio to more than 1,600 and create one of Britain’s biggest pub firms.

It represents a big return for NewRiver which bought Hawthorn for £106.8m in 2018.

The CMA today said that the merger may result in a “substantial lessening of competition within a market or markets in the United Kingdom.”

The CMA has arrived at this decision under its fast-track procedure at the request of the merging parties. This merger will be referred for a phase 2 investigation unless the parties offer an acceptable undertaking to address these competition concerns.

7am: FirstGroup tender offer

FirstGroup is to return up to £500 million to its shareholders by way of a tender offer at 105p per share.

The move follows disposal of its First Student and First Transit businesses to EQT Infrastructure for $3.1 billion when it announced its intention to increase the proposed return of value from £365m.

Shareholders are being invited to tender some or all of their ordinary shares for purchase on the terms and subject to the conditions set out in a circular to be published today.

Global markets

Profits at Google owner Alphabet hit a new record on the back of an eye-watering 41% jump in sales to $65.1 billion in the latest quarter, equivalent to the UK government’s defence budget.

Net income, or profit, climbed from $11.25 billion to $18.94 billion in the three months to 30 September.

Google sells more internet ads than any other company through its search engine, YouTube video service and partnerships across the Web. Demand for its services surged in the past year as the pandemic forced people to spend more time online, and their new habits have persisted.

Shares in the group fell back 0.33% $2,777 during after-hours trading.

Oil prices eased from overnight peaks, with Brent crude futures down 0.75% at $85.75 a barrel and US crude down by the same margin to $84.02 a barrel.

China’s Shanghai Composite dropped 1% while Hong Kong’s Hang Seng index slumped 1.55%

In Japan, the Nikkei 225 fell 0.19% and South Korea’s Kospi declined 0.80%.

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