Top UK Stocks to Watch: Entain raises takeover bid for Enlabs
Joshua Warner March 1, 2021 4:09 AM
Entain ups its bid for Enlabs, BT’s chairman announces plans to retire, Morrisons and McColls expand their partnership, Bunzl forecasts another year of growth after performing well in 2020, and Electrocomponents buys a second PPE provider.
Top News: Entain ups Enlabs bid to win over shareholders
Online bookmaker Entain said it has raised its takeover bid for Enlabs to SEK53 per share from its previous offer of SEK40 after some Enlab shareholders argued the original offer was too low, stating it is a final offer that will not be increased again.
Enlabs creates entertainment and gaming content and claims to be the ‘largest iGaming operator in the Baltics’ with ambitions to become a leading online gaming business.
Enlabs shares have risen since the original offer was made and shares currently trade at just under SEK45 per share. The new offer values Enlabs at around SEK3.7 billion, equal to around £316 million.
Some Enlabs shareholders had rejected the original offer from Entain but the increased offer has now won over the majority of investors and the Enlabs board.
‘In a highly competitive and regulated industry, where consolidation is a key theme, Entain is able to provide the scale and platform needed to further support Enlabs’ long-term growth, and we firmly believe that Entain will be the best home for Enlabs, its employees and customers,’ said Entain’s chief financial officer and deputy chief executive Rob Wood.
‘Against this background, we have decided to make a final offer of SEK53 to all shareholders, providing an opportunity to exit their investment at a very attractive valuation. We are pleased that shareholders with around 51% have now irrevocably agreed to accept the offer and would urge other shareholders to do the same by 18 March,’ he added.
Where next for the Entain share price?
Entain shares jumped over 2% in early trade. The stock trades above its 20 & 50 sma on the 4 hour chart in an ascending channel pattern dating back to mid-January suggesting an established bullish trend.
The RSI is also in bullish territory supportive further gains whilst it remains out of overbought territory.
Immediate resistance can be seen at 1465 the yearly high. A move beyond here could see the bulls attach the upper back of the ascending channel at 1485 before targeting the all time high of 1494.
On the flip side horizonal support can be seen at 1425 ahead 1400, the confluence of the 20 sma and the lower band of the channel. It would take a move below the 50 sma at 1360 to negate the current bullish trend.
FTSE 100 news
Below is a guide to the top news from the FTSE 100 today.
Morrisons extends wholesale deal with McColl’s
Morrisons has extended its wholesale supply deal with convenience store chain McColl’s.
Morrisons has been supplying McColl’s and converting its stores to Morrisons Daily. The pair said around 30 McColl’s stores had been converted in recent months and that the extension will see 300 more outlets change brands. Morrisons will also continue to supply McColl’s stores for the next three years until 2027 as its only wholesale supplier.
‘McColl's has been an important customer since 2017, and during that time wholesale supply has grown very quickly into a profitable business for Morrisons. We currently supply over 1,200 McColl's stores, including over 230 of its biggest convenience stores which we have started to supply over recent weeks. Morrisons supplies McColl's across all ranges, including brands and the popular Safeway own brand, which we will be developing further in the coming months,’ said Morrisons.
Morrisons shares were trading 0.8% higher at 171.8 in early trade, while McColl’s shares jumped 9.2% higher to 26.2.
Bunzl expects another year of growth after strong 2020 results
Bunzl reported strong growth in revenue and profits during 2020 as its logistical expertise became invaluable during the pandemic, prompting it to raise its dividend and forecast another year of growth in 2021.
The international distribution and services group reported an 8.4% rise in revenue to £10.11 billion in 2020, with adjusted pretax profit jumping almost 24% to £715.6 million. On a statutory basis, pretax profit climbed almost 23% to £555.7 million.
‘The pandemic has served to highlight the vital role that Bunzl plays in ensuring supplies of essential products as well as the benefits of our diversification. As a result of our extensive supply chains and our Asia sourcing and auditing operation, we were able to quickly source and deliver significant quantities of quality assured Covid-19 related products, such as gloves and masks. Consequently, we were able to offset the negative impact that restrictions had on many of our customers' businesses, particularly in the foodservice and retail sectors,’ said chief executive Frank van Zanten.
Bunzl raised its dividend by 5.5% to 54.1 pence from 51.3p in 2019, marking the 28th consecutive year of dividend growth. Cash conversion remained strong in the year at 103% and net debt equals 1.5x Earnings before interest, tax, depreciation and amortisation, giving it plenty of financial headroom.
‘Overall in 2021 we expect robust revenue growth over the prior year at constant exchange rates, after excluding larger Covid-19 related orders which we do not expect to repeat. We anticipate that the recovery in sales of other products, as restrictions ease, will broadly offset the decline of smaller Covid-19 related orders, with recent acquisitions making an increasing contribution to the group's performance. It is part of our proven and consistent strategy to use our strong balance sheet and cash flows to consolidate the fragmented markets we operate in,’ van Zaten said.
Notably, Bunzl said 2020 was the second biggest year for acquisitions in the company’s history as it unveiled three new purchases that should help fuel growth going forward. It has purchased healthcare distributor Deliver Net, food-service disposable product distributor Disposable Discounter, and Canadian cleaning and hygiene distributor Pinnacle.
‘I am pleased to welcome Deliver Net, Disposable Discounter and Pinnacle into the Bunzl family. All three businesses demonstrate our continued focus on growing Bunzl through the acquisition of high quality businesses. Further, these acquisitions demonstrate Bunzl's continued acquisition momentum, with our pipeline remaining active and discussions ongoing,’ said Bunzl’s chief executive.
Bunzl shares were down 1.6% in early trade at 2191.5.
BT Group chairman Jan du Plessis to retire
Telecoms giant BT Group said its chairman Jan du Plessis has announced his plans to retire from the board before the end of this year. He will stay in his position until a suitable successor can be found.
The chairman joined BT as a non-executive in 2017 and was appointed as chairman within a few months.
‘BT is a fantastic company and it is a huge privilege and responsibility to be its chairman. But after 17 years of demanding roles as chairman of significant FTSE companies, I know the time is now right for me to step down and focus on other interests. Until I hand over to my successor, I remain fully committed to BT and helping Philip continue to deliver for all our customers, colleagues and shareholders,’ said du Plessis.
BT Group shares were up 2.2% in early trade at 125.68.
FTSE 250 news
Below is a guide to the top news from the FTSE 250 today.
Aggreko says markets are recovering after being hit in 2020
Aggreko said it is well placed to bounce back as the economy recovers this year after being pushed into the red during 2020.
The company, which hires out the likes of power generators, heaters and chillers to industrial sectors, said revenue slumped to £1.36 billion in 2020 from £1.61 billion in 2019.
The company reported an adjusted operating profit of £136 million from £241 million but was pushed to a £39 million loss when £175 million worth of exceptional charges were taken into account. These related to extra costs booked because of the pandemic and write-downs of its power assets to reflect lower oil prices and the transition to lower carbon technologies.
Adjusted pretax profit almost halved to £102 million from £199 million, and swung to a £73 million loss when the exceptional items were included.
The company said it was paying a final dividend of 10.0 pence per share to take the total dividend for the year to 15.0p. This is up from the 9.83p paid out in 2019 when it only made an interim payout.
‘We enter 2021 well positioned for the recovery which we are seeing in our markets and this momentum supports our confidence in the business going forward,’ said chief executive Chris Weston.
Aggreko has seen demand increase for its Power Solutions division as contracts that had been delayed during the pandemic start to kick-in, and it is also starting its work on the Tokyo Olympics that are due to go ahead later this year.
‘We have also set out our strategy for the energy transition, providing industry-leading commitments to be net zero by 2050, while achieving profitable growth and mid-teens ROCE in the medium-term. We are pleased with our progress in the transition to date, recently winning a solar-hybrid contract for a mine in Chile, and starting work on upgrading our Dumbarton facility into a hub for our net-zero initiatives. Reflecting the board's confidence in the outlook for the business and our financial strength, we are proposing a final dividend for the year of 10 pence per share,’ he added.
Aggreko shares were down 0.4% in early trade at 800.8.
Electrocomponents buys PPE supplier John Liscombe
Electrocomponents has announced it has bought John Liscombe, a ‘leading supplier’ of personal protective equipment (PPE) and industrial safety gear, for £11 million.
John Liscombe supplies blue-chip customers in the UK and the Netherlands. The acquisition has been made on a cash-and-debt-free basis and will boost adjusted earnings per share immediately, with the cost of capital expected to be covered within the first year.
The purchase builds on the recent acquisition of Needlers, which provides PPE to the food manufacturing sector. The pair will be combined and together, John Liscombe and Needlers ‘will provide a full range offer and expertise across key sectors within safety and PPE’.
‘The combination will enable the group to capture a greater share of wallet with existing customers and establish a meaningful presence in a product category in which we anticipate attractive underlying growth over the long term,’ said Electrocomponents.
Electrocomponents shares were up 1.3% in early trade at 983.0.
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