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Flutter acquired Playtech’s Italian business for a small bargain - analyst
Flutter Entertainment PLC (LON:FLTRF)’s €2.3 billion acquisition of Playtech PLC (LON:PTEC)’s Snaitech gaming business in Italy is around €70 million below Peel Hunt’s sum-of-the-parts valuation for the business, the broker has stated.
This in turn implies a 5% lower price of Playtech stock than Peel Hunt’s 1,000p target price.
However, the broker noted that Playteck’ intention to return up to €1.8 billion to shareholders via a special dividend should offset this.
“We expect the share price to react positively today as it is clear that Playtech has come out of the period without communication and can start to lay out the investment stall for its continuing B2B business,” said Peel Hunt (LON:PEEL).
Conversely, PlayTech shares dipped 3% following the disposal announcement.
Nonetheless, the broker reiterated its buy recommendation and 1,000p price target.
Pret a Manger sales surpass £1bn for first time
Sandwich peddler Pret a Manger saw its global sales exceed £1 billion for the first time in its 30-year history in 2023, driven by escalating ex-UK growth.
Sales topped £1.1 billion, the group stated in an unannounced trading update, marking a 15% year-on-year incline, with a quarter of these sales generated outside of its core UK market.
“The fact that £1 in every £4 is now spent outside the UK is both an achievement and an opportunity for our business,” said Pret boss Pano Christou.
The group added that sales in the first half of 2024 rose by 10% to £569 million.
Pret has nearly 700 stores globally, with nearly a third outside of the UK. It currently has 65 locations in the US and a growing presence across Europe, India and South Africa.
Analysts at Shore Capital Market suggested that today’s unannounced update from an unlisted company “is no doubt seeking to raise awareness that the firm is alive and kicking, possibly ahead of a wider capital event or organisational change”.
"All in, Pret is expanding its mid-to-upper food-to-go assortment across a wide geography, including areas outside London in the UK,” they said.
Pret added that it has raised another £250 million from existing shareholders.
B&Q-owner Kingfisher rallies on a ‘complicated beat’
B&Q-owner Kingfisher plc added 6.3% following a promising interim earnings report published today.
The FTSE 100-listed group delivered half-year results in-line with expectations, with adjusted pre-tax profit (PBT) dipping half a percentage point to £334 million and top-line sales dipping 1.4%.
It marks a considerable improvement from the 29% falling in adjusted PBT in the first half of 2023, suggesting a welcome recovery in the DIY market.
Barclays PLC (LON:BARC) analysts called the results “a complicated beat”.
“The headline… numbers look very strong, although some of the outperformance is due to helpful (first-half/second-half) cost timing and £25 million of UK business rates recovery,” said analysts at the bank.
Regardless of the complexity of the beat, the market rallied, pushing Kingfisher stock to a 31-month high of 309.7p.
Intel to rally
Intel Corp (NASDAQ:INTC) is expected to post a 7% gain when US markets commence trading today.
It comes after the group outlined plans to split its foundry business into a separate subsidiary with its own governance structure within the wider group.
Intel Foundry comprises the Santa Clara-headquartered technology trailblazer’s semiconductor manufacturing wing, which is an aspect of the business chief executive Pat Gelsinger has been at pains to grow.
However, it has struggled to find a place in the heavily concentrated market which largely consists of a duopoly between TSMC and Samsung (LON:0593xq).
Intel has been slow to adopt the most cutting edge of chipmaking technology despite netting billions in subsidies from the US government’s CHIPS Act.
This has led to tumbling profits and large-scale workforce reductions.
In August, it was reported that Intel had brought in advisors to explore options to restore its declining business operations.
Intel hopes that splitting the foundry business will help to entice big-ticket clients away from its largest competitors.
“A subsidiary structure will unlock important benefits,” said the group.
“It provides our external foundry customers and suppliers with clearer separation and independence from the rest of Intel.
“Importantly, it also gives us future flexibility to evaluate independent sources of funding and optimize the capital structure of each business to maximize growth and shareholder value creation.”
Encouragingly, Intel also announced that it will be producing artificial intelligence chips for Amazon (NASDAQ:AMZN) Web Services via a multi-year, multi-billion-dollar partnership.
The morning so far
The FTSE 100 surged higher in early exchanges thanks in part to a 7% rally on Kingfisher plc shares.
The B&Q and Screwfix-owner delivered half-year results in-line with expectations, with adjusted pre-tax profit (PBT) dipping half a percentage point to £334 million and top-line sales dipping 1.4%.
It marked a considerable improvement from the 29% falling in adjusted PBT in the first half of 2023, suggesting a welcome recovery in the DIY market.
Other top risers among the FTSE 100 set include DS Smith PLC (LON:SMDS) (up 2.4%), Phoenix Group Holdings PLC (LON:PHNX) and JD Sports Fashion PLC (LON:JD) (both up 2%), Diageo PLC (LON:DGE) (up 2.1%) and Prudential (LON:PRU) (up 1.85%)
Elsewhere in company news, FanDuel and Paddy Power-owner Flutter Entertainment PLC announced the acquisition of Playtech PLC’s Italian gaming operator Snaitech for €2.3 billion (£1.9 billion)
The deal follows a confirmation that talks were underway between the two in August. Flutter shares dipped 0.4% in opening trades and Playtech dipped 3%.
THG (LON:THG) announced a spin off of its Ingenuity division through a demerger and said it is applying to change its listing category on the London Stock Exchange to potentially join the FTSE indices.
THG shares fell 4.5% following the announcement.
Barring any significant developments on the UK macroeconomic calendar, attention turns to US retail sales later in the day, which should give and insight into the robustness of the US economy prior to tomorrow’s Federal Reserve interest rate call.
The footsie is currently up 59 points to 8,337.