Proactive Investors -
- FTSE 100 down 48 points at 7,439
- Burberry warns of low-end profits on luxury slowdown
- Hotel Chocolat agrees £534m takeover from Mars
Mars pays hefty premium to secure sweet deal
The Hotel Chocolate takeover has raised a few eyebrows - given the hefty premium paid by Mars.
Russ Mould at AJ Bell said the fact Mars is willing to pay a 170% premium for the shares is remarkable on two accounts.
First, bid premiums are typically in the 25% to 50% range so Mars paying so much more would suggest it has taken a long-term view of what the business is worth.
Second, it suggests that Mars has spotted an opportunity and there is no way it wants to waste time with a low-ball bid.
This looks like going in with its best offer with the hope of wrapping up the transaction as quickly as possible, he said.
“Mars doesn’t have to worry about sales of its eponymous chocolate bar, but it does have to think about the evolution of the business and tapping into parts of the market who are looking for a higher quality product," he explained.
Hotel Chocolat ticks the right boxes and while its international expansion strategy hasn’t gone to plan, perhaps Mars thinks it has the necessary skills to make a good job of turning the UK chocolatier into a global name, he said.
"It is hard to imagine shareholders turning down such a generous offer," he reckons
More rail misery with strikes planned
Rail passengers face disruption in December after train drivers announced a new set of strikes.
The Aslef union on Thursday outlined a “rolling programme” of strikes at 16 train companies between December 2 and December 8, with drivers at different operators walking out on each day.
The union said that spreading the strike action will mean the “ramifications for the rail industry will be greater.”
Subdued start expected on Wall Street
US stocks are expected to make a subdued start consolidating recent gains inspired by favourable inflation readings.
In pre-market trading, futures for the Dow Jones Industrial Average were flat, while those for the S&P 500 were also little changed, and contracts for the Nasdaq 100 futures were down 0.2%.
Joshua Mahoney at Scope Markets said: “Market optimism appears to be cooling off after a bumper period of gains for equity markets, built on growing expectations that the Fed are finished with their historic tightening process.”
“With markets now pricing a mere 1% chance of another hike, markets are now more concerned with the timing of the first rate cut and the pace of easing. “
“As things stand, markets are expecting 100 basis points worth of rate cuts next year, with precious metals and cryptocurrencies the early movers on the premise of a more advantageous macro environment.”
New applications for unemployment aid are forecast to have increased to 220,000 in the week ended November 11, compared with 217,000 claims a week prior.
In economics news, new applications for unemployment aid are forecast to have increased to 220,000 in the week ended November 11, compared with 217,000 claims a week prior. An industrial production reading is also expected.
Stocks on the move include Cisco (NASDAQ:CSCO), down 11% in pre-market trading, after guidance disappointed investors while Palo Alto (NASDAQ:PANW) is down 4.8% after missing Wall Street estimates for billings in its fiscal first quarter and lowering its estimates for the full year.
Results from Walmart (NYSE:WMT) will also attract attention.