MARKET REPORT: Companies that stand up to the vultures of private equity
The London stock market has been under attack from private equity this week, but companies are finally resisting the vultures.
Engineering firm Senior, surrounded by Lone Star for months, rejected a £ 738million takeover, telling the US firm that its third bid grossly undervalues the value of the business.
Likewise, the administrative activity, Sanne, rejected a new offer from Cinven, saying that the offer “does not reflect the group’s ability to deliver strong operational and financial performance”.
A senior spokesperson added, “Senior’s board has reviewed the proposal, along with its advisers, and concluded that it fundamentally undervalues Senior and his future prospects.”
Investors cheered, with many hoping for a higher bid, after two companies showed enough courage to dismiss the private equity giants.
Senior, founded in 1933, supplies airframes and engine tubes to planners and is based in Rickmansworth in Hertfordshire.
The London stock market has been plundered by private equity since the start of the coronavirus pandemic, with companies keen to profit from low valuations and investors worried about the future.
Senior’s business has been hit hard by Covid, with aerospace sales down 25% in the first quarter of this year, but are expected to recover in the coming month.
This week alone, Telit Communications (up 0.4%, or 1p, to 226p) and Equiniti (up 1.1%, or 2p, to 181.4p) fell prey to private equity, while that the UK’s largest private pantomime company, Qdos Pantomimes, was also sold down the river.
Senior stocks rose 34.4 percent, or 40.7p, to 159p and Sanne gained 1.5 percent, or 11p, to 750p. But the FTSE 100 had another mundane session, barely budging and up just 0.04%, or 2.94 points, to 7,022.61.
This marks the end of a week with no big changes.
The increase was largely attributed to the nation’s largest home builders.
It marked a turnaround from the previous session when a report warned Taylor Wimpey faced additional repair costs for a faulty London building that would not be covered by the £ 165million he had already set aside for potentially dangerous legacy developments after the Grenfell Tower coating. scandal.
Taylor Wimpey rose 2.6%, or 4.4p, to 171.4p, Persimmon gained 2.4%, or 75p, to 3160p, and Barratt Developments added 2.3%, or 17.2p, to 756.4p.
Other notable hikes included airlines after former IAG boss Willie Walsh said he expected the outlook to improve in the second half of the year for the industry.
Now as the head of the global airline industry body IATA, Walsh said: “ There is good evidence to be optimistic that as we approach the second half of this year we will see a better environment. that will allow more people to travel. ”
British Airways owner IAG added 0.7%, or 1.35p, to 202.6p, and Easyjet gained 0.9%, or 8.7p, to 1006.5p.
In the banking sector, shareholders have adopted a plan that will phase out HSBC loans to all coal projects around the world by 2040.
Shares rose 1.1%, or 5.1p, to 455.3p.
The proposal was brought forward by HSBC’s board after pressure from the lender’s shareholders, including ShareAction, a group with more than £ 1.7 trillion invested in global assets.
The biggest losers have been the miners including Antofagasta, Evraz and Fresnillo, amid growing fears that the Chinese economy could slow.
Antofagasta lost 2.2% or 34.5p, to 1544.5p, Evraz fell 2.2%, or 14.2p, to 637.6p and Fresnillo lost 1.7%, or 15.4p, to 897.6p.
The FTSE250 index, meanwhile, closed up 0.1%, or 24.91 points, at 22,683.95.
Some links in this article may be affiliate links. If you click on it, we can earn a small commission. This helps us fund This Is Money and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.