⚔️ Cineworld Bidding War

Markets found their rhythm again after last week’s volatility, PE funds mull a move for Cineworld assets, the BoE vows to fight inflation despite banking trauma, Next eyes a deal for vintage brand Cath Kidston and fintech Bink is rescued. Markets UK markets shrugged off last week’s concerns over the state of the banking sector, with the FTSE 100 and FTSE 250 advancing +0.9% and +0.2% respectively. Banks led the charge after news from the US that First Citizens Bank had acquired SVB (below), with German-listed Deutsche Bank (+4.6%) recovering some of Friday’s bruising losses. On the downside – Mining stocks slipped after disappointing economic data from China showing industrial profits had softened (China is one of the biggest consumers of metals and minerals). Listed trading platform CMC slumped 21% after warning markets that profit would be lower than expected as they faced a “challenging environment”. Top Stories 🦅 Private Equity Circles Cineworld Assets Sky reported on Monday that CVC had joined the party bidding for parts of troubled cinema chain, Cineworld. It’s thought that CVC has no interest in Cineworld’s UK or US business, instead focussing on operations in Eastern Europe and Israel. This follows reports over the weekend that activist investor Elliot Management was also pondering a bid for the same assets. Cineworld confirmed on Friday they’d received bids for various parts of the business, but stressed that a breakup of the cinema chain was “unlikely” to result in proceeds for equity holders.

March 28, 2023

Good morning. In today’s update - Markets found their rhythm again after last week’s volatility, PE funds mull a move for Cineworld assets, the BoE vows to fight inflation despite banking trauma, Next eyes a deal for vintage brand Cath Kidston and fintech Bink is rescued.

Markets

UK markets shrugged off last week’s concerns over the state of the banking sector, with the FTSE 100 and FTSE 250 advancing +0.9% and +0.2% respectively. Banks led the charge after news from the US that First Citizens Bank had acquired SVB, with German-listed Deutsche Bank (+4.6%) recovering some of Friday’s bruising losses.

On the downside – mining stocks slipped after disappointing economic data from China showing industrial profits had softened (China is one of the biggest consumers of metals and minerals). Listed trading platform CMC slumped 21% after warning markets that profit would be lower than expected as they faced a “challenging environment”.

Top Stories

🦅 Private Equity Circles Cineworld Assets

Sky reported on Monday that CVC had joined the party bidding for parts of troubled cinema chain, Cineworld. It’s thought that CVC has no interest in Cineworld’s UK or US business, instead focussing on operations in Eastern Europe and Israel. This follows reports over the weekend that activist investor Elliot Management was also pondering a bid for the same assets. Cineworld confirmed on Friday they’d received bids for various parts of the business, but stressed that a breakup of the cinema chain was “unlikely” to result in proceeds for equity holders.

🏛️ BoE Taking No Prisoners in Battle With Inflation

BoE Governor Andrew Bailey stated on Monday that the central bank wouldn’t let nervousness surrounding the banking sector get in the way of their fight against inflation. He reiterated his view that the UK banking system is “resilient”, and that decisions around the stability of the banking sector could be left to the FPC (the committee at the BoE tasked with financial stability).

🌸 Next Eyes Cath Kidston Deal

Continuing its trend of acquiring well-known but financially troubled brands, FTSE 100 retailer Next has turned its attention to Cath Kidston. Whilst no value was reported by Sky, Next is reportedly in the market to acquire the vintage brand from Hilco Capital. Hilco acquired the brand in June last year from Barings Private Equity, who in turn had rescued Cath Kidston from administration following Covid-related struggles. The deal follows similar moves by Next in recent times, including the acquisitions of Made.com and Joules.

🚑 Barclays-Backed Fintech Secures Rescue Funding

Bink – a developer of digital loyalty schemes – has secured a £7.5m capital injection from existing investors including Barclays and Lloyds Bank. The announcement ends a troubling six months for Bink after it struggled to raise additional funding late last year, leading to the departure of high-profile chairman Bob Wigley. The cash provides Bink with runway to survive until Q1 2024.

🤝 Strike Update

Some further positive updates on UK industrial action - Post Office workers are set to vote on a revised offer that sees members given a 9% pay rise and up to a £3,000 one-off lump sum. The postal workers union (CWU) have thrown their backing behind the deal, claiming it’s “the best that can be achieved”. Elsewhere, 3,000 National Express bus drivers in the Midlands have also voted to end industrial action after accepting a 16.2% pay rise.

What Else Happened?

Economics / Politics / General

The UK is going through “biggest squeeze on living standards” since records began, according to OBR chairman, who also claimed the UK economy is 4% smaller after Brexit.

British Gas, Scottish Power and OVO Energy are the main culprits as 94,000 prepayment energy meters were forcibly fitted last year.

British retailers forecast sales growth for the first time since September in further signs the economy is recovering.

Deals

Broadband provider TalkTalk has reportedly hired advisers to run a sales process for its B2B division, in a deal worth up to £200m.

Standard Chartered took a further step towards its re-focussed strategy over the weekend, with the sale of its Jordanian operations to Arab Jordan Investment Bank.

Redx Pharma was left at the altar after US-listed Jounce Therapeutics opted for an all-cash offer from Concentra, despite previously agreeing to merge with the British biotech.

An Oxford University spinout building smart water tanks has secured around £9m in venture funding to build a new R&D facility.

Company News / Trading Updates

Listed Events business Hyve Group announced an update on Monday letting markets know it was trading in-line with expectations ahead of their agreed sale to PE firm Providence. Notably, Hyve expect attendance at certain events to be hit by banking turmoil. (Official)

Mexican lunchtime favourite Tortilla swung to a loss in 2022 as the restaurant chain battled “unprecedented” food inflation and energy rises. (Official)

🌎 Global Snapshot

First Citizens Bank has agreed a deal to assume $100bn worth of SVB’s assets at a 20% discount, along with a bunch of loan-loss protections and extra liquidity from the FDIC. Shareholders loved the deal – First Citizen’s shares rallied 50%. (Official)

Less than two weeks after lighting the flame that torched Credit Suisse, the chair of the Saudi National Bank has resigned for “personal reasons”. Hmmm.

Chinese industrial profits dropped 22% year-on-year at the start of 2023 as the economy deals with lacklustre demand and cost inflation, with a struggling auto sector leading the decline.

🔈 Share The Long & Short

Know any friends who would benefit from having a daily summary of all things UK business and finance news delivered directly to their inbox?

Copy and paste this link to others: www.thelongandshort.co.uk/subscribe

Feedback

Got any suggestions for how we can make The Long & Short more useful for you? Fire them over to [email protected] (or just reply to this email).