đŸ„Ž CMA Spoils Microsoft's Party

The CMA ruled against Microsoft’s $75bn acquisition of Call of Duty owner Activision, London’s exodus was back on the agenda as both CRH and Flutter prepare to move, and Standard Chartered looked beyond recent banking sector stress to post a positive Q1 market update.

April 27, 2023

Good morning. In today’s update - the CMA ruled against Microsoft’s $75bn acquisition of Call of Duty owner Activision, London’s exodus was back on the agenda as both CRH and Flutter prepare to move, and Standard Chartered looked beyond recent banking sector stress to post a positive Q1 market update.

Markets

UK equities struggled on Wednesday, held back by the pharma giants as investors digested GSK’s Q1 results and waited for AstraZeneca’s update on Thursday - both names closed more than 3% lower. Overall, the FTSE 100 fell -0.5% whilst the more domestically-focussed FTSE 250 was broadly flat.

On the upside - housebuilders closed higher as investors read across from Persimmon’s upbeat Q1 trading statement, with Bellway (+3.8%), Taylor Wimpey (+3.7%) and Barratt Developments (+3%) all in the green; Persimmon themselves finished +4.9% higher.

Top Stories

đŸš«  CMA killed Microsoft / Activision deal

The UK’s Competition and Markets Authority has blocked the $75bn deal in a ruling today, over concerns it would lead to “reduced innovation” in the cloud gaming market. Activision were naturally pretty unhappy. CEO Bobby Kotick said the UK was “clearly closed for business” following the decision, claiming the ruling “contradicts” the ambition of Britain to attract big technology companies. The pair said they would appeal the decision, but that wasn’t enough to stop a slide in Activision shares - down 11% following the news. (CMA announcement)

đŸ›«  Au revoir

Wednesday was a tough day for London’s finance sector in general, as various companies confirmed (or spoke about) a move away from the UK. FTSE 100 building materials supplier CRH confirmed that a formal vote would take place in June, after “strong” support from shareholders on the proposal to move its stock market listing to the US. Likewise, Sky reported that Paddy Power owner Flutter is also set to confirm an additional listing in the US on Thursday, with the expectation that it will eventually abandon its London listing.

Elsewhere, the founder of a UK chipmaker backed by the VC arm of the CIA said the company may move operations to the US, should the British government failed to support the industry. Scott White - who started Pragmatic Semiconductor in 2010 - said the US provided a better base for scaling the company due to billions of dollars in government support for chipmakers, along with wider access to capital.

📈  What banking turmoil?

London-listed Standard Chartered rose above recent banking worries to beat expectations for Q1 trading, buoyed by rising interest rates and a re-opening in China. Revenue jumped 8% to $4.4bn, driven by an increase in net interest income, whilst pre-tax profits rose 25% to $1.8bn - above market expectations of $1.4bn. On the back of the positive quarter, Standard Chartered also upped its full-year profit estimates - shares rose 2.2% on the update. Separately, CFO Andy Halford also confirmed there had been “no contact” with FAB, the Abu Dhabi-based bank who considered an acquisition of the lender earlier this year. (Official)

What Else Happened?

Economics / Politic/s / General

After being grilled by MPs on the worrying decline of UK public listings, London Stock Exchange CEO Julia Hoggett said the country needed to recognise that stock markets are about “deploying risk capital”.

Tough luck - Pret is hiking the price of its subscription service to ÂŁ30 a month.

Deals

Teck Resources - the Canadian mining company at the heart of a $21.5bn bid from Glencore - announced the surprise decision to call off plans to split its coal and copper businesses.

Wednesday’s top VC deals - It’s Fresh, a UK startup helping food producers keep fruit and vegetables fresher for longer, raised a £6.7m funding round led by BGF; IRIS Audio Technologies raised a $7m Series A round to expand its voice isolation and audio tools to the US; Oxford University spinout HydRegen - a startup enabling sustainable chemical manufacturing - raised £2.6m, led by the Clean Growth Fund.

Company News / Trading Updates

GSK shares dropped on Wednesday despite reporting Q1 results ahead of expectations - total sales fell 8% to ÂŁ7bn (above market forecasts of ÂŁ6.5bn), with the drop largely driven by a decline in demand for its Covid treatments.

Housebuilder Persimmon reported a 42% drop in house completions for the first quarter of 2023, however shares rallied after it said full-year volumes would be at the higher end of its original estimates.

Man Group - the London-listed hedge fund - saw net asset flows of $1bn in Q1 as investors sought alternative investments.

🌎 Global Snapshot

Facebook owner Meta saw shares jump 12% in after-hours trading after breaking a succession of three quarter’s without revenue growth - sales increased 3% to $28.7bn, above analyst forecasts of $27.7bn. (Official)

Disney sued the governor of Florida - Ron DeSantis - saying he’d subjected the company to a “targeted campaign of government retaliation”, after voiding a development deal allowing the media business to expand its theme park in Orlando.

Amid strong demand, Boeing announced plans to ramp up production of the 737 Max plane despite manufacturing issues.

German engineering company Bosch announced a deal to acquire US-based chipmaker TSI and plans to invest $1.5bn into its California factory; the site is to become Bosch’s "third pillar" of in-house semiconductor production.

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