👋 London Bids Farewell To Another Takeover Target

Medica Group was snapped up by IK Partners in a £269m deal, Rightmove reported a relatively resilient housing market during April and the former Chief Economist at the BoE thinks we should pause rate hikes.

April 25, 2023

Good morning. In today’s update - markets looked for direction ahead of a big week of earnings, Medica Group was snapped up by IK Partners in a £269m deal, Rightmove reported a relatively resilient housing market during April and the former Chief Economist at the BoE thinks we should pause rate hikes.

Markets

UK markets struggled for momentum on Monday as investors largely sat on their hands ahead of a key week of earnings in both the UK and across the pond. The FTSE 100 was broadly unchanged whilst the FTSE 250 (-0.2%) finished marginally lower. ASOS was a notable mover in the FTSE 250, closing down 4.5% after notorious short-seller ShadowFall built a small (£4m) position in the online retailer.

Top Stories

Medica Group agreed £269m acquisition

Medica Group became the latest private equity target after agreeing a £269m acquisition by London-based IK Partners, claiming the group is “better able to achieve its full potential in a private market setting”. Medica’s board are recommending shareholders accept the deal, saying it’s at a value that “reflects the future growth potential of the business” - the offer is at a 32.5% premium to Friday’s closing price. The deal is expected to close in Q2 this year subject to shareholder approval and other conditions. (Official)

Rightmove house sale volumes return to pre-pandemic levels

The estate agent’s April report showed the UK housing market remained relatively resilient, despite lower than average growth for the month. Overall, prices rose +0.2% - lower than April’s historic average of +1.2% - whilst agreed sales volumes returned to pre-pandemic levels. Bad news if you’re about to step foot on the property ladder - prices for first time buyers hit record highs (£225k). (Rightmove report)

Inflation to halve in next six months - Andy Haldane

The former Chief Economist at the Bank of England expects inflation to fall significantly over the next six months due to a slowdown in energy prices, predicting price growth will slow to “3, 4 or 5” percent. Haldane also warned that most people were yet to feel the effects of the rise in borrowing costs, calling on his former committee members to pause rate hikes and “see what happens”.

What Else Happened?

Economics / Politics / General

Burberry chair Gerry Murphy bemoaned Rishi Sunak’s decision to remove VAT refunds for international shoppers and claimed Brexit was a “drag on growth” - Murphy also said the UK was the weakest of Burberry’s big markets post-pandemic.

The number of profit warnings (anticipated full-year profits falling well below market or management expectations) issued by UK-listed companies in Q1 2023 increased to 75, the largest first quarter number since 2020. (EY report)

Deals

Renee Elliot - founder of Planet Organic - is lining up a rescue package for the troubled organic supermarket, with backing from private investors.

An offshore wind plant in Scotland secured a £300m investment from US fund Energy Capital Partners, to turn the port into a renewable energy hub.

Wizz Air looks to the future as the airline invested £5m into sustainable aviation fuel startup Firefly Green Fuels.

Brompton Bicycle - producer of the iconic folding bike - is reportedly in talks with BGF regarding a £20m investment to help shore up finances.

Monday’s top VC deals - Cambridge-based quantum computing startup Riverlane raised £15m led by Molten Ventures; Trainline rival Seatfrog is set to announce a £6m funding round after growing revenue by 800% last year; Sheffield University spinout Productive Machines raised £2.2m to advance its AI solutions for manufacturing efficiency.

Company News / Trading Updates

Revolut investor Schroders slashed its internal valuation of the UK fintech by almost 50%, from $33bn to $18bn.

Gymshark profits suffered in 2022 as the eCommerce company was hit by discounted products and rising input costs; earnings for the year dipped by nearly 40%.

High street staple Prezzo announced plans to close 46 restaurants across the UK as it struggles with inflated costs, putting around 800 jobs at risk.

🌎 Global Snapshot

Despite having to be rescued by its closest rival, Credit Suisse posted a one-off 12bn Swiss Franc profit in Q1 following the write-off of its AT1 bonds; Monday’s earnings report also showed the extent of outflows before the deal was struck - almost $69bn in the first quarter.

Activist investor Trillium Capital proposed a $4bn buyout of Getty Images after asking the company to sell itself - markets, however, are wary of the deal actually going through.

Troubled retail company Bed, Bath and Beyond filed for Chapter 11 bankruptcy in the US and announced it was seeking buyers for some or all of its assets.

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