🧐 Rock Bottom For the LME

Good morning. In today's update - there's another gaff for the London Metals Exchange, the UK and Russia share an undesirable trait, the CMA takes a swipe at United Health's £1.2bn acquisition of EMIS, and the John Wood board give more time for Apollo to submit a decent bid.

Markets

Thursday’s optimism over Credit Suisse's rescue package quickly faded as volatility returned to markets on Friday. Investors were also digesting a gloomy projection from the OECD that claimed the UK would be joined by only Russia as two countries in the G20 to shrink this year. Both the UK’s top-flight indices finished the week poorly, with the FTSE 100 and FTSE 250 sinking -1.0% and -1.5% respectively.

Once again (and somewhat unsurprisingly), it was banks leading the falls. Barclays (-2%), HSBC (-2.9%), Lloyds (-2.6%) and Standard Chartered (-2.5%) all headed into the weekend lower. Another notable mover was BT (-6%), who sunk on news that Ofcom had delayed its decision on the company’s new wholesale pricing structure.

Top Stories

🧐 London Metals Exchange hits rock bottom after nickel goes missing

In another blunder for the LME (see 2022's "Nickel Crisis" and Trafigura's recent fraud case), it was announced on Friday that certain cases of nickel had actually been filled with rocks instead of the metal they were supposed to be carrying. In a slight dig towards the warehouses that secure the consignments, the exchange noted in the announcement that the irregularities were "evident" from the weight of the bags, before reminding operators of their obligations to check the metals (i.e. do your jobs).

🥴 UK and Russia share one thing in common: shrinking economies

Despite admitting the UK economic outlook had improved compared to its November forecast of a -0.4% fall, the OECD still see GDP slipping by -0.2% during 2023. This puts the UK and Russia in the unenviable position of the only two countries out of the G20 heavyweights to see GDP fall in 2023. However, on a more positive note the OECD did say it was now more "optimistic" on the UK outlook given measures put in place by the Government in its Spring budget to bring people back into the workforce. They also expect households to start spending some of the savings they accumulated during the pandemic to maintain living standards, amidst the cost of living crisis.

🚫 CMA puts the breaks on £1.2bn EMIS acquisition

The UK’s Competition and Markets authority announced on Friday that United Health’s £1.2bn acquisition of London-listed EMIS could reduce competition in the UK. More specifically, they claimed it could lead to “worse outcomes for the NHS and ultimately patients and UK taxpayers”, citing a potential lack of innovation in products and services post the takeover. The announcement came as the CMA concluded their Phase 1 investigation into the deal that was announced last year. EMIS and United Health now have 5 days come up with proposals to rectify the issues. (Official)

⏱ PE giant Apollo granted more time by John Wood for bid

The Scottish engineering group has granted Apollo another four weeks to come up with a reasonable proposal to be put to shareholders. The Board of John Wood has already rejected four previous bids from Apollo, the latest of which valued shares at 237p each - a 62% increase on the 'undisturbed' share price (i.e. price the day before the first offer was announced to markets on 22-Feb). Given the extension, the Board are likely to think a deal is achievable.

What Else Happened?

Economics / Politics / General

The UK Space Agency is backing ambitious plans by Rolls Royce to build a nuclear power station…on the moon

UK households ease up on their expectations for inflation – BoE survey indicates we now believe inflation will be at 3.9% in 12 months, compared to 4.8% when asked in November

Deals

PE-backed, UK food company Valeo Foods is reportedly on the hunt for £400m tinned tuna manufacturer Princes Foods, after owner Japanese Mitsubishi Corporation put it up for sale

US investment group 777 Partners considers taking a stake in Newcastle United, adding to recent investments in Standard Liège, Vasco da Gama and Sevilla, among others

Specialised equipment supplier Diploma PLC successfully raised £235m through an equity placing – proceeds will be used to refinance the acquisition of Tennessee Industrial Electronics and provide further M&A firepower. (Official)

Mubadala-backed financial services company Apex Group is reportedly mulling a takeover approach for troubled London-listed firm, MJ Hudson

UK-based Fundpath, which helps connect fund buyers with asset management firms, secured a £4m investment from Fuel Ventures

Company Updates

Battle for supermarket staff heats up as Aldi raises pay for third time in 12 months

Revenue at FTSE 250 heat services company Bodycote jumped 21% in 2022, thanks to price increases and previous investment in high-growth markets. (Official)

🌎 Global Snapshot

UBS has sealed the acquisition of Credit Suisse, valuing the stricken bank at just CHF0.76 per share (compared to a closing price of CHF1.86 on Friday). It was previously reported that BlackRock could also be close to making a bid for the Swiss bank, although they later denied this.

Figures released on Friday showed Eurozone wages grew at the fastest pace since 2010 in the last quarter of 2022, piling more pressure on central bankers to tame inflation

Cosmetics giant L'Oréal and PE firm Permira are said to be amongst bidders looking at French skincare group Aesop

Thinking of taking the CFA? Good news – study time is about to get shorter

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