📰 Telegraph up for sale

Good morning. In today’s update - Lloyds are hoping to recover £500m from a sale of the Telegraph, Vodafone and Three are on the cusp of a monster UK mobile merger, house prices dipped on an annual basis for the first time in 10 years and Zara owner Inditex is flying.

Markets

• London equities failed to find their footing on Wednesday after some disappointing economic data from both Germany and China - the FTSE 100 and FTSE 250 dropped 0.1% and 0.3% respectively.

• Gambling firm 888 surged another 26% on Wednesday as markets continued to digest news of an investor group building a sizeable stake in the company.

• Housebuilders were in the red on the back of disappointing Halifax house price data.

  • Persimmon (-1.8%), Taylor Wimpey (-0.7%) and Berkeley Group (-1%) all finished below the waterline.

Corporate News

FTSE 100 beverage firm Diageo announced the sad news that long-time CEO Sir Ivan Menezes had passed away after complications relating to surgery; Menezes had led the company since 2013 and was praised for his “desire to build the world’s best brands”. (Link)

Hostmore - owner of restaurant chain Fridays (or TGI Fridays) - reported that sales had dipped by 3% over the first 22 weeks of the year, whilst cost reduction programmes were progressing in-line with expectations. Shares finished 0.9% lower on the day. (Link)

Deals

Receivers have taken control of the Telegraph’s parent company and are expected to commence a sales process, aiming to raise proceeds of around £500m; Lloyds appointed Alix Partners to take ownership of the company after talks broke down between the bank and current owners, the Barclay family. (Link)

Vodafone and Hutchinson (owner of Three) are on the verge of announcing the £15bn merger of their respective UK businesses; the combined group is set become the largest mobile operator in the UK, with around 27m customers. Hutchinson will own 51% of the merged entity. (Link)

FTSE 250 oil and gas producer Harbour Energy is reportedly in multi-billion dollar merger talks with New York-listed Talos Energy; should a deal go ahead, the London Stock Exchange would likely lose another company, as the combined group would be expected to list in New York. Harbour recently made the decision to pull back UK operations in the North Sea, in response to the controversial windfall tax. (Link)

Consolidation amongst smaller investment banks continued on Wednesday, as Investec announced the majority acquisition of boutique advisor Capitalmind; London and Johannesburg listed Investec is looking to expand its footprint in Western Europe, with the tie up bringing together around 130 advisers across the region. (Link)

In today’s VC update:

• GetHarley - a platform connecting consumers with dermatological experts - bagged a $52m funding round, led by Index Ventures. (Link)

• Oxccu - a sustainable startup converting carbon dioxide and hydrogen into industrial and consumer products - raised a $23m Series A. (Link)

• Griffin - a London-based provider of tools and products for companies looking to build financial products - raised an £11m Series A, led by MassMutual ventures. (Link)

Economy / General

Halifax’s data showed UK house prices dipped on an annual basis for the first time since December 2012, weighed down by a surge in mortgage rates; the report showed the average home price in May hit £286.5k, down 1% compared to a year ago. The news comes after reports earlier this week showed lenders continued to increase borrowing rates and pull mortgage deals. (Link, Halifax)

The race for AI talent is heating up amongst big banks; both Barclays and Natwest have been hiring heavily in the area, whilst more widely - around 40% of AI roles within banks were created in the last 18 months. (Link)

🌎 Global Snapshot

Shares in Zara owner Inditex rose 6% after reporting larger-than-expected earnings for the first quarter, driven by strong demand for its Spring/Summer collection; Sales grew 13% to €7.6bn, whilst net earnings surged 54% to €2.2bn, with price increases failing to deter customers. (Link, Inditex)

Disappointing trade data from China showed exports fell far more than expected in May compared to a year earlier, fuelling concerns of a sputtering economy; exports dropped 7.5% year-over-year - much lower than the 0.4% fall forecasted by economists - reflecting subdued demand from Europe and the US. (Link)

Trafigura - one of the world’s largest commodity traders - announced the highest staff dividend in 30 years on the back of a doubling in net profits; the trader pulled in half-yearly earnings of $5.5bn, driven largely by Russia’s invasion of Ukraine and the knock on effect to the oil industry. (Link)

Amidst the risk of sticky inflation, Canada resumed interest rate hikes on Wednesday having paused since January; the overnight benchmark rate now sits at 4.75%, its highest level in 22 years. (Link)

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