Enterprise Inns, Britain’s largest pub operator, was a faller on Friday after Barclays expressed concerns about its balance sheet strength.
Enterprise faded 2.7 per cent to 84.7p after Barclays downgraded to “underweight”. Not only does Enterprise have the sector’s highest net debt, at more than seven times Ebitda, its refinancing needs are also the most pressing with a £350m bond due in 2018, Barclays said.
It also saw a risk to earnings, given Enterprise is restructuring its estate to cope with the end of the beer tie. MPs in November voted to ban the arrangement whereby landlords buy beer from just one brewer in return for lower rent, which is how Enterprise runs nearly all of its 5,000 pubs.
The wider market resumed its slide, pulling the FTSE 100 lower by 0.9 per cent or 50.70 points at 5,848.06. For the week the index slid 3.9 per cent.
But a short squeeze continued in Anglo American, the FTSE 100’s second-most-shorted stock, which rose 10.7 per cent to 363.4p.
As well as recent dollar weakness putting a floor under commodity prices, Anglo shares have been helped by rumours of progress with potential disposals such as its 40 per cent stake in Samancor, South32’s South African chrome unit.
Another line of speculation was that Anglo might consider a more formal tie-up with South32, which has been reported to be among the bidders for Anglo’s $1bn-valued Brazilian phosphates and niobium business. South32 rose 3.8 per cent to 55.3p, which gave it a market capitalisation of £2.9bn against £4.7bn for Anglo.
Auto Trader, which because of Anglo’s rebound might miss out on promotion to the FTSE 100 in a March index review, slid 3.7 per cent to 386p.
Shire was down 1.7 per cent to £36.71, its lowest since June 2014, as drug stocks weakened on worries that the US regulator was lowering hurdles for the approval of a class of copycat drugs known as biosimilars.
In briefing documents ahead of a meeting next week, the US Food and Drug Administration said a clone of Merck’s Remicade treatment for rheumatoid arthritis appeared similar enough to extrapolate trial data to other approved indications. BMO Capital Markets called the ruling “incrementally negative” for the branded drug manufacturers.
Just Eat rallied 5.4 per cent to 379.4p after the takeaway food-ordering website bought four of Rocket Internet’s competing businesses for an aggregate €125m. Acquiring the heavily lossmaking companies will consolidate Just Eat’s leadership in all four territories, allowing it to “save substantial costs including significant marketing spend”, said JPMorgan Cazenove.
Worries about competition from delivery outsourcers, such as Uber and Amazon, have sunk Just Eat shares by 23 per cent since the start of the year. “This deal shows that new competition still needs to execute and money on its own is not enough,” said Barclays, which repeated an “overweight” rating.