Listen to this article
Today’s big stories are still the ones we had on our front page this morning – both, as it happens, by Lina Saigol and both confirmed first thing.
First, J Sainsbury has confirmed it has received a takeover proposal from Qatar’s Delta Two. Sainsbury shares are up 1½ per cent at 593¾p, a little short of what Delta Two offered, which I hear, once you strip out the dividend, was around 600p. As Robert Peston pointed out on the Today programme, Delta Two is so opaque it makes private equity look positively open. It is a point which will resonate with readers of this morning’s Lombard column. Anyway, with the Qataris already holding 25 per cent and Robert Tchenguiz holding up to 10 per cent, this offer has a much better chance than the private equity one three months ago, although we’re not sure yet whether Delta Two is going for a scheme of arrangement requiring 75 per cent support. With the Qataris apparently keen to keep this friendly, a deal could still be a few weeks away.
Second, Imperial Tobacco confirmed that it offered €12.8bn for Altadis. It also says it will need a huge amount of bridge equity until, sometime in the next 12 months, it puts in place one of Britain’s largest ever rights issues – £5.4bn – to help fund the deal. The banks hate providing bridge equity, and the risk for them here is not negligible. One theory voiced on FT Alphaville is that Imps has gone for a larger proportion of equity than originally intended because debt has become more expensive. Altadis has agreed to the offer, but will CVC come back?
Other news: Tate & Lyle has agreed to sell its starch business for €310m (£209m) and confirmed it will return this and more to shareholders, but it has also said it expected results on continuing operations to be lower than previously forecast. Its shares are among the sharpest fallers, off 3.4 per cent.
Also, Terra Firma now has a clear run at EMI after Warner Music decided overnight that it would not bid. But what will Guy Hands do with it? And what music does he listen to anyway? Jim Fifield has also pulled out of the bidding but he never looked very serious. EMI shares are off nearly 2 per cent.
And JD Wetherspoon has become the first pubs group to report on the impact of the (heaven-sent) smoking ban in England. It says sales are encouraging and pubs were becoming more attractive to the majority of customers, although there may be an initial impact on margins. Its shares are up nearly 10 per cent.
Finally, is it just me or is Sir Tom Hunter’s pledge to give £1bn to charity not quite as impressive as it seems? First, the gift is intended to be made over his lifetime. And second, it is just a pledge. I read elsewhere that he is currently worth £1.1bn. Maybe, but I also read that his foundation has so far given away only around £35m. His plan is a fine one, but the execution risk looks considerable.