LONDON (SHARECAST) - Mondi, the Anglo-South African paper and packaging firm, leads the Forestry & paper sector higher after broker Jefferies issued a bullish note on the company on Tuesday.
The group is acquiring two box plants and a container board mill from Duropack for €120m, prompting Jefferies to lift its earnings forecasts for fiscal 2013 (FY13) by 4% - its fourth earnings per share upgrade of the year to date.
The acquisition comprises two box plants in Ansbach, Germany and in Ceske Budejovice, Czech Republic, with 130,000 tonnes combined annual capacity. In addition, the Czech Republic operations have a small recycled container board mill with 105,000 tonnes annual capacity.
In 2011, the Duropack assets reported revenues of €160m, earnings before interest, tax, depreciation and amortisation (EBITDA) of €23m with operating profit of €17m, which Jefferies notes equates to 5.2 times enterprise value/EBITDA.
"We view this as an earnings accretive, strategically sensible acquisition with geographical and vertical integration synergies to follow from FY13 onwards," the broker said.
Life assurance is the worst performing sector, largely because big dividend payer Aviva is trading in ex-dividend form today.
The group has been in the news because Aviva Investors, the asset management arm, looks likely to close its global Real Estate Investment Trust (REIT) business.
The company has sent clients a letter saying the business is under review because its scale prevents it from competing on the international level.
The letter reads: "In light of the level of competition, we consider our current global listed securities business to have insufficient scale. It is therefore unable to compete effectively in standalone pure alpha global strategies.
"Though this is subject to consultation with affected employees, it is likely that the review will culminate in Aviva Investors closing the dedicated London and New York desks. It must be stressed that this review has not been driven by investment performance, with the team building up an excellent track record over the past few years."
Top performing sectors so far today
Forestry & Paper 6,753.64 +3.12%
Electricity 8,718.77 +2.10%
General Industrials 3,272.27 +1.66%
Household Goods & Home Construction 7,607.85 +0.92%
Chemicals 8,995.84 +0.87%
Bottom performing sectors so far today
Life Insurance 4,672.56 -1.07%
Industrial Transportation 2,360.21 -0.88%
Mobile Telecommunications 4,058.89 -0.65%
Oil Equipment, Services & Distribution 25,503.63 -0.58%
Beverages 12,444.89 -0.55%