FTSE 100 movers: Whitbread rockets on Costa sale; Sage slides on CEO departure
London's FTSE 100 was down 0.6% to 7,472.49 in afternoon trade on Friday amid growing concerns about global trade.
Whitbread shares surged as it agreed to sell the Costa coffee chain to Coca-Cola for £3.9bn.
The Premier Inn owner, which bought Costa back in 1995 for £19m, said the deal has been unanimously agreed by the Whitbread board as being in the best interest of shareholders.
The transaction represents an enterprise valuation multiple of 16.4x Costa's FY18 earnings before interest, taxes, depreciation and amortisation and the valuation is significantly higher than is currently reflected for Costa in Whitbread's market value.
Neil Wilson, chief market analyst at Markets.com, said: "The price looks like investors will get more bang for their buck than they would have done with a simple demerger. However, the growth story needs to be looked at because Whitbread has decided to change tack, shifting away from a demerger that it said would let the coffee and hotel chains grow more rapidly in favour of a quick sale.
"Clearly Coca-Cola sniffed an opportunity to gain an attractive brand with a fast-growing global presence. It’s a pretty good return too on the £19m Whitbread paid for the coffee chain over 20 years ago."
On the downside, Sage Group tumbled after the software company said chief executive officer Stephen Kelly will leave next May and reiterated guidance for the year.
The group has kicked off a process to find a new CEO but in the meantime, chief financial officer Steve Hare will step into the role on an interim basis. Kelly will remain available to Sage until he leaves.
AstraZeneca was also on the back foot after its experimental lupus drug anifrolumab failed to meet its main target in a late-stage clinical study.
FTSE 100 - Risers
Whitbread (WTB) 4,674.00p 16.27%
Severn Trent (SVT) 2,013.00p 1.64%
United Utilities Group (UU.) 746.40p 1.03%
Tesco (TSCO) 247.20p 1.02%
London Stock Exchange Group (LSE) 4,692.00p 0.93%
SSE (SSE) 1,264.50p 0.88%
Micro Focus International (MCRO) 1,312.00p 0.81%
BT Group (BT.A) 219.75p 0.76%
WPP (WPP) 1,287.50p 0.74%
National Grid (NG.) 814.70p 0.73%
FTSE 100 - Fallers
Sage Group (SGE) 599.20p -7.19%
Burberry Group (BRBY) 2,248.00p -2.56%
GVC Holdings (GVC) 1,088.00p -1.98%
Evraz (EVR) 500.20p -1.96%
AstraZeneca (AZN) 5,801.00p -1.84%
Melrose Industries (MRO) 223.80p -1.80%
Glencore (GLEN) 317.05p -1.72%
Smith (DS) (SMDS) 496.50p -1.41%
Rentokil Initial (RTO) 326.90p -1.36%
Rightmove (RMV) 487.10p -1.30%