FTSE 100: Investors shopping for Sainsbury's; Glencore losing its shine
Shares in Sainsbury's, the UK's second largest supermarket group, soared on Monday and pulled the FTSE 100 into positive territory after the company agreed to merge with Walmart-owned Asda to create a £15bn market cap, £51bn-revenue business.
The agreed deal will see Sainsbury's, which also reported its final results on Monday, hold 58% of the combined business and retain its chairman, chief executive and chief financial officer, as well as its listing in London, in exchange for paying Walmart a £3bn cash payment and a huge chunk of its shares.
Walmart's 42% equity stake values Asda at £7.3bn on a debt-free, cash-free and pension-free basis, but a mix of non-voting shares will mean it only has 29.9% of the total voting rights, plus two non-executive seats in the Sainsbury's boardroom and Asda's chief executive joining the operating board.
Tesco shares were lower as it faced a larger rival.
WPP shares were also on the march as the company left its guidance for 2018 unchanged amid a “fresh look” at strategy and potential for growth, after a first quarter that saw the departure of longstanding boss Martin Sorrell in controversial circumstances.
The FTSE 100 advertising giant said reported revenue was down 4.0% at £3.56bn, with currency headwinds of 6.0% resulting in a constant currency revenue rise of 2.0%, while like-for-like revenue improved 0.8%. North American sales fell 12.3% due to a 10.6% currency drag.
Reported revenue, less pass-through costs, was down 5.1% at £2.95bn, while currency headwinds of 6.1% resulted in that measure being up 1.0% in constant currency, while LFL revenue after pass-through costs was down 0.1%.
Constant currency net debt as at 31 March was £354m higher on the same date in 2017, with average net debt in the first quarter of 2018 up by £357m over the same period in 2017.
Russian steel-maker Evraz was also in favour, where a fall in production in the first quarter was offset by a larger amount of mined coal.
Total crude steel production of 3.36m tonnes in the first three months of 2018 was down 5.5% on the fourth quarter of 2017 and 8.7% lower than the first.
Shares in Anglo-South African financial services group Old Mutual fell as it said on Monday that its businesses continue to trade in line with the expectations outlined in its results back in March.
In a statement to be made at its annual general meeting in later in the day, the company said that Quilter, formerly Old Mutual Wealth Management, saw net client cash flow up 14% in the first quarter to £1.6bn, with assets under management/administration down 2% to £111.6bn, as negative market movements were partially offset by the strong NCCF.
Meanwhile, the group's continuing operations have kicked off the year on a positive note and results from operations are trading in line with management expectations.
Glencore shares were lower as its problems continued to mount after the freezing of its assets in the Democratic Republic of the Congo as a result of a $3bn claim from an Israeli businessman, leading analysts at RBC Capital Markets to reassess their stance.
Late last week, the Swiss commodities group announced that Katanga Copper and Mutanda Mining, Glencore's Congolese majority-owned businesses, had been served freezing orders via a claim from tycoon Dan Gertler, the company's former partner in Congo, who said he had not received due royalties following his inclusion on the recent US sanctions lists.
Gertler's Ventora issued freezing orders against Katanga and Mutanda for roughly $2.28bn and $695m respectively, which it said would be the damages relating to future royalties due to it. Katanga disputes that Ventora has any claim against it. The contracts between Mutanda and Ventora are subject to English Law and arbitration in Hong Kong, while the agreement between Katanga and Ventora is subject the exclusive jurisdiction of the English courts, Glencore said.
Market Movers
FTSE 100 (UKX) 7,515.04 0.17%
FTSE 100 - Risers
Sainsbury (J) (SBRY) 310.70p 15.16%
WPP (WPP) 1,218.50p 6.09%
Antofagasta (ANTO) 974.40p 2.14%
Evraz (EVR) 462.00p 1.85%
Pearson (PSON) 835.80p 1.65%
Anglo American (AAL) 1,726.60p 1.61%
Paddy Power Betfair (PPB) 7,220.00p 1.48%
Whitbread (WTB) 4,311.00p 1.34%
Standard Chartered (STAN) 770.40p 1.14%
Unilever (ULVR) 4,096.00p 1.11%
FTSE 100 - Fallers
Glencore (GLEN) 354.50p -3.93%
Severn Trent (SVT) 1,941.00p -0.99%
Taylor Wimpey (TW.) 192.20p -0.93%
Tesco (TSCO) 236.00p -0.88%
G4S (GFS) 259.30p -0.88%
Sage Group (SGE) 635.80p -0.81%
Ashtead Group (AHT) 2,041.00p -0.68%
NMC Health (NMC) 3,576.00p -0.67%
United Utilities Group (UU.) 744.00p -0.64%
Old Mutual (OML) 253.20p -0.59%