Sirius Minerals faces crunch vote; what’s cooking for Greggs?
While the board has recommended the deal, the majority of Sirius shareholders are private investors who bought shares at a much higher price and claim the offer “significantly” undervalues the company.
This group is opposing the deal and voting trends ahead of Tuesday’s meeting, according to research by the Sunday Times, suggest the deal could be in serious trouble.
The offer has also attracted criticism from hedge fund Odey Asset Management, which on Monday revealed it has continued building up a 1.8% stake ahead of the vote, noted last week that Anglo’s offer was not “final”, “does not represent fair value for shareholders”, and suggesting Anglo “would be willing to bid substantially more”.
Investors voting against the deal are gambling that Anglo will have to sweeten the deal or that there will be a last-minute “interloper”, as Odey suggested, which could involve a band of private investors that are attempting to raise £460mln in a bid to stop Anglo’s takeover.
However, the failure of the deal could result in Sirius collapsing into administration and leading to an even cheaper deal for the FTSE 100 mining giant and zilch for private investors.
Outside of the North Yorkshire mining scene, Tuesday may also see the first central bank cutting interest rates in response to the coronavirus outbreak, while in the US there are political machinations and elsewhere there is macro data for traders to chew over.
The Reserve Bank Australia meeting is expected to produce the first rate cut of the month, with markets now pricing in similar potential stimulus moves from the US Federal Reserve later in the month and perhaps also from the Bank of England.
In the US on ‘Super Tuesday’, roughly of third of Democratic primary voters across 14 states will be choosing their preferred presidential candidates to face Donald Trump later in the year.
The main macro data in the UK will be the purchasing managers index survey for the construction sector for February, which is expected to strengthen slightly but remain below the 50 level that separates contraction from growth.
What’s cooking for Greggs?
High street bakers Greggs PLC (LON:GRG) had a stellar year in 2019, and is forecasting profits slightly higher than expectations even after dishing out a special £7mln thank-you payout to all employees.
Investors are likely to be excited about the full-year results coming out on Tuesday, however, the year ahead comes with tough comparatives as like-for-likes have jumped 12.6% over two years.
Analysts at HSBC are expecting staff costs and higher pork prices to dent future sales, even though an increasing vegan offering is what the FTSE 250-listed firm thinks has been the key to its success.
However, Greggs management are mindful of upcoming headwinds and the group is planning to open 100 more stores this year, as well as extending trials for longer trading hours and for making delivery more widely available.
Just last month the firm clinched a partnership deal with Just Eat Takeaway.com (LON:JET) to deliver its ‘fake bakes’ and breakfast deals UK-wide.
Coronavirus and trade war loom large for Intertek
However, investors will be keeping a close eye on the company’s outlook for the first quarter of 2020 as the coronavirus outbreak has the potential to slow demand for its services.
There are also lingering concerns that the US-China trade war could have affected the previous year’s numbers.
Direct Line rings up numbers
Another of the various insurers with results out this week is Direct Line Insurance Group PLC (LON:DLG), which has been in the news recently over reports that it is getting rid of 800 staff, or 7% of its workforce.
This follows an update in November where Direct Line announced plans to improve its operating expense ratio to 20% by the end of 2023 through a mixture of increasing automation, self-service and digitalisation.
This spending on technology is likely to see capital expenditure in the region of £175mln for 2019, with the changes designed to reduce annual capex to less than £100mln from 2022 onwards.
Direct Line said trading since the middle of the year has shown signs of improvement, with gross written premiums in the third quarter to £858.0mln, roughly flat on last year as modest growth in motor offset a fall from home insurance.
Significant announcements on Tuesday 3 March:
Finals: Greggs PLC (LON:GRG), Direct Line Insurance Group PLC (LON:DLG), 4Imprint Group PLC (LON:FOUR), Apax Global Alpha Limited (LON:APAX), Cairn Homes plc (LON:CRN), Getbusy PLC (LON:GETB), Hutchinson China Meditech Ltd (LON:HCM), Ibstock Plc (LON:IBST), Intertek Group PLC (LON:ITRK), Rotork PLC (LON:ROR), Signature Aviation PLC (LON:SIG)
Interims: Craneware PLC (LON:CRW)
Economic data: PMI construction index