Brexit and Trump cause ‘significant’ M&A slowdown

Economic uncertainty sparked by the Brexit vote and the US election caused a “significant” slowdown in global merger and acquisition (M&A) activity in the final months of 2016, research shows.

The number of deals closed over the fourth quarter fell to 201 compared to 307 over the same period last year, with only five acquisitions completed by UK firms, versus 16 in the final months of 2015.

Willis Towers Watson’s latest Quarterly Deal Performance Monitor, conducted in partnership with the Cass Business School, shows that an additional 40 deals could still be completed by year-end worldwide, but that would still leave volumes lagging behind last year’s levels.

Jana Mercereau, Willis Towers Watson’s head of corporate M&A, said: “The results suggest that despite globally low interest rates acting as an incentive for companies to raise capital to undertake M&A activity, the economic uncertainty post-Brexit, and pre-US election, has caused companies to ‘wait and see’ before they embark on new activity.”

The total number of completed UK acquisitions fell by two thirds, but included Ladbrokes’ merger with Gala Coral Group for £2.3bn, JD Sports’ takeover of Go Outdoors for £112.3m, and Informa’s acquisition of Penton Media for £1.26bn.

The report only considered completed M&A deals worth at least $100m (£80.8m).

On a regional basis, North American companies were the most active acquirers, closing 84 deals, but that was still lower than 133 in the fourth quarter of 2015.

PA

McColl’s gets final approval for ‘transformational’ Co-op deal

Convenience store chain McColl’s has won clearance from the competition watchdog for a “transformational” deal to snap up nearly 300 outlets from the Co-operative Group.

The final clearance from the Competition and Markets Authority (CMA) comes after the acquisition was first announced in July and will see McColl’s add another 298 shops to its 1,000-strong convenience store estate.

It will also allow the Co-op to focus on its larger stores.

The CMA said in October it was investigating the deal to examine whether it would result in “a substantial lessening of competition within any market or markets in the United Kingdom for goods or services”.

Jonathan Miller, chief executive of McColl’s, said: “This is a transformational deal, which substantially accelerates our growth strategy and expands our neighbourhood presence for the benefit of our customers.

“We have a long history and proven track record of successfully integrating convenience stores into our estate, and we expect these newly acquired stores to make a significant contribution to our future strategic plans.”

The group will start integrating the new stores into its estate in January and expects the shops to be converted to its branding by the end of August.

PA

Weetabix could be sold by China’s Bright Food for £1bn

China’s Bright Food Group has hired Goldman Sachs to sell the breakfast cereal-maker Weetabix in a deal that could value the famous British brand at roughly £1bn, according to three sources familiar with the matter.

The sale process is expected to start in January, the sources said, less than five years after the Chinese company agreed to take control of the 84-year-old business, which has seen the majority of its union workers voting on Monday to strike over new working conditions.

The sale comes after Bright Food has struggled to crack the Chinese market, where many consumers tend to eat hot breakfasts rather than cold cereal. The overwhelming majority of Weetabix sales still come from its slower-growth domestic market.

In Britain and the US, cereals have for several years faced mounting competition from smoothies, yoghurts and juices, while the increasing popularity of low-carbohydrate diets has also pressured sales.

State-owned Bright Food agreed to buy a 60 per cent stake in Weetabix in 2012 from private equity firm Lion Capital in a deal that valued it at £1.2bn. Baring Private Equity Asia subsequently bought Lion’s remaining stake in 2015.

The business has not grown significantly since then, the sources added, estimating a similar price again based on current earnings before interest, tax, depreciation and amortisation (Ebitda) of £130m.

Reuters

Soccer leak revealing offshore millions prompts French probe

France is the latest country to investigate possible tax avoidance by soccer stars, coaches and their managers following the leak of financial information published by media organisations across Europe.

France’s financial prosecutor opened a preliminary probe into possible laundering of tax-fraud proceeds earlier this month, it said in a statement. The probe is run by a law enforcement unit specialising in financial and tax offences. Mediapart, a French group that’s been publishing data distributed by the Football Leaks website, said Manchester United’s Paul Pogba, the world’s most expensive player, has offshore bank accounts. His agent, Mino Raiola, also named in the documents, described the information as “inaccurate.”

Last week, Spain’s tax agency requested information from the El Mundo newspaper after it ran a series of stories alleging that some people in the soccer world, including Real Madrid star forward Cristiano Ronaldo, have improperly benefited from having image-rights income paid into offshore accounts established by Portuguese soccer entrepreneur Jorge Mendes’s Gestifute agency.

Football Leaks had been posting documents on its website until April, when it started supplying them to Mediapart, a coalition of media organisations. Mediapart revealed earlier this month that Paris Saint-Germain players Angel Di Maria and Javier Pastore received some revenue in Panama or Uruguay in order to lower their taxes in Europe.

The information sheds light on complex financial structures used in global soccer, where salaries and transfer fees are some of the highest in sport.

Bloomberg

The White Company sees profits soar 51%

Retailer The White Company has hailed another record year after ringing up a 51 per cent surge in earnings.

The latest accounts for the chain, which has 55 stores across the UK, show operating profits surged to £17.3m in the year to the end of March.

It notched up another year of double-digit sales growth at 12.6 per cent to £184.3m.

This marked a slight slowdown on the 14 per cent surge seen the previous year, but chief executive Will Kernan said it was achieved against a “very strong” year to March 2015 and “difficult” trading conditions on the high street.

The group opened stores in Meadowhall and Birmingham over the year, with further outlets since then in London’s Marylebone, Leeds, Liverpool, Bicester and Chelmsford.

Kernan added: “This year we continue to invest in enhancing our customers’ experience through world-class new stores across the UK.”

The White Company saw its fragrance ranges sell particularly strongly, with a 29 per cent surge in sales, while it posted growth of 26 per cent across home and dining and 16 per cent for daywear.

PA

BlackBerry profits beat expectations despite sales fall

BlackBerry posted an adjusted profit that beat expectations even as revenue dropped sharply, as the software growth it is relying on failed to fully make up for its retreat from handsets and lost service fees.

The Canadian smartphone pioneer has gone through a wrenching transition in recent years featuring huge writedowns and job cuts as it seeks to build up a software business not tied directly to its eponymous smartphones, which have fallen from market dominance to also-ran in the iPhone and Android era.

BlackBerry said about 80 per cent of its software and services revenue, excluding patent licensing and professional services, was recurring, which helped it notch a record gross margin.

The results from the company’s software business gave investors reasons to be hopeful, said IDC analyst John Jackson. He was not surprised by the steep drop in hardware revenue.

“The part of the business that represents the future continues to show, I think, reasonably good progress,” he said.

Reuters

Royal Mail finance head Matthew Lester to leave in July

Royal Mail said its finance head Matthew Lester intends to step down after more than six years in the job, as the former British monopoly grapples with challenging trading conditions in its domestic parcels and postal businesses.

Lester, who was chief financial officer during the company’s privatisation in 2013, will stay on beyond his contractual notice period to enable an orderly succession and would step down after its general meeting in July 2017, the company said on Tuesday.

Royal Mail said it had begun looking for Lester’s successor and would consider internal and external candidates.

Reuters

LSE to sell clearing business to Euronext

Euronext is in exclusive talks to buy the London Stock Exchange’s French clearing business, a potential deal that would help clear the way for LSE’s proposed $28bn (£22.6bn) merger with Deutsche Boerse.

In a joint statement with Deutsche Boerse, LSE announced it was in discussions about selling its French subsidiary LCH.Clearnet SA to address antitrust concerns raised by the European Commission in relation to the planned merger.

LSE and Deutsche Boerse also hope that selling LCH.Clearnet SA to Euronext would help ease French resistance to the merger, people familiar with the transaction said.

The European Commission stated its objections to the merger earlier this month, but outlined fewer concerns than in a first letter sent to LSE and Deutsche Boerse in September. Its concerns focus mainly on clearing of derivatives contracts.

LSE has previously indicated it plans to sell the French unit but said that any deal would have to be reviewed and approved by the European Commission.

Reuters

Ex-Deutsche Bank Russia trader accused of ‘large-scale’ market manipulation

Yuri Khilov, while head of Deutsche Bank’s Russia equity trading desk, allegedly engaged in “large-scale” market manipulation from 2013 to 2015, using accounts that he opened in his relatives’ names, according to the Russian central bank.

Khilov is accused of booking trades in the name of Deutsche Bank’s London office and then buying and selling stocks for his relatives within minutes, skimming the profit, the Bank of Russia said in a statement Tuesday. The central bank worked with German financial regulator Bafin on the investigation, and the case has been sent to law enforcement agencies, it said. Khilov, when reached by phone, declined to comment on the investigation.

The Frankfurt-based lender is grappling with a range of regulatory woes, including US probes into mirror trading from its Russian office, its mortgage-backed securities business and whether its traders colluded to manipulate currency rates.