Hi, I’m Gabi from Bloomberg's UK Breaking News team, bringing you the corporate updates making waves this morning.
US candy manufacturer Mars has made an offer for Hotel Chocolat Group that shareholders may find difficult to refuse. The Bounty maker is willing to pay a 170% premium in a deal that values the British company at £534 million. Shareholders may elect to receive 375 pence a share in cash or choose a partial share alternative.
Mars expects the deal to cement its place in the UK market, where it’s been operating since 1932 and employs 10,000 people.
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Key Business News
In other deals news, Young & Co.’s Brewery Plc has agreed to buy smaller rival City Pubs in a stock-and-cash deal values the business at around £162 million. The transaction represents a roughly 46% premium to City Pubs’ last closing price and is expected to boost margin and earnings in the first full year of ownership, Young & Co.’s said.
In Europe, meanwhile, tech-savvy buyout firm Thoma Bravo is acquiring corporate communications and compliance services firm EQS Group AG in a roughly €400 million transaction that would mark its first takeover of a listed German company.
On the earnings front, Burberry Group Plc warned this year’s revenue target may be out of reach after slower-than-expected growth in the second quarter. The UK trench-coat maker now sees earnings likely at the lower end of its guided range. The stock plunged almost 10% at the open.
Melrose Industries Plc on the other hand raised its profit guidance for fiscal 2023 by 7% as margin performance in the four months to Oct. 31 was “substantially better than expectations.” The aerospace company also expects to deliver revenue of as much as £3.4 billion, with business improvement projects progressing faster than planned, it said.
Markets Today’s Take
Burberry's troubles this quarter highlight a key theme of the latest earnings season -- the difficulties facing firms selling luxury goods in a cost of living crisis.
While consumers have been far more resilient than feared in the UK's inflation crisis, the benefits are mainly being felt by supermarkets and high street clothing brands, with the likes of M&S, Next and Sainsbury all reporting very tidy results.
But in Britain, and elsewhere, it looks like shoppers are pulling back from luxury purchases and rebelling against higher prices. Last week, premium drinks giant Diageo downgraded its outlook while watchmaker Richemont warned that luxury prices won’t rise during the next two years.
The big question now is if the economising endures throughout the crucial Christmas period, or if shoppers have enough spare cash for a big splurge to end the year.
— David Goodman
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What’s Next?
The Office for National Statistics discloses October retail sales at 7 a.m. tomorrow, capping a week filled with key indicators that reflect a still tight labor market and easing inflation. Unseasonably wet weather last month probably curbed spending, with retail sales including fuel seen up 0.3% compared with September, consensus shows.