MARKET REPORT: Private equity giants licking their lips after Essentra suggests it will be exiting the packaging market
Private equity giants were licking their lips after Essentra suggested it will be exiting the packaging market.
The plastic goods and cigarette filter maker announced a ‘strategic review’ of the division, responsible for £363m in annual sales, after saying last month it would move to focus solely on components.
It said a similar review of its filters business, which makes £278.3m of yearly sales, is progressing as planned.
Change of direction: Essentra announced a ‘strategic review’ of the packaging division
Finance boss Lily Liu is also leaving the company next June and will focus on the shift purely to components, worth £255m in annual sales to the business.
The Milton Keynes-based group has sold off arms in the past to American private equity firms leading to speculation it could also be lining up bidders for its unwanted divisions. In 2019 it sold its speciality tapes business to Los Angeles-based Opengate Capital for £61m.
Private equity buyers have snapped up £68.5billion worth of British firms this year including Asda and Morrisons and most recently Unilever’s tea division. Essentra, which makes plastic caps, workholding clamps, fasteners and knobs was itself spun out of FTSE 100 listed Bunzl (up 0.8p, or 21p, to 2835p) in 2005.
Shares in Essentra dropped 1.3 per cent, or 4p, to 309p. Analysts at Jefferies said: ‘We see the strategic review progress as being a positive for sentiment, and we reiterate our buy recommendation.’
The investment bank expects the stock will rise to 425p. It was grim news on the blue chip FTSE 100 which crashed 3.64 per cent, or 266.34 points, to 7044.03 yesterday amid the huge uncertainty surrounding the latest Covid variant. The FTSE 250 fell 3.19 per cent, or 742.07 points, to 22537.89. Meanwhile sofa and flooring seller ScS said it had seen a slowdown in ‘big ticket’ sales as the supply chain crisis drives up delivery times. The Sunderland-based company, which has 100 stores around the country, said sales in the 16 weeks to November 20 dropped 10.6 per cent from a year ago when ScS saw an ‘unprecedented’ boom as stores reopened.
They were 0.9 per cent ahead of the same period two years ago before the pandemic. Shares crashed 8.6 per cent, or 21.5p, to 227.5p.
Drinks maker Diageo offered a sip of relief to pensioners and savers who were starved of payouts through the pandemic.
The Johnnie Walker and Guinness owner announced it will buy back £550m worth of shares between now and March 4.
It plans to return £4.5billion to shareholders by June 30, 2024. It has so far bought back £1.7billion of shares, it said yesterday, up to November 12. Buybacks give shareholders a boost as when repurchased shares are cancelled they drive up the value of remaining stock. Diageo shares dropped 3.9 per cent, or 152.5p, to 3759.5p amid wider market chaos.
Former Tesco boss Sir Terry Leahy joined electric car charging start-up Myenergi as it is reportedly lining up a London listing. It would join rival Pod Point which listed this month and has seen shares charge up more than 15 per cent since. Pod Point shares dropped 1.6 per cent, or 4p, to 250p yesterday.
Telecom group BT moved into a flashy London office yesterday as it continues to come under pressure from French telecom and media company Altice.
One Braham in Aldgate is part of the firm’s ‘root and branch’ transformation programme.
It came amid reports this month that Altice’s founder Patrick Drahi was looking to increase his stake in the group. BT shares dropped 4.3 per cent, or 6.85p, to 154p.
Aim member therapeutics firm Silence confirmed it would delist from the junior exchange next week. It proposed the delisting on October 15 and the move was approved by its shareholders on November 1. Shares dropped 1.8 per cent, or 10p, to 540p.