Tie-up talk boosts In­ter­Con­ti­nen­tal

The Daily Telegraph - Business - - Business - Louis ash­worth

MERGER whis­pers lifted shares in

In­ter­Con­ti­nen­tal Ho­tels, af­ter reports French ri­val Ac­cor had eyed a tie-up be­tween the two groups.

The FTSE 100 com­pany, which owns the Crowne Plaza brand, edged up 34p to £40.30 fol­low­ing a re­port in French news­pa­per Le Fi­garo.

It said Sébastien Bazin, Ac­cor’s chief ex­ec­u­tive, had formed a team in June to ex­am­ine the pos­si­bil­i­ties of a trans­ac­tion.

Ul­ti­mately, Mr Bazin de­cided it was not the right time to move ahead, Le

Fi­garo said, but Ac­cor’s board of­fered sup­port to the pro­ject in prin­ci­ple.

A tie-up be­tween the groups – the third and fourth largest Western ho­tel chains – has been a “reg­u­lar sug­ges­tion”, wrote an­a­lysts at Bern­stein, who added In­ter­Con­ti­nen­tal looks to ex­pen­sive to jus­tify a deal at this point.

Jef­feries’ Ste­fano Ber­tolini said a merger be­tween the two would cre­ate the world’s largest ho­tel chain, with “lead­ing po­si­tions in all ge­ogra­phies”. He said such a move would make sense due to the group’s syn­er­gies on cost and ge­o­graphic ex­po­sures.

The rise left In­ter­Con­ti­nen­tal as one of the few bright spots on a poor day for the FTSE 100, which dropped sharply as fears of a resur­gence in Euro­pean virus cases and ris­ing trade ten­sions weighed on the Con­ti­nent’s indices. All but 10 of Lon­don’s bluechips fell, with com­pa­nies ex­posed to in­ter­na­tional in­dus­try tak­ing an es­pe­cially heavy hit. Strong gains for the pound added to the pres­sure.

Shares in fund man­ager M&G dropped 11p to 169p af­ter it was down­graded by Deutsche Bank, which warned the group faces loom­ing rev­enue pres­sures. In a note to clients, an­a­lyst Oliver Steel said the group looked “less en­gag­ing” be­neath its solid first-half re­sults, warn­ing it will strug­gle to meet its cap­i­tal gen­er­a­tion tar­gets. He cut the FTSE 100’s rat­ing from “buy” to “hold”.

Cop­per miner Antofa­gasta also found it­self in Deutsche Bank’s sights, drop­ping 64p to £10.85 af­ter an­a­lyst

Liam Fitz­patrick cut the group’s rat­ing from “hold” to “sell”. He said the stock’s price pre­mium rel­a­tive to peers looks “un­jus­ti­fi­able”, warn­ing the Chile-fo­cused group faces con­tin­ued strains on its cash flow.

Else­where, Sains­bury’s climbed 1.1p to 188.4p, even af­ter Black­Rock In­vest­ment Man­age­ment boosted its short po­si­tion against the com­pany to 2.16pc of the su­per­mar­ket’s stock.

On the FTSE 250, Mike Ash­ley’s Frasers Group – the com­pany be­hind Sports Di­rect – led ris­ers, climb­ing 40.8p to 346.6p de­spite re­port­ing a 20pc an­nual profit hit that it at­trib­uted to the pan­demic. Royal Bank of Canada’s Richard Cham­ber­lain said the re­sults looked “mixed”, but noted the group’s “up­beat out­look”. He warned, how­ever, that the group is likely to see in­creased pres­sure from on­line com­peti­tors.

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