ITV under the cosh as it eyes Big Brother maker
MISGIVINGS over a possible bid by ITV for Big Brother production firm Endemol Shine have given investors a headache.
ITV has reportedly thrown its hat into the ring for Endemol, which also counts Masterchef and Peaky Blinders among its hits.
Private equity firm Apollo Global and 21st Century Fox, which jointly own Endemol, effectively hoisted the ‘for sale’ sign on the Dutch production company in July.
It is thought cable TV giant Liberty Global and French production and distribution company Banijay Group are also interested in acquiring Endemol, which has been valued at around £3bn.
Were ITV – valued at £6.4bn – to outbid its illustrious competition, the deal would mark a real statement of intent from Carolyn McCall, who joined from EasyJet in January to succeed Adam Crozier as chief executive of ITV.
McCall has pledged to continue Crozier’s strategy of reducing ITV’s reliance on advertising revenues, but even Crozier never contemplated a deal this big – the closest he came was a £1.2bn approach for Entertainment One, maker of Peppa Pig.
To use City parlance, the deal would be ‘transformational’, but the worry is that it would be so in the same way that a broken leg is transformational. Fears that the company would have to cripple itself with debt or issue a massive number of shares – or both – to finance the deal sent ITV shares 3pc, or 4.75p lower, to 153.25p. ITV’s slide didn’t help the
FTSE 100 and it closed down 0.03pc, or 1.87 points, at 7,300.23, while the FTSE 250 index gained 0.4pc, or 83.88 points, to 20,458.27.
The blue chips eked out gains as recent selling pressure on miners eased, although US-China trade war fears lingered on after President Trump’s latest batch of tariffs. Investors moved back into the sector on reports that China intends to increase infrastructure investment. Glencore gained 2.8pc, or 8.35p, to 308.7p, while
Antofagasta added 1.8pc, or 13.6p, to 790.6p. Mexican precious metals miner
Fresnillo was also boosted by broker comment, with RBC Capital assuming coverage on the stock with a ‘top pick’ rating, helping its shares add 1pc, or 8.2p, at 796.4p.
Broker comment also gave a lift to British gas owner Centrica, which added 2.7pc, or 3.9p, to 149.35p with the parent company of British Gas bolstered by a double-upgrade of its rating by Goldman Sachs.
The US bank raised its stance to ‘ buy’ from ‘ sell’ as it believes recent underperformance of Centrica’s shares is overdone and that investors are overlooking the impact of year-to-date rallies for gas and power prices.
But lower on the benchmark was
British American T obacco with its shares falling 1.9pc, or 69p, to 3600p after Morgan Stanley initiated coverage on the stock with only an ‘equal-weight’ rating.
Away from the big players, Indian smart-meter specialist
Cyan Connode was the top riser in London, soaring 43.7pc, or 2.95p, to 9.7p on the back of an £8.8m smart-metering contract with an unnamed Indian utility.
Despite today’s surge, the shares are still worth less than half what there were at the start of the year but Cyan Connode’s house broker, Finncap, went into bat for the company, saying the deal ‘ highlights the huge opportunity in the Indian market, Cyan Connode’s strong position in that region and the imminence of major deployments after a raft of pilot project wins’. Shares in audio-visual company
Mediazest rose 15pc, or 0.02p, to 0.12p as it moved into profit in the first quarter.
The company reported a net profit of £75,000 for the three months to the end of June, up from a £127,000 loss a year ago.