KKR sale knocks Pets at Home shares
PETS at Home’s top shareholder halved its stake in the pets superstore yesterday, after a rally in the retailer’s shares gave its former private equity owner an opportunity to cash in.
Kohlberg Kravis Roberts sold a 12.2pc stake in Pets at Home for 195p a share, generating £119m to mark another step in its exit from the retailer.
Since dropping to its lowest ever share price in June, Pets at Home has rebounded 41pc as investors were left purring by an uptick in sales boosted by a new lower pricing strategy. KKR’s stake in the £1bn firm, which stood at about 47pc after its IPO in 2014, has now dropped to approximately 12.4pc. This stake will now be subject to a 60 day lock-in period, during which it cannot sell any of the stock.
KKR bought the company seven years ago from private equity peer Bridgepoint for £955m, but the sale knocked the City’s confidence in the firm, sending it sliding 16.7p to 199.2p, a 7.7pc slump.
Elsewhere, US pharma giant Pfizer’s announcement that it will shed parts or all of its consumer healthcare division through either a sale or spin-off boosted consumer goods multinational Reckitt Benckiser on hopes that it could mount a bid for the unwanted assets.
A deal would fill two of Reckitt’s key “whitespaces in health”, US analgesics and digestive remedies, Berenberg analyst Rosie Edwards told clients, adding that a deal for the unit would be valued at between £10bn-13bn and boost earnings by up to 10pc.
Other pharma firms, such as GlaxoSmithKline, could hold a better hand in any bidding battle by having pharma assets to swap with Pfizer but a deal involving Reckitt was still “achievable”, she added.
Reckitt’s boss said in 2015 that he would be “very interested” in the unit if Pfizer put up a “for sale” sign but the FTSE 100 firm’s recent acquisition of Mead Johnson has led to doubts over whether the firm has the financial muscle to swoop again.
Reckitt’s 152p climb to £70.90 was trumped on the FTSE 100, however, by luxury fashion house Burberry, advancing 40p to £18.43 after French high-end peer LVMH smashed expectations to lift the entire sector, and housebuilder Persimmon jumping 63p to £27.61 after a ratings upgrade from Redburn. Outperforming its peers on the Continent, the wider blue-chip index closed 30.38 points higher at 7,538.27.
Centrica chairman Rick Haythornthwaite signalling his confidence in the firm by buying £173,100 shares pushed the British Gas owner up 3.3p to 176.1p.
Chief executive Iain Conn also upped his stake the day before to little market reaction but the energy provider’s board doubling down on its sentiment-boosting director dealings was cheered by investors ahead of the Government’s energy price cap proposal due tomorrow, which will potentially hit Centrica’s earnings.