Diploma ahead as it reels in wire maker

The Daily Telegraph - Business - - Business - Louis ash­worth mar­ket re­port

SHARES in tech­ni­cal prod­ucts group Diploma soared af­ter it raised £194m to com­plete a big-ticket pur­chase. The cash boost al­lowed the com­pany to buy Windy City Wire, “a lead­ing value-add dis­trib­u­tor of premium qual­ity, low volt­age wire and ca­ble” based in the US.

The FTSE 250 group sold £190m worth of shares to in­sti­tu­tional in­vestors and a fur­ther £4m to re­tail in­vestors.

Diploma said WCW was a “highly at­trac­tive busi­ness” in one of its key mar­kets, with a “strong track record of per­for­mance”. The takeover is ex­pected to be com­pleted by the mid­dle of Novem­ber.

Chief ex­ec­u­tive Johnny Thomson said the takeover is an “ex­cep­tional op­por­tu­nity” for Diploma, de­scrib­ing WCW as “a high-qual­ity wire and ca­ble dis­tri­bu­tion busi­ness with a strong man­age­ment team and an im­pres­sive value-add cus­tomer propo­si­tion”.

Royal Bank of Canada’s An­drew Brooke sounded cau­tion over the deal, not­ing there are ques­tions about how some of Diploma’s end mar­kets, in­clud­ing the avi­a­tion sec­tor, will re­cover from Covid-19.

In­vestors wel­comed the deal, how­ever, driv­ing Diploma’s shares more than a quar­ter higher, up 461p to £21.72.

The per­for­mance left Diploma as the clear stand­out on a solid day for UK-listed stocks, which man­aged strong gains as in­vestors took heart that the Gov­ern­ment’s Covid-19 re­stric­tions were not as se­vere as had been feared. Dur­ing the ses­sion, Lon­don’s in­ter­na­tional earn­ers lost the sup­port of a weaker pound, which touched a two-month low early in the ses­sion but bounced back as the day wore on.

JD Sports was among the big­gest ris­ers on the FTSE 100, climb­ing 29.2p to 792.2p, as in­vestors wel­comed a blowout up­date from Nike on Tues­day night. Rip­ples from the re­port lifted sportswear groups across Europe, although Mike Ash­ley’s Frasers

– which car­ries few Nike prod­ucts – firmed just 4p to 344p. Hazard pro­tec­tion group Halma rose mod­er­ately, climb­ing 42p to £22.59, af­ter keep­ing its guid­ance steady.

On a day in which most blue-chips gained ground, pre­cious metal miner Fres­nillo had a poor ses­sion, drop­ping 73.5p to £12.05 as the price of gold con­tin­ues to move sharply down­ward. The yel­low metal is al­most 10pc lower than its early-Au­gust peak, with losses sparked by broadly im­proved risk sen­ti­ment and a de­sire for cash.

Travel food out­let owner SSP was the sec­ond best mid-cap per­former, up 22.3p at 203p, but its 12pc gain was still a fair dis­tance be­hind Diploma’s 26pc. The group, which op­er­ates brands such as Up­per Crust, said it had been forced to re­struc­ture and un­der­take “con­sid­er­able job losses” as a re­sult of the pan­demic, but in­vestors wel­comed its bet­ter-than-ex­pected out­look.

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