Diploma ahead as it reels in wire maker
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.