It’s takeoff for Thomas Cook
ON an otherwise bleak day for equities, it was blue skies all the way for Thomas Cook as shares in the world’s oldest travel company gained altitude to touch 160.6p before closing 3.1p better at 156.1p.
Initially lifted by an upgrade from joint broker Credit Suisse, buyers later piled in amid hopes that Fosun International could soon double its stake to 10pc as a prelude to a bid. They heard the Chinese investment firm had raised £770m in a domestic share placing and said the cash would be used on further acquisitions. It bought Club Med, the French holidays and tours group, months ago.
Fosun paid £91.8m in March for a 5pc stake in Thomas Cook, buying 73.1m shares at 125.59p a pop. It gave the stock a big lift after a disappointing period which followed Harriet Green’s shock departure as chief executive in November. The shares then fell £400m or 22pc to 107p on the abrupt exit of a boss who was credited with saving the 174-yearold tour operator from the knackers’ yard.
Credit Suisse upgraded to outperform from neutral and raised its target price to 180p from 159p. The broker said it had underperformed rival TUI by 45pc since September 2014 and now trades at a 30pc 2016 price earnings discount.
As Thomas Cook took off, discount airline easyJet nosedived 179p or 9.8pc to 1654p. It was sold down to 1638p after boss Carolyn McCall warned that April had been a difficult month because of increased disruption with more than 600 cancellations, the majority of which were caused by the extended French traffic- control strikes. The disruption is expected to slash pre-tax profits by £25m.
Easyjet’s problems rubbed salt into the Footsie’s gaping wound caused by finance minister Yanis Varoufakis’s stark warning that Greece could run out of funds in the next two weeks. Friday’s post-election result euphoria seemed a long time ago as the elite index declined 142 points before rallying to finish 96.05 points off at 6933.80. The FTSE 250 dropped 181.41 points to 17,689.23.
The major talking point on the Street of Dreams was US telecom giant Verizon’s $4.4bn (£2.8bn) or $50 a share cash offer for AOL, America’s internet group. Dealers were obviously delighted to see that M&A fever shows no signs of abating and helped the Dow Jones rally from 180 points down on Greece worries to trade only 29.9 points easier when equity traders in London left for home.
B&Q retailing group Kingfisher, which tomorrow will trade without entitlement to the latest 6.85p dividend, shed 13.1p to 357.5p. Still reflecting diminishing concerns about its usage of zero-hour contracts after the Conservatives’ outright victory in the General Election, Mike Ashley’s Sports Direct International edged up 2.5p to 656p.
Pubs group Greene King frothed 25.5p higher to 830p after JPMorgan Cazenove upgraded to overweight from neutral, believing that the UK pub sector, for all its challenges, offers good exposure to the UK consumer environment. This year’s Rugby World Cup will also have punters flocking to watering holes throughout the UK.
Scrappy selling dragged fashionwear group Ted Baker 220p lower to 2728p.
Office rental group Regus lost 17.8p to 245p after founder and chief executive Mark Dixon trousered £73.5m by selling 30m shares at 245p a pop. He still holds a 31.4pc stake.
Al Noor Hospitals, the Abu Dhabi-focused private healthcare service provider, fell 49.5p to 819p. The company said it has performed in line with expectations in the first three months of 2015 but sentiment was not helped by news of the resignation of chief financial officer Pramod Balakrishnan.
Chief executive Keith Evans’ decision to leave Tribal Group at the end of next month had sellers all over the education support services group. Shares were sold down to 144p before closing 7.5p cheaper at 149.25p. Evans, whom analysts say was instrumental in its turnaround and restructuring, is stepping down after five years to seek a ‘change in lifestyle’.
Anite buzzed 6.5p higher to 91.25p after the provider of software and hardware to the international wireless market said it expects to report full-year revenue and adjusted operating profit in line with expectations.
Highlands Natural Resources jumped 4.38p or 47pc to 13.62p after it bought a 75pc stake in US-based Diversion Technologies.
Placed on AIM at 4.5p, shares of the Nick Candy-backed satellite broadband business Satellite Solutions Worldwide were supported up to 5p and closed at 4.849p. Mr Candy sits on 10.9pc of the equity.
Quarry company Fox Marble declined 0.9p to 20.5p after raising £2m via a placing of 10m shares at 20p. The £20m raised will help repay the outstanding convertible loan of £1.1m with Amati Global. BERENBERG gave Greggs’ shareholders indigestion after advising clients to sell. Shares of the bakery retailer crumbled 41p to 1142p after the broker said shares look overvalued for a business with historically weaker revenue growth, weaker earnings growth and lower margins than UK peers. In the first quarter, it opened 24 new shops but closed 18 which indicates that medium-term opportunities are limited.