Big guns gang up on Ashley
BILLIONAIRE retailer Mike Ashley likes the City almost as much as he likes Sunderland Football Club. He still remembers the flak he took from all and sundry when he floated his beloved Sports Direct International in early 2007, trousering a mouthwatering £900mplus in the process.
However, detractors were left with egg on their faces when the retailer not only survived the financial crisis, but saw off a major rival in JJB Sports and then found itself sitting pretty among the Footsie elite. Fund managers then had to sit up and take notice.
Yet Ashley, who owns Sunderland’s arch rivals Newcastle United, still remains an easy target for the bears. Shares of Sports Direct closed 40p lower at 697p, some 25pc below April 2014’s high, as major institutional shareholders in Findel – in which Ashley has an 18.9pc stake – ganged up to block his attempt to put his mate Benjamin Gardener on the home shopping group’s board.
Toscafund and Schroders, which own 20pc apiece, had already rejected the proposal and River & Mercantile has added its considerable weight behind it, so Ashley is now tackling heavy opposition speaking for 44pc.
Remember, Ashley bought his stake in Findel, 8.25p cheaper at 225.25p, in September for £32m from Toscafund and Schroders, prompting speculation that he wanted to get his hands on Kitbag, which sells replica football and rugby kits, and keep it from falling into another bidders’ hands. Findel appointed auditors KPMG last year to help manage the sale of Kitbag, which could be worth £20m.
Analysts say Ashley is actively looking for acquisitions and he certainly has the funding to buy Findel, currently valued at £193m, outright. He reports interim figures next Thursday and will no doubt be questioned further about his intentions towards Findel and Kitbag. They will also want to know about sales on Black Friday and prospects for the crucial Christmas trading period.
Sports Direct has previously forecast full year profits of £420m and shareholders will be hoping that remains the expectation. Any change in a southward direction and the share price reaction could be severe.
Wheeler dealer Ashley has an option over 10.5pc of Debenhams shares, which he used as leverage in talks to sell leisurewear through the department store chain. Indeed, he expects to have eight concessions in Debenhams by Spring 2016.
Goldman Sachs yesterday pulled the shutters down on the Debs share price – 5.75p off at 79.65p – after downgrading to sell. The US broker said that online sales channels cannibalizing store-based sales is becoming the norm and could lead to tough times for many bricks and mortar businesses.
Sellers again put the boot into shoe retailer Jimmy Choo and the close was a further 7.5p down at a year’s low of 125.5p.
European Central Bank boss Mario Draghi’s name was mud as the Footsie slumped 145.93 points to 6,275 and the FTSE 250 lost 162.05 to 17,391.87 after he announced that the ECB will continue its accommodative monetary policy until at least March 2017, as well as cutting the deposit rate.
Down 158 points overnight after Federal Reserve boss Janet Yellen proclaimed that the US economy is now ready for higher borrowing costs, Wall Street fell a further 100 points in early trading on the ECB statement.
Vague takeover talk and further consideration of the full-year results and 21pc dividend increase helped investment manager
Brewin Dolphin put on 20.6p to 289.6p. Ground engineer Keller Group jumped 38.5p to 864p after reporting a strong order book and saying it expects full-year results to meet analysts’ predictions.
The Go-Ahead Group travelled 59p higher to 2659p on hearing the Department of Transport has awarded London Midland, its 65pc owned train company, a new contract to continue to run the West Midlands franchise until October 2017.
Investec advised clients to sell Spire Healthcare, 25.3p off at 303.5p. The broker reckons Spire faces an uncertain short-term future with NHS volumes decelerating and the regulator Monitor proposing to cut orthopaedic prices – making the current rating too rich.
Pantheon Resources rose 10.5p to 97p after announcing the successful conclusion of drilling operations at the VOS#1 well in Tyler County, Texas. Broker Stifel lifted its target price to 130p on the news, which it believes demonstrates it is a less risky project. Cluff Natural Resources advanced 0.12p to 3.38p after highlighting the excellent potential of its 100pc-owned natural gas development interests in the Southern North Sea Basin.
Security tracking and monitoring specialist Starcom climbed 0.88p or 39pc to 3.12p after winning its largest contract to date to supply its Helios vehicle tracking system to a company in Kenya for ‘many thousands of units’, worth £3.7m over three years.
÷ SHARES of InternetQ, the mobile marketing provider, crashed 79.5p or 59pc to an all-time low of 54.25p after a critical blog on investment website Shareprophets.com sparked an avalanche of selling. The blog questioned its revenue model and finances and said it has a high dependence on three major, un-named customers, representing 80pc of total revenue. InternetQ strongly refuted the claims.