Watchdog raises red flag over DS Smith’s sale of assets to rival
FOOD and drinks suppliers could get a worse deal on their packaging if DS Smith sells part of its business to Liqui-box, the competition watchdog has found.
Us-based Liqui-box is trying to buy the FTSE 100 firm’s rigid and flexible packaging business for an enterprise value of $585m (£468m) under a deal announced in March.
The Competition and Markets Authority (CMA) said yesterday it was concerned that the deal could lead to less choice for customers and higher prices, especially as there are very few large suppliers in the UK market. The regulator said a reduction in competition could lead to lower quality products or poorer service.
An initial investigation by the watchdog found that Liqui-box and DS Smith are two of the four main suppliers of bag-in-box packaging in the UK, used for products such as wine. The firms must propose plans acceptable to the CMA on how they can address its concerns or it will open an in-depth investigation.
Shares in DS Smith fell 6.2p, or 1.7pc, to 357.2p.
Shares in advertising giant WPP suffered as investors fretted it may suffer similar headwinds to those that caused its French rival Publicis to cut its sales outlook for the rest of the year. Online and social media advertising have shaken up the marketing industry in recent years, hitting agencies like WPP and Publicis hard.
WPP, which sold its market research arm Kantar to Bain Capital for £2.5bn last week, shed 21p to 916.8p, a fall of 2.2pc.
At the other end of the FTSE leaderboard, travel operator Tui was lifted as analysts perceived an increased probability of the firm being compensated by Boeing for costs incurred due to the grounding of its 737 Max fleet. The improved outlook came after the American manufacturer took a $4.9bn charge in its accounts on Thursday to deal with the costs of the model being taken out of service following two crashes that claimed the lives of 346 people. Shares gained 37.2p, or 4.9pc, to end at 802p.
Sirius Minerals
announced plans for a $500m bond issuance to fund the construction and development of a mine in North Yorkshire.
The site will yield polyhalite, a mineral used in the production of fertilisers. The bonds will sit alongside a much larger private credit facility to help fund the project. The FTSE 250 firm rose 0.8pc to 16p.
The FTSE 100 closed at 7,508.70, a gain of 0.2pc on the day and leaving the benchmark index virtually flat for the week. The wider
FTSE 250 gained 0.4pc yesterday. Europe’s Stoxx
600 rose 0.1pc, while Asian equities traded strongly on increased hopes of a rate cut by the US Federal Reserve. The Shanghai Composite and Hong Kong’s Hang
Seng jumped 0.8pc and 1.1pc, respectively, while Japan’s Nikkei 225 added 2pc.
Gold reached a six-year high, and an eight-year peak in pounds, as investors reacted to debate about whether the US Federal Reserve should adopt a more aggressive monetary policy and sought sanctuary from low bond yields and elevated political risk in the Gulf.
The metal briefly broke through the $1,450 per ounce milestone before falling back.
Sterling held the gains made on Thursday, oscillating between $1.25 and $1.255 against the US dollar and in the range of €1.111 and €1.116 against the euro.