Companies in the news ... and how they were assessed
The Weinstein Company: white knight?
“Perhaps you’ve heard, but the Weinstein Company is in a bit of trouble,” said Jon Shazar on Dealbreaker.com. Investors in the privately held film company – which include Goldman Sachs, WPP and Fidelity, worry about its future without Harvey at the helm. But never fear, a white knight is in the offing. The firm is reportedly in talks to sell to the private equity company Colony Capital, and has reached a deal for an “immediate capital infusion”. The synergies look good. Colony is well-versed in both showbiz and alleged sexual predators. In 2008, it rescued Michael Jackson’s Neverland Ranch from foreclosure and its CEO, Thomas J. Barrack Jr, is “one of President Trump’s closest advisers”. Even before last week’s bombshell allegations, the Weinstein empire was on “shaky financial ground”, said the New York Post. In 2010, it only dodged bankruptcy after striking a $450m debt-restructuring deal that forced it to hand over the rights to 200 films to Goldman Sachs and Assured Guaranty. Colony could offer “a lifeline” to the embattled outfit, said Brooks Barnes in The New York Times. “But the fate of the studio,” including whether co-founder Bob Weinstein will stay involved, “remains far from resolved.” Some investors, noting the seriousness of the allegations and the extent of the likely litigation, question “what could be done with such a toxic asset”.
Convatec: open wound
Convatec is one of those FTSE 100 companies that “rarely commands attention” because its business “seems so dull”, said Nils Pratley in The Guardian: it makes medical products such as colostomy bags, catheters and wound care treatments. “How wrong we were.” Shell-shocked shareholders this week saw a quarter of the value of their investment wiped out, equivalent to £1.3bn, following “a thumping profits warning”. Apparently, Convatec “made a botch of the superficially simple job of shutting a factory in North Carolina and shifting its production to the Dominican Republic”. The company calls this a “temporary but painful setback”. Maybe, but it “undermined its big pitch to investors” at last year’s flotation, when it promised rapid improvements in gross margins and organic growth. “At times like these, little beats Aquacel Ag Extra,” said Alistair Osborne in The Times: the Convatec wound dressing is apparently “nine times stronger and 50% more absorbent than rival kit. Just the thing for investors who’ve been banging their head on the desk all day.”
Newcastle United: exit Ashley
The financier Amanda Staveley recently made the trip to Newcastle to watch the home side play Liverpool. Staveley, who runs PCP Capital Partners, has form when it comes to selling British football clubs, said Jack de Menezes in The Independent: she oversaw the £210m deal that saw Sheikh Mansour take over Manchester City. Now it seems she is helping out Mike Ashley. “After ten tumultuous years,” and the investment of some £134m, the Sports Direct boss is throwing in the towel. He has put the club up for sale for a reported £380m, and hopes to be out by Christmas. Who might buy, asked Joe Hall in City AM. Turkey’s richest man, “biscuit tycoon” Murat Ülker, is already in negotiations. But if China’s five-year plan, unveiled this week, sees restrictions on outward investment lifted, the “Jaffa Cake king” can expect strong competition from Chinese buyers.