Britvic are the number two soft drinks producer by volume and sales value in the UK. Although its operations are concentrated in UK and Ireland, its international arm exports to over 50 countries. This has helped Britvic increase its revenues by 33 % in the first half of the year. The company paid €250m (£170m) for C&C’s soft drinks business last year, at the same time it generated £100m from the Irish addition in seven months and earned operating profits of £4.3m.
Britvic plans to reap cost savings of €14m from the acquisition. It saved €1m by closing bottling factory in Cork and will save another €5m this year. The remaining €9m saving is budgeted for the next year.
Britvic is attributing its success of 18 % growth in international revenues to the popularity of its children’s soft drink, Fruit Shoot, in Holland and Robinsons, the famous squash, in Nordic countries.
However the sales were poor in licensed premises due to smoking ban in England and due to the discounting strategy adopted by the competitors which Britvic did not adopt. The higher material and packaging costs ate away some profits which would have been otherwise much higher. Paul Moody, chief executive, is confident of meeting profit expectations through brand and product expansion, cost control, and outsourcing of retail distribution.
Microsoft has stated it is considering a deal with Yahoo! that would not involve a full buyout of the firm. Microsoft’s previous offer to acquire Yahoo! for $33 a share, a figure that valued the firm at $47.5bn was turned down. Last week Yahoo! rebuffed billionaire investor Carl Icahn’s plan to oust the existing board over the failed merger. Now Microsoft reveals that it is discussing with Yahoo! ‘an alternative transaction’, but did not give any details.
So, what about the ’stockholder value’? In a statement, Microsoft stated it “is not proposing to make a new bid for acquiring all of Yahoo! at this time, but reserves the right of reconsidering that alternative”. It issued the statement, ‘in light of developments” since the firm withdrew its bid two weeks ago. Microsoft underlined a deal may or may not take place. After the statement Yahoo! confirmed it was looking at several ‘value maximising’ alternatives with Microsoft, and the firm would assess offers made by the latter.
The internet firm stated its board would evaluate each of the alternatives that also include any Microsoft proposal with a focus on maximising stockholder value.
Cable & Wireless, the global telecom group announced that it is considering de-merger of core business divisions. The company had promised its share holders that it would look into ways, in 2008-2009, to realise the value of its shares. DE-merger is being considered as a possible way to fulfil the promise.
The group had divided itself into two separate divisions. One division covered the operations in US, Europe and Asia, the other division managed international operations and businesses Macau, Panama and the Caribbean.
Tony Rice, company’s finance director, says that de-merger option is on top of its agenda, including options of selling off parts of business or returning capital to share holders by resorting to alignment of group.
The global telecom group’s revenues were down by 5.9% to £3.15bn, but the earnings showed a jump of 23% to £605m, much above the analysts’ expectations.
Its dividend is up 28% to 7.5p. The growth during the current year is expected to be between £702m and £725m. The four year turnaround plan includes improvement of efficiency, boosting of margins and cutting number of customers to 3,000 from 30,000 for high-quality contracts.
The group cut down work force by 9%, contributing to cost reduction of £4m. It renegotiated network contracts and managed reduction of 97% in rejection of customer orders. The company achieved phenomenal success by changing the way it worked.
Battle between Halliburton and Candover took a fierce turn when Umbrellastream, a Candover-led consortium of funds tabled £15.50 cash bid proposal within hours against the £15.25-a-share take-over offer from Halliburton. Halliburton started taking keen interest in Expro’s figures soon after Umbrellastream made a bid at £14.35 a share in April. It is reliably learnt that Halliburton’s Texan management is very much determined to clinch the deal and is coming back with a lucrative offer next week. The company however maintains that no such proposal is yet under consideration.
With the steep rise in oil prices ($135 a barrel), and the global hunt for sources of supply, Expro’s oil well production-testing technology is in great demand. Analysts feel that rising oil prices and high consumption are making Expro a golden goose and the bidders are feeling confident of extracting substantial synergies from a deal even after paying a high price. Expro’s shares closed at £16.26, up 85p, indicating expectations of a higher bid by the market.
Halliburton would hold further negotiations with Expro’s board. Finance director, Mike Speakman, said that it has so far not received firm offer from any company, except Umbrellastream. Halliburton has been involved in several controversies and is under investigation by the US Department of Justice. But, according a spokesman, these issues are irrelevant to its offer for Expro.
Vodafone Head Arun Sarin’s sudden departure Vodafone revealed their annual pre-tax profits have gone up 2% to £8.9bn. But that is no reason to cheer as they even revealed the departure of one of their most eminent persons who has helped shape and promulgate the brand to the fullest. Vodafone chief executive Arun Sarin is stepping down. The head of one of Britain’s biggest companies reigned for five years. Mr. Sarin will retire in the end of July. He had a bad patch in the year 2006 when shareholders revolted against him and criticized his performance. About 15% of shareholders either abstained or voted against him continuing as chief executive.
Given the rough times in European markets Mr Sarin expanded the Vodafone network in emerging markets such as India, Romania, and Turkey. Vodafone’s business in emerging markets is performing well, especially in India where revenue had jumped by 50%. With Mr. Sarin’s the firm has been able to sign up large numbers of new users. Most recently, Vodafone was in talks with South Africa’s MTN.
South African mobile operator MTN is showing keen interest in Indian super group Reliance Communications in global merger talks. Indian cellular giant Bharati Airtel recently withdrew from the race. MTN and Bharati had issues about the structure of a combined group. Bharati Airtel decided to pull out of the deal as MTN had proposed a structure which would have made Bharati Airt1el a subsidiary of the South African cellular company contrary to the agreed terms between the two firms. Sources have confirmed of Reliance Communiaction being the favourite to land MTN. After Bharati pulled out from its $50 billion merger deal Reliance Communications is said to have started negotiations for a possible tie-up with the South African major. According to industry experts the combination of Reliance Communication and MTN would create a global wireless juggernaut. Even larger than established market giants like AT&T. Vodafone started off with gusto with a 20-billion bid which it withdrew at a very early stage.
But the Indian giant Reliance Communications even have other plans. They have been the frontrunners in acquiring UK-based global virtue network operator – Vanco. Reliance Communications is fighting other biggies like AT&T, BT, T-System and NTT in fray. Although the final price of the deal is unknown, as Vanco stands at a $800 million market cap.
Marks & Spencer (M&S) the largest clothing retailer in UK and also multi-billion pound food retailer has reported 4.3% rise in its profits, amounting to £1bn. Despite impressive rise, M & S is cautious about next 12 months’ business. Its UK like-for-like sales in food and clothing dropped considerably. Trading in the month of April was very low.
The bonuses for staff are cut drastically, but the store teams, which did roaring business, will be sharing a bonus of £12.8m. The 75,000 strong staff was paid record £91m bonus last year. Chief executive Sir Stuart Rose is confident of meeting challenges of retail environment on the strength of its long experience in UK market. He is taking all precautionary measures to face the onslaught of difficult market conditions. Top priority is being accorded to inventory controls and cost effective measures.
Sales figures indicate drop of 0.5% in like-to-like and general merchandise, and 0.4% in food sales. International sales grew up by 16.8% and operating profits were up by 33%. M&S gained 4.8% shop floor space in UK on account of expansions and new stores. It is targeting growth of 5.5% in the current year.
Regent Inns, is facing big crisis with its sales going down drastically. Regent Inn is basically an operator for pubs and comedy clubs. Its entertainment bars division registered 11 per cent slump in sales since beginning of the year. Rising costs, tough competition and the ban on smoking in the pubs have adversely affected the business of its Walkabout chain.
Regent had been under severe cash and capital crunch. As part of its recovery measures it has slashed capital expenditure, and has decided to cancel dividend payments. Regent Inn is struggling to repay its huge debt of £79m. Seven of its freehold properties were sold and leased back in March. These measures yielded meagre £1.6m. The debt is four times its market capitalisation value.
According to Bob Ivell, the executive chairman the sales of its core entertainment division has been continuously falling since Christmas and has taken a worst turn with its like-for-like sales going down by 10.9%. He says the performance is dismal despite good contributions from 12 Jongleurs clubs during this period. Regent’s shares prices had witnessed crash of almost 90% last year. It has entered in to negotiations with potential bidders Sun Capital, and night club group Brooks Leisure. British Beer and Pub Association reports, Britain is witnessing closure of 4 pubs everyday.
Energy providers in UK are intensifying their campaign against European Commissions stringent plan to curb industrial pollution. They argue that implementation of EU’s directives will result in reduction of 25% of Britain’s power generation capacity. This is going to cause frequent blackouts all over the country.
The Association of Electricity Producers (AEP) has urged Business Secretary, John Hutton to take up the issue of Industrial Emissions Directive (IED) with EU vociferously. EU is planning to further tighten its already stringent limits on emissions sulphur and nitrogen oxides.
Mr Porter, head AEP, sees threat to the future of coal-fired power stations posed by EU directives and considers that it will hamper UK energy providers’ efforts to replace old plants with the new generation plants in future. He claims industry would be put to shell out £2.8bn to comply with EU emission limits, proposed this year. Many suppliers would be forced to close down while recovering hefty equipment installation costs.
He terms EU regulation as scary. It is appealing to bureaucrats but threatening to the industry’s survival. The rush of one regulation after another reflects on poor understanding of business and investment by the European Commission. The AEP has also approached the Department of Environment, Food and Rural Affairs (Defra) and is lobbying the European Parliament with the help of European trade body Eurelectric.
In a refreshing change at a time characterised by crashing profits, supermarket chain Sainsbury, has reported a staggering 28% increase in profits, for the year ending in March 2008. Annual pre-tax profits were £488 million. An increase in like-for-like sales were also reported, which were up by 3.9% in all sectors except fuel.
Sainsbury had been on a recovery program since 2004 and the figures achieved this year were higher than their set target of 2.5 billion pounds sales growth by March 2008. This goal was bettered to 2.7 billion pounds sales growth. This improvement has been greatly aided by lower prices and consistently strong sales in the fresh and premium food divisions.
Sainsbury is currently ranked third in the supermarket hierarchy in the country, right after TESCO and Wal-mart’s Asda. Their expansion plans include a foray into the non food online business, with an investment of £15 million pounds. They also plan to expand their banking operations.
Sainsbury expects nearly two-thirds of their future sales to be in the food division and one –third from the non-food ones. They intend to give half their space to the burgeoning non-food section. The tight economy however will ensure that the markets will remain intensely competitive.
The board has recommended a final dividend of 9 per share, adding the year’s dividend up to 12 pence, which would mark an increase of 23%.