After admitting to talks yesterday Marks & Spencer (MKS) has on Wednesday confirmed plans to form a £1.8bn grocery joint venture with technology delivery firm Ocado (OCDO).
The tie-up, if approved by shareholders, will give M&S a food delivery business for the first time, but it comes at a hefty price. M&S plans to raise £600m through a rights issue to fund its part of the deal, and will involve rebasing its dividend.
‘This is one of those situations which on the face of it, it looks like it makes more sense for Ocado than for M&S’, says one market watcher, a view that most investors appear to agree with judging by the respective share price reactions in early trade on Wednesday.
M&S stock is the biggest faller on the FTSE 100 loser board, down more than 7% at 281.6p, valuing the retail doyen at £4.8bn. Conversely, Ocado’s share price soars to the top of the FTSE 100 leader board, up 2% to £10.10, although it is worth considering the stock’s overall 14% rally since last week’s 886p close.
Overall UK stock markets are in losing territory early on Wednesday as investors appear to shrug-off a rally in Asia overnight, instead concentrating on the weak session in New York.
On Wall Street the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite all declined modestly (about 0.1%).
Japan's benchmark Nikkei 225 index and China's Shanghai Composite added 0.6%, while Hong Kong's Hang Seng index edged 0.5% higher.
TRENDY TED BAKER WARNS
Fashion chain Ted Baker (TED), in the news recently because of improper behaviour claims regarding its boss Ray Kelvin, compounds the gloomy high street backcloth after warning of lower profits.
The company says it now expects pre-tax profit for its recently ended 26 January financial year to come in at around £63m, way down on the £68.8m of the previous 12 months. This is due to foreign exchange movements, system upgrades and warehouse transitions.
Shares in the business slump more than 12% to £17.59, going close to halving over the past year.
Also in the doghouse is supposed challenger bank Metro Bank (MTRO) after it cut back on previous growth targets and unveiling plans to tap investors for £350m of new growth funding.
Shares in Metro have collapsed from above £40 levels in less than 12 months on a lengthening list of catastrophe’s, falls heavily again on Wednesday, down more than 18% to £10.62.
MIXED RESULTS
Results from other FTSE 100 companies of note include a 22% rise in pre-tax profit for mining services engineer Weir (WEIR) to £310m as orders increased 15% on a like-for-like basis to £2.5bn.
Its share price nudges 10p higher to £16.07.
Anglo-Australian mining giant Rio Tinto (RIO) rewarded shareholders with a bumper special dividend worth a total $4bn as part of $7bn payout, pushing its stock 1.8% up to £44.65.
Going the other way is wealth management firm St James's Place (STJ), which lifted its dividend but though sounded a note of caution on ‘challenging external factors’ currently being experienced.
Its share price falls 2.5% to 952.4p.
ITV EYEING AUNTIE TIE-UP
Broadcaster ITV (ITV) reported a higher annual profit though anticipated a challenging first half of 2019 following stronger comparatives a year ago.
There is also talk of launching some sort of streaming TV service alongside the BBC in a bid to fend off competition from Netflix and other online services, although there is nothing concrete yet.
ITV shares slide close on 2% to 128.85p.
Housebuilder Taylor Wimpey (TW.) continues to robust reporting of UK housebuilders after saying it enjoyed ‘another strong year’ as it posted 5% growth in underlying profit.
Shares in the company nudge marginally higher to 172.1p, and comes after firm results from peer Persimmon (PSN) on Monday.
Finally, credit checking firm Experian (EXPN) has ditched plans to buy out rival ClearScore after coming to the conclusion that the deal would not get past competition regulators.
Experian, valued at more than £18bn and one of Shares running Great Ideas, sees its stock dip 8p to £20.01.
