The value-add distribution group Diploma saw its share price surge this morning following news that it was set to acquire Peerless Aerospace for £236m. That is seen as being a highly attractive valuation, with a year one ROATCE (return on average tangible common equity) of 15%, well in excess of the cost of capital. It will be immediately accretive to group growth and operating margin. As well as the financial rationale, this is also seen as being a strong strategic fit and an acquisition of this scale is certainly cause for cheer when it comes to the health of the London market. Shares were up by as much as 11% in early trade.
In keeping with the M&A theme, DS Smith issued a note last night confirming media speculation that it was now in acquisition discussions with International Paper. The company remains in talks with Mondi as well, so a bidding war could ensue here. An hour into the day and DS Smith shares are trading around 7% higher, but if Mondi responds then a full-blown bidding war could ensue.
Advertising and technology play S4 Capital issued full year numbers this morning which evidently did little to impress the market. Coming off the back of a strong performance over the last four years, macroeconomic woes saw the company miss targets and also advise that the near term outlook remained challenging, with further revenue declines expected in the year ahead. Shares were trading down by more than 13% just over an hour into the session.
Headlines we expect on Thursday
Arbuthnot Banking Final Results
This time last year Pre-tax profits £20m, EPS 109.6p, Impairment loss £5.5m
International Public Partnerships Final Results
This time last year NAV per share 159.1p, FY dividend 7.74p
