Column: £750m deal on future of online food shopping

The FTSE 100 had a tough period of trading last week as a strong Pound took its toll on the internationally-focused index. Losses during the middle of the week correlated with the strengthening of the Pound against both the Euro and the Dollar, with the latter moving from $1.30 to $1.33 as the week progressed, adding to last week’s gains. Markets were also under pressure, with investors waiting for details on a possible US-China trade deal and President Trump’s meeting with North Korean leader Kim Jong-un. The summit between the two leaders, held in Hanoi, broke down after the US refused North Korean demands for sanction relief. Mr Kim reportedly wanted all sanctions lifted against the country which the US refused, with Trump stating: “Sometimes you have to walk, and this was one of those times”.
49 Briggate, Leeds, West Yorkshire, 2014 ⬢ Following on from yesterday's stall, M&S now resides in this magnificent black marble art deco edifice ⬠there's a brief history on the plaque, below.49 Briggate, Leeds, West Yorkshire, 2014 ⬢ Following on from yesterday's stall, M&S now resides in this magnificent black marble art deco edifice ⬠there's a brief history on the plaque, below.
49 Briggate, Leeds, West Yorkshire, 2014 ⬢ Following on from yesterday's stall, M&S now resides in this magnificent black marble art deco edifice ⬠there's a brief history on the plaque, below.

Shares in Ocado rose last week as it formally announced its tie up with retailer Marks and Spencer. The deal, valued at £750m, has given M&S a 50 per cent stake in the new ocado.com joint venture, finally offering home delivery to its customers. However, shares in the retail giant fell 12 per cent as analysts and shareholders raised concerns over the price paid for the deal. This wiped more than £550m off the market value of M&S in its largest one-day fall since 2016, with a 40 per cent dividend cut and £600m rights issue also weighing on shares. The move comes after a stagnation in the retailers share price in recent years, as it looks to improve long-term profitability and drive revenue growth. Steve Rowe, chief executive of M&S attempted to ease investor concerns, stating that “This is not about the short-term, this is about the transformation of online grocery shopping in the UK.”

Also in the news last week was the UK’s largest housebuilder, Persimmon after it announced record breaking profits a day after its involvement in the government’s Help to Buy scheme was questioned. Annual profits at the firm rose 13 per cent to £1.091bn from £966m a year earlier, the first company to reach the £1bn milestone in the sector. Interim chief executive Dave Jenkinson, who the company announced will now take on the role permanently, commented “The whole team are very proud”. However, despite the bumper results, there were reports that a source close to Housing Minister James Brokenshire said that he was “increasingly concerned” by Persimmon’s practices, including issues around quality of buildings and accountability. Shares fell around 5% on the news, after investors worried that the house builder’s inclusion in the Help to Buy scheme could be under review.

Hide Ad
Hide Ad

In the red this week was British Airways and Aer Lingus owner, International Airlines Group. Gains on Friday from a reported increase in shareholder pay-outs were not enough to offset the steep losses incurred on Tuesday and Wednesday as its share price fell a combined 7.06 per cent. This was mainly down to its removal from several of MSCI’s global equity indices after the firm fell foul of the US index compiler’s rules on foreign ownership of shares. Shares were lifted on Friday however, due to a bumper shareholder pay-out in the form of an increased regular dividend and payment of a special dividend coming in at 16.5 Euro cents and 35 Euro cents respectively, costing the company a combined €700m.

Please remember that investments and income arising from them can fall in value and you may lose some or all the amount you have invested. Past performance and forecasts are not reliable indicators of future results or performance. Please note that this article is for information only and does not constitute a recommendation to buy or sell the shares of the companies mentioned.

Redmayne Bentley LLP is a Limited Liability Partnership. Registered in England and Wales. Registered No: OC344361

Registered Office: 9 Bond Court, Leeds LS1 2JZ VAT number: GB 165 8810 81 LEI: 213800S3IRIPK1R3JQ58. Members of the London Stock Exchange. Authorised and Regulated by the Financial Conduct Authority