The Week Ahead: Forget the numbers, the City's only thirsty for the Allied bid
Sunday 17 April 2005
Drinks group Allied Domecq unveils interim results this week. Had it happened last month, it would have been a simple affair: the US performing well, Europe less so and pre-tax profits potentially as high as £290m against last year's £266m.
But, as one broker notes, there is "a feeling of irrelevance" about these numbers. Because most expect French giant Pernod Ricard and US partner Fortune Brands to have made an offer worth more than £7bn for Allied Domecq before anyone gets a chance to start discussing earnings per share.
There had been hopes a bid would come sooner - due diligence was carried out last week - and there was also confusion about whether another suitor might come forward. Constellation Brands, for example, the American owner of Mondavi wines, said it was considering an approach but distanced itself from both the remarks and intention as the week drew to a close. However, sources say Pernod Ricard's aim is still to get an offer on the table by Thursday's results.
There are various questions that will be answered by a formal bid, such as the structure of the deal, the value (most are speculating around 670p a share) and how Pernod Ricard and Fortune will divvy up the goods. But a bid will also bring more questions, not least of which is whether the Allied Domecq board will believe it represents fair value. Do not expect the affair to come to a close any time soon.
Another sometime takeover subject is WH Smith, and it also has interim numbers out on Thursday. The similarities with Allied Domecq end there, however, with its former suitor, Permira, long since gone. Some are cautiously optimistic that the results will confirm that chief executive Kate Swann's recovery is gaining ground.
Christmas sales were poor, and the tough conditions on the high street are challenging the whole sector. But Ms Swann has already revealed both an improvement in profitability, as promotions were axed, and a strong Valentine's Day. The group also dispensed with its finance director recently in favour of Alan Stewart, who has a reputation for helping turn businesses around.
Other retail results come from Game Group, the computer games specialist. The company, though, is in potential takeover talks, so again, this is likely to be the focus for most analysts.
Associated British Foods is also reporting, and the City is hoping for good news from the owner of discount retailer Primark and household brands such as Twinings, Ryvita and Silver Spoon. In particular, Primark - which recently snapped up six Allders stores - should show solid growth and help boost pre-tax tax interim profits from £232m to around £265m.
In other sectors, news and information group Reuters is one of the biggest names addressing investors. First-quarter sales are due on Wednesday, with the annual general meeting the following day. Most are predicting that underlying sales will be down around 1.5 per cent, but overall the City is becoming more bullish towards Reuters. Analysts point to the strong start to the year already reported, and price increases. Also on the cards is the sale of its 63 per cent-owned sharetrading subsidiary, Instinet, to Nasdaq.
Overseas, and in the US, first-quarter results are coming thick and fast. Investors will be getting news from Ford, eBay, Motorola, Google, Eastman Kodak, Yahoo! and the controversial services giant Halliburton, to name but a few.
Gaming giants MGM Mirage and Harrah's Entertainment are also reporting. They have viewed the UK market with increasing excitement over the past year as plans to deregulate gather pace - but that is likely to have been severely dampened by the Government's recent decision to limit the number of mega-casinos to just one. Any views on this are bound to be interesting.
Also in the States, sources on Capitol Hill expect progress on the deal to resolve the asbestos crisis, which has hit scores of companies around the world. The draft of a 300-page bill, sponsored by Republican Senator Arlen Specter, to create a $140m (£74m) asbestosis compensation fund has been circulating. It has received support from Democrats but a few conservative Republicans are objecting. The other people not happy are reinsurance companies, notably Equitas in the UK, which feel the bill puts too much of the brunt on them.
In mainland Europe, meanwhile, stocks reporting include mobile phone giants Nokia and Ericsson, and Dutch electronics group Philips.
And rounding off a busy week is a slew of economic news as G7, IMF and World Bank meetings all draw to a close. On a local level, there are minutes from the Bank of England detailing its last decision on interest rates (likely to show a seven-two vote for a hold), the Rics house price survey and retail sales for March.
UK: Results: (final) Peter Hambro Mining, Star Energy.
UK: Results: (F) Cairn Energy, Canterbury Foods, Game Group, Parity Group; (interim) Associated British Foods, Bellway, Carr's Milling Industries, Incat International, Mouchel Parkman; (first quarter) ARM Holdings.
UK: Results: (F) Clinton Cards, Oakdene Homes, RC Holdings; (I) Carter & Carter, McCarthy & Stone; (Q1) Autonomy Corp.
UK: Results: (F) Imperial Energy Corp; (I) Allied Domecq, WH Smith.
UK: Results: (F) Surgical Innovations; (Q1) WPP
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