Companies roundup: Ocado takeover and Whitbread sales
The value of Ocado (OCDO) shares leaped up by over 40% during mid-morning, due to speculations circulating about a possible offer for the grocery technology company, which has been facing negative attention.
During the lockdown, people were really interested in Ocado's shares, but now they've lost a lot of value. This is because they haven't been able to make enough sales to make up for all the money they've put into the business. In fact, last year they lost almost three times as much money as they did the year before - £501 million! This is because their partnership with Marks & Spencer, where they sell food together, didn't work out too well. Even though Ocado's shares are still worth a lot less than they were in September 2020, they have gone up by more than half in the last month.
According to Clive Black, the vice chairman of Shore Capital, there isn't a good reason for Ocado's shares to be going up in value. This is because the company's equity valuation is still very high. Additionally, with higher base rates expected to continue for a long time, investing in a company like Ocado, which is currently losing money and has negative return on capital employed, does not seem like a good idea. Black also noted that he doesn't believe even Mike Ashley would invest in Ocado.
Find out more: The financial losses of Ocado have worsened.
Strong Demand Lifts Whitbread Sales Up 20%
In the first quarter of the year, Whitbread - the owner of Premier Inn - reported a revenue increase of 19% from last year. The company attributed this to high demand from both business and leisure guests, as well as a decrease in available hotel options. Their UK accommodation sales were up by 18%. Whitbread plans to open between 1,500-2,000 rooms in the UK and Ireland, and 1,000-1,500 new rooms in Germany this year. They hope to achieve profitability in the German market by 2024. Additionally, the company extended their £775mn revolving credit facility to 2028. Despite this positive news, their shares remained unchanged in early trading.
Rent Rise Saves Urban Logistics Despite Loss
Urban Logistics (SHED) reported a pre-tax loss of £83 million for the fiscal year ending on March 31st due to the impact of rising interest rates on the value of warehouses. Despite this, there was a significant increase of 45% in net rental income which indicates that demand for warehouse space from occupiers was high resulting in a strong operational performance.
Richard Moffitt, CEO of the investment advisor for the Reit, stated that our strategy of actively managing our assets has provided us with the ability to enhance their value and protect our company from any negative effects caused by a decrease in yields. Our approach involves increasing lease lengths, improving tenant covenants, and re-evaluating rental prices.
Civitas Directors Retain Shares As Takeover Deadline Nears
The deadline for the takeover of Civitas Social Housing (CSH) is quickly approaching, yet two directors have decided to retain their shares in the company.
Recently, the Civitas board accepted an offer from CK Asset Holdings worth £485mn, but disagreed that it did not accurately reflect the value of the company. Currently, CKA only holds 17.1% of CSH shares, and the deadline for the takeover ends tomorrow at 1pm. Although board members Alastair Moss and Peter Baxter made an "irrevocable commitment," they have not given CKA their shares yet.
The CSH has refrained from giving any explanation regarding their decision to withhold information. Request for comment has been sent to CKA. ML
Check it out: Civitas supports a buyout offer that is too low for the company's worth.
