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M&A warms up for sizzling second quarter earnings

The headlines this week have been dominated by several speculative M&A reports involving some of the largest companies in the UK. After all, it’s not often that a UK 100 giant will be approached by another firm looking to purchase it, let alone two in a single week.

The first story detailed multiple supposed takeover bids for payments processor Worldpay (WPG). Only hours after the initial speculation swirled, the company came out to confirm that US peer Vantiv and banking giant JPMorgan had indeed approached it, eventually agreeing to a 385p deal with the former, but only after its shares had rallied 30%.

Only two days later, the same news source that foresaw the Worldpay deal also released a report stating that Centrica (CNA) could be in talks with potential buyers. The shares rallied as much as 5% on the report on Friday.

Other companies that have been subject to M&A speculation include ITV (ITV), Sainsbury’s (SBRY) and Unilever (ULVR), while Sky (SKY) is in the final stages of having its takeover by 21st Century Fox given the green light.

ITV has been subject to multiple reports of approaches, from perennial US predator Liberty Global, to an Evening Standard report that Amazon, Netflix or even Apple had approached shareholders regarding a potential offer. Going back as far as 2014 Sainsbury’s has been named as a takeover target for Qatari groups, while Unilever was subject to a failed takeover bid from Kraft foods that would have valued the company at $143bn.

The latest M&A chatter has certainly hotted up the marketplace as we move into the second half of the year, and while it may be near impossible to predict which UK 100 blue chip will be the next to be approached, there are, of course, events that can see shares move by just as much in a single session.

Set to lift the markets out of its summer lull is Q2 earnings season. Already this week, we’ve been keenly watching the warm up for the key period that’s just around the corner.

UK 100 housebuilder Persimmon (PSN) traded as much as 4.5% higher on increased revenues while Primark owner Associated British Foods (ABF) rallied as much as 6% after a better-than-expected period at its flagship stores.

But the best is yet to come.

Next week, we have no less than six UK 100 companies reporting their figures from the previous quarter, while three of the largest banks in the world report their Q2 earnings on Friday which will undoubtedly have an effect on the UK’s crucial banking sector. What better way to warm up for the weekend than reacting to these pivotal company reports?

Through this exciting period for traders, what you will need most is a reliable source of information. A source of information that will call you directly in order to give you the latest market updates or news that could affect your portfolio. If you’re caught unaware of the key dates that could affect your holdings, your trading book could take a hit that it struggles to recover from.

Thankfully, at Accendo we pride ourselves on keeping our clients up to date, offering them the insight of our award-winning research department and trading service to keep them abreast of the latest market-moving events, as well as a daily morning briefing before London trading gets underway. You can try it out for yourself by signing up for our research here.

No ifs, no buts, no obligations. Just timely, reliable and tailor-made research to suit your trading needs. Why not take the workload off your shoulders just in time for summer?

John Truong, Senior Trader, 7 July

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This research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. This investment research has not been prepared in accordance with legal requirements designed to promote its independence and it is not subject to the prohibition on dealing ahead of the dissemination of investment research. This research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only.

Accendo Markets considers opinions and information contained within the research to be valid when published, and gives no warranty as to the investments referred to in this material. The income from the investments referred to may go down as well as up, and investors may realise losses on investments. The past performance of a particular investment is not necessarily a guide to its future performance. Prepared by Michael van Dulken, Head of Research

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