Activist Investors Eye UK Targets
Activist investors are on the hunt for UK targets this year, with as many as 54 London-listed firms in their sights. Experts believe that the energy, consumer, and industrial sectors are particularly vulnerable. Last year, companies like The Restaurant Group and Entain, owner of Ladbrokes, successfully fended off takeover bids. However, other firms, including Dr. Martens and Purplebricks, were not so lucky.
What Are Activist Investors?
Activist investors are typically hedge funds that acquire stakes in companies and then push for change. They often call for cost-cutting measures, which can result in job losses. In extreme cases, they may even demand the removal of bosses or the sale of the company. Activists target struggling firms with low share prices, aiming to boost their value by shaking up the boardroom.
No Company Is Immune
Even large international companies are not immune to activist investors. For example, Walt Disney is currently facing an approach from aggressive hedge fund owner Nelson Peltz. However, the UK is particularly attractive to activists because British companies offer good value. According to a report by management consultancy Alvarez & Marsal, British companies targeted by activists typically see a nine percent increase in their valuation after five years.
In the Crosshairs
Activist investors are expected to increase their scrutiny and challenge of UK company boards. This means that more companies may find themselves in the crosshairs of activists in the coming months. The energy, consumer, and industrial sectors are likely to face the most pressure. Boards should be prepared for increased activism and the potential for significant changes to their companies.
Private Equity Owners of Asda Deny Fuel Rip-Off
The private equity owners of Asda, TDR Capital and the Issa brothers, have denied allegations that they intentionally raised fuel prices to increase profits. Last year, a competition investigation found that Asda had tripled its fuel profit margins since its £6.8 billion takeover. Critics argue that Asda's higher fuel prices have allowed rivals to also raise their prices. The private equity owners claim that the price increase was not part of a strategy to make larger profits.
Boohoo Shuts Leicester Factory
Fashion retailer Boohoo is closing its multi-million pound factory in Leicester, less than two years after it opened. The factory was intended to help restore the brand's reputation following a scandal over poor treatment of workers. Boohoo employs around 100 staff at the site, producing clothes for brands like Dorothy Perkins and Karen Millen. The closure is part of the company's efforts to become more efficient and productive.
Hays Recruitment Firm Faces Job Cuts
Recruitment firm Hays is considering further job cuts as profits are expected to fall from £73 million to £60 million. The company has already cut 1,100 jobs in the past year and is looking to save £30 million in costs. Hays has experienced a decline in fees across the globe, with the sharpest drop in the UK and Ireland. The tough market conditions have led to widespread job cuts in various sectors.
European Regulators Probe Microsoft's Investment in ChatGPT
European regulators are launching a full investigation into Microsoft's $13 billion stake in ChatGPT's owner OpenAI. This comes after a power struggle within ChatGPT's boardroom, which involved Microsoft. Regulators want to determine if the AI partnership risks distorting market dynamics. Microsoft maintains that its investment is not traditional and has highlighted its involvement in the power struggle.
B&M and Shoe Zone See Sales Rise
Bargain retailer B&M saw a 5 percent increase in sales over the festive period, driven by shoppers seeking decorations and Christmas gifts. The company's CEO called the performance pleasing. B&M plans to open 45 new stores in the UK this year. Cut-price chain Shoe Zone also reported a rise in sales and nearly a fifth increase in profits.
Boeing's Nightmare Continues
Boeing is facing ongoing issues with its 737 Max 9 aircraft. Both Alaska Airlines and United have discovered loose bolts on their planes, just days after a door was blown out during a flight. The US has grounded 171 of the latest Boeing model, while UK airlines do not currently have any in service. Ryanair, however, has a significant order for the next version, the Max 10.
