virgin money (VMUK.L)
Nationwide Building Society has struck a deal to buy Virgin Money for 2.9 billion pounds ($3.7 billion), creating one of the UK's largest mortgage and savings groups.
The offered price of 220p per share represents a 38% premium to Virgin Money's closing share price on Wednesday. Virgin Money UK chairman David Bennett said the deal offered “compelling value for shareholders”.
Nationwide confirmed that the move is not expected to result in any significant changes to Virgin Money's 7,300 employees “in the short term”. The company will initially retain the Virgin Money brand, but it will be phased out over six years once the acquisition is complete.
Nationwide is the UK's largest building society with over 17 million customers, while Virgin Money is the UK's sixth largest retail bank with approximately 6.6 million customers and 91 branches.
The merger of the two companies will create a group with 696 branches, second only to Lloyds Banking Group in the UK.
The stock price rose as much as 36% on the news, propelling it to the top of the FTSE 250 (^FTMC).
Rentokil (RTO.L)
Rentokil shares rose 14% in London after the pest control company reported a 57% increase in annual operating profit, benefiting from the Terminix acquisition.
Despite weaker growth in North America, organic revenue increased by 4.9% and operating margin increased by 1.20 points to 16.6%.
Rentokil said it had completed 41 acquisitions in 2023 and the outlook for its bolt-on pipeline “remains strong”, with the company expecting to invest £250m this year.
“Transformative acquisitions always pose significant risks to companies, and Rentokil's acquisition of Terminix is a great example of this,” said Charlie Huggins, Quality Shares portfolio manager at Wealth Club.
“The contract with Terminix is by far the largest the Group has ever undertaken, establishing the company as a leading pest control business in North America and enabling significant cost savings. , there are clearly problems with the integration.
Organic growth in the North American pest control business has been slower than expected, mainly due to sluggish acquisition of new customers. The confusion and complexity of such a large-scale integration has taken the group's eye off the ball. This is further exacerbated by an increasingly competitive market environment. ”
Aviva (AV.L)
Aviva announced a $380 million share buyback after a 9% rise in profits due to strong performance in general insurance and health insurance.
Operating profit was 1.74 billion pounds, slightly ahead of analysts' expectations of 1.43 billion pounds, according to a consensus survey compiled by the company.
“Aviva is moving even faster than before,” CEO Amanda Brann said on a media conference call. She said: “We have exceeded our goals and are setting new goals.”
The insurer increased its dividend by 8% to 33.4p, compared to expectations of 33.3p. It has also set an operating profit target of £2 billion by 2026.
The positive result comes just days after the insurer announced it would buy Provitas for £242m and return to Lloyd's Syndicate of London.
ITV (ITV.L)
ITV's profits fell in 2023. The broadcaster found it “difficult” to encourage advertisers to spend on traditional TV commercials due to the global economic downturn.
The company said pre-tax profits fell from £501m in 2022 to £193m last year, but growth had been seen in some business units.
In London, the share price rose 8% despite a 15% “significant decline” in linear advertising, but digital revenue fared much better, up 19% to £490m.
Group revenue fell 2% to £4.3bn, with TV advertising down 15%. Digital revenue increased by 19% and the studio division recorded a 4% increase to his £2.2 billion.
CEO Carolyn McCall said: “In 2023, we realized the benefits of the actions we have taken to reposition ITV towards higher sustainable growth.
“Our studio business recorded record revenues and profits, and ITVX delivered strong growth in viewership and digital revenue in its first year with on-plan investment.
“This growth in production and streaming has largely offset challenging linear TV advertising market conditions.”
He added that total advertising revenue is expected to grow by 3% in the first quarter of 2024, thanks to digital advertising revenue. ITV expects advertising to be boosted by upcoming events, including the UEFA Euro 2024 Football Championship in June.
“Last year's advertising market was difficult to say the least, but we expect this year to be better than last,” she said.
See: How does inflation affect interest rates?
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