Anglo American (AAL), WH Smith (SMWH), Ryanair (IE:RYA), Good Energy (GOOD), Dr Martens (DOCS), Diversified Energy (DEC) and Johnson Matthey (JMAT)
Anglo American (AAL) has been one of the best performers in the mining sector in the past 12 months as investors bet on both its own restructuring and also BHP (BHP) coming back with another bid. A Financial Times story over the weekend puts some cold water on the second driver – sources within BHP say Anglo’s share price is beyond what the company would pay now. The shares dropped 6 per cent on Monday in response.
Anglo announced progress in its move to spin off the De Beers diamond division last week with the signing of a new deal with the Botswana government. This means a sale or spin-off listing can progress. AH
In-depth reading
Shell & SThree: Stock market week ahead – 27-31 January
Halma and JD Sports: Big director share deals this week
The 'golden' era of rental growth is over
'How should I invest my pension so I can travel the world?'
The VCTs investors can still buy this year
Tap into this company’s overseas expansion
ESG fund managers' favourite international shares
WH Smith’s high street business on the block
WH Smith (SMWH) confirmed weekend reports that it is mulling the sale of its 500-strong UK high street chain to focus on its travel hub business.
The retailer said that it was “exploring potential strategic options for this profitable and cash-generative part of the group, including a possible sale”.
WH Smith was started from a single store in London in 1792. Although the high street business still employs about 5,000 people, over the past decade it has become a “focused global travel retailer”, with more than 1,200 stores in 32 countries. The travel business now generates 85 per cent of trading profit, the retailer added.
Interested parties include retail-focused private equity investor Alteri and turnaround specialist Hilco, according to the Financial Times.
However, any prospective buyer of the high street business would face “a challenging climate to operate in”, according to Nicholas Found, head of commercial content at Retail Economics.
WH Smith’s shares were up 3 per cent in early trading. Although a sale would likely be dilutive to earnings (as a bidder would be unlikely to pay the 8.6-times enterprise value to Ebitda multiple the wider group is valued at), it could lead to a higher multiple being applied to the remaining business, given its faster growth rate, said Investec analyst Kate Calvert. MF
Ryanair cuts 2026 passenger target for a second time
Ryanair (IE:RYA) cut its passenger traffic growth forecast again because of ongoing delivery delays at Boeing (US:BA), as it reported an uptick in profit in its third quarter.
The Irish low-cost airline now expects passenger traffic of 206mn in its 2026 financial year, down from the 210mn it forecast in November. The latter figure was cut from a 215mn estimate. Chief executive Michael O’Leary said that “we no longer expect Boeing to deliver sufficient aircraft” for the company to hit its previous target.
Profit after tax accelerated to €149mn (£126mn) in the quarter to 31 December from €15mn in the same period in 2023, as passenger numbers rose 9 per cent at higher fares. Management is “cautiously guiding” for an annual profit of €1.55bn-€1.61bn, compared to €1.92bn the year before.
The shares rose 5 per cent in early trading. CA
Read more: Can airline stocks overcome the great plane delay?
Good Energy agrees £99mn takeover
Renewable energy specialist Good Energy (GOOD), which readers might recognise from our high-quality small caps screen has finally managed a deal with Abu Dhabi’s Esyasoft months after the first offer was tabled. The all-cash deal values Good Energy at £99mn, or 490p a share. This is up from the initial 412p a share bid in October. The company sells renewable electricity to households and also installs heat pumps and solar panels.
“Given the company's shareholder structure and general prevailing sentiment of the UK public markets, the Good Energy board believes it may not have sufficient access to capital to capture many of the opportunities that lie in front of it,” the company said. Its 26-per-cent shareholder, Ecotricity, has backed the buyout, and the total irrevocable undertakings cover 30 per cent of the share count. AH
Dr Martens takes a step towards recovery
Dr Martens (DOCS) reported a 3 per cent increase in revenue at constant currency rates for the third quarter - a significant improvement on the 16 per cent decline reported in the two previous quarters.
The company said direct-to-consumer sales returned “to positive growth”, although this was offset somewhat by weaker retail sales in its EMEA region.
It kept full year targets unchanged, adding that it continued to cut inventory and manage costs. The shares fell by 2 per cent. MF
Diversified Energy inks $1.3bn deal
US onshore oil and gas company Diversified Energy (DEC) has landed its biggest deal yet, a $1.275bn (£1bn) takeover of Maverick Natural Resources, adding around 60,000 barrels of oil equivalent per day (boepd) in production. The actual purchase price is around $550mn, with the extra $700mn coming from Maverick debt to be transferred. The new assets include a mix of oil and gas wells across the country, including Diversified’s existing Appalachia exposure and adding wells in the Western Anadarko, Permian, Barnett and Ark-La-Tex (at the border of Arkansas, Louisiana and Texas) areas. Peel Hunt forecasts the deal will improve unit Ebitda margins by a quarter, while Maverick will add around $125mn of free cash flow, using the figure from the 12 months to 30 September.
Diversified said it had already lined up a new $1.5bn loan that will include existing debt as well as the Maverick borrowings. The company said the deal would allow for a “natural deleveraging process”. Net debt stood at $1.6bn as of 30 September. AH
Johnson Matthey cuts hydrogen spending
When a major shareholder says publicly you’re running a business badly, it’s important to listen. Johnson Matthey (JMAT) agrees – it has published a new strategy aimed at improving cash conversion in response to Standard Investments’ public campaign to get the core business humming again. Standard said in a letter in late 2024 that Johnson Matthey, which makes most of its earnings from catalytic converters for cars, was wasting money on a new hydrogen business. The idea is to develop a division that can keep the 200-year-old business going after the end of internal combustion engine vehicles. But they will be around for a while yet, and Standard said hydrogen was not the right answer.
Hence today’s announcement: “No further capex [will be] deployed in hydrogen technologies, and capex in this business will be reduced to maintenance levels of no more than £5mn per annum from [next year].” Johnson Matthey did say hydrogen would hit operating profit neutrality by next year, but was also “pursuing options to further de-risk this business”. The company is also forecasting positive free cash flow this financial year, and doubling cash conversion from 20-30 per cent this year. AH