Top UK Stocks to Watch: Entain raises takeover bid for Enlabs

Entain ups its bid for Enlabs, BT’s chairman announces plans to retire, Morrisons and McColls expand their partnership, Bunzl forecasts another year of growth after performing well in 2020, and Electrocomponents buys a second PPE provider.
Top News: Entain ups Enlabs bid to convert shareholders
Online bookmaker Entain said it’s raised its tender offer for Enlabs to SEK53 per share from its previous offer of SEK40 after some Enlab shareholders argued the first offer was too low, stating it’s a final offer which will not be increased again.

Enlabs creates entertainment and gaming content and claims to be the ‘largest iGaming operator within the Baltics’ with ambitions to become a number one online gaming business.

Enlabs shares have risen since the first offer was made and shares currently trade at slightly below SEK45 per share. The new offer values Enlabs at around SEK3.7 billion, adequate to around £316 million.

Some Enlabs shareholders had rejected the first offer from Entain but the increased offer has now won over the bulk of investors and therefore the Enlabs board.

‘In a highly competitive and controlled industry, where consolidation may be a key theme, Entain is in a position to supply the size and platform needed to further support Enlabs’ long-term growth, and that we firmly believe that Entain are going to be the simplest home for Enlabs, its employees and customers,’ said Entain’s chief treasurer and deputy chief executive Rob Wood.

‘Against this background, we’ve decided to form a final offer of SEK53 to all or any shareholders, providing a chance to exit their investment at a really attractive valuation. We are pleased that shareholders with around 51% have now irrevocably agreed to simply accept the offer and would urge other shareholders to try to to an equivalent by 18 March,’ he added.

Where next for the Entain share price?
Entain shares jumped over 2% in early trade. The stock trades above its 20 & 50 sma on the 4 hour chart in an ascending channel pattern dating back to mid-January suggesting a longtime bullish trend.

The RSI is additionally in bullish territory supportive further gains whilst it remains out of overbought territory.

Immediate resistance are often seen at 1465 the yearly high. A move beyond here could see the bulls attach the upper back of the ascending channel at 1485 before targeting the all time high of 1494.

On the flip side horizonal support are often seen at 1425 ahead 1400, the confluence of the 20 sma and therefore the lower band of the channel. it might take a move below the 50 sma at 1360 to negate the present bullish trend.

Morrisons extends wholesale affect McColl’s
Morrisons has extended its wholesale supply affect shop chain McColl’s.

Morrisons has been supplying McColl’s and converting its stores to Morrisons Daily. The pair said around 30 McColl’s stores had been converted in recent months which the extension will see 300 more outlets change brands. Morrisons also will still supply McColl’s stores for subsequent three years until 2027 as its only wholesale supplier.

‘McColl’s has been a crucial customer since 2017, and through that point wholesale supply has grown very quickly into a profitable business for Morrisons. We currently supply over 1,200 McColl’s stores, including over 230 of its biggest convenience stores which we’ve began to supply over recent weeks. Morrisons supplies McColl’s across all ranges, including brands and therefore the popular Safeway own brand, which we’ll be developing further within the coming months,’ said Morrisons.

Morrisons shares were trading 0.8% higher at 171.8 in early trade, while McColl’s shares jumped 9.2% higher to 26.2.

Bunzl expects another year of growth after strong 2020 results
Bunzl reported strong growth in revenue and profits during 2020 as its logistical expertise became invaluable during the pandemic, prompting it to boost its dividend and forecast another year of growth in 2021.

The international distribution and services group reported an 8.4% rise in revenue to £10.11 billion in 2020, with adjusted pretax profit jumping almost 24% to £715.6 million. On a statutory basis, pretax profit climbed almost 23% to £555.7 million.

‘The pandemic has served to spotlight the vital role that Bunzl plays in ensuring supplies of essential products also because the benefits of our diversification. As a results of our extensive supply chains and our Asia sourcing and auditing operation, we were ready to quickly source and deliver significant quantities of quality assured Covid-19 related products, like gloves and masks. Consequently, we were ready to offset the negative impact that restrictions had on many of our customers’ businesses, particularly within the foodservice and retail sectors,’ said chief executive Frank van Zanten.

Bunzl raised its dividend by 5.5% to 54.1 pence from 51.3p in 2019, marking the 28th consecutive year of dividend growth. Cash conversion remained strong within the year at 103% and net debt equals 1.5x Earnings before interest, tax, depreciation and amortisation, giving it many financial headroom.

‘Overall in 2021 we expect robust revenue growth over the prior year at constant exchange rates, after excluding larger Covid-19 related orders which we don’t expect to repeat. We anticipate that the recovery in sales of other products, as restrictions ease, will broadly offset the decline of smaller Covid-19 related orders, with recent acquisitions making an increasing contribution to the group’s performance. it’s a part of our proven and consistent strategy to use our strong record and cash flows to consolidate the fragmented markets we operate in,’ van Zaten said.

Notably, Bunzl said 2020 was the second biggest year for acquisitions within the company’s history because it unveiled three new purchases that ought to help fuel growth going forward. it’s purchased healthcare distributor Deliver Net, food-service disposable product distributor Disposable Discounter, and Canadian cleaning and hygiene distributor Pinnacle.

‘I am pleased to welcome Deliver Net, Disposable Discounter and Pinnacle into the Bunzl family. All three businesses demonstrate our continued specialise in growing Bunzl through the acquisition of top quality businesses. Further, these acquisitions demonstrate Bunzl’s continued acquisition momentum, with our pipeline remaining active and discussions ongoing,’ said Bunzl’s chief executive.

Bunzl shares were down 1.6% in early trade at 2191.5.

BT Group chairman Jan du Plessis to retire
Telecoms giant BT Group said its chairman Jan du Plessis has announced his plans to retire from the board before the top of this year. He will stay in his position until an appropriate successor are often found.

The chairman joined BT as a non-executive in 2017 and was appointed as chairman within a couple of months.

‘BT may be a fantastic company and it’s an enormous privilege and responsibility to be its chairman. But after 17 years of demanding roles as chairman of serious FTSE companies, i do know the time is now right on behalf of me to step down and specialise in other interests. Until I fork over to my successor, I remain fully committed to BT and helping Philip still deliver for all our customers, colleagues and shareholders,’ said du Plessis.

BT Group shares were up 2.2% in early trade at 125.68.

Aggreko says markets are recovering after being hit in 2020
Aggreko said it’s well placed to recover because the economy recovers this year after being pushed into the red during 2020.

The company, which hires out the likes of power generators, heaters and chillers to industrial sectors, said revenue slumped to £1.36 billion in 2020 from £1.61 billion in 2019.

The company reported an adjusted operating profit of £136 million from £241 million but was pushed to a £39 million loss when £175 million worth of outstanding charges were taken under consideration . These associated with extra costs booked due to the pandemic and write-downs of its power assets to reflect lower oil prices and therefore the transition to lower carbon technologies.

Adjusted pretax profit almost halved to £102 million from £199 million, and swung to a £73 million loss when the exceptional items were included.

The company said it had been paying a final dividend of 10.0 pence per share to require the entire dividend for the year to fifteen .0p. this is often up from the 9.83p paid call at 2019 when it only made an interim payout.

‘We enter 2021 well positioned for the recovery which we are seeing in our markets and this momentum supports our confidence within the business going forward,’ said chief executive Chris Weston.

Aggreko has seen demand increase for its Power Solutions division as contracts that had been delayed during the pandemic start to kick-in, and it’s also starting its work on the Tokyo Olympics that are thanks to plow ahead later this year.

‘We have also began our strategy for the energy transition, providing industry-leading commitments to be net zero by 2050, while achieving profitable growth and mid-teens ROCE within the medium-term. We are pleased with our progress within the transition so far , recently winning a solar-hybrid contract for a mine in Chile, and starting work on upgrading our Dumbarton facility into a hub for our net-zero initiatives. Reflecting the board’s confidence within the outlook for the business and our financial strength, we are proposing a final dividend for the year of 10 pence per share,’ he added.

Aggreko shares were down 0.4% in early trade at 800.8.

Electrocomponents buys PPE supplier John Liscombe
Electrocomponents has announced it’s bought John Liscombe, a ‘leading supplier’ of private protective equipment (PPE) and industrial safety gear, for £11 million.

John Liscombe supplies blue-chip customers within the UK and therefore the Netherlands. The acquisition has been made on a cash-and-debt-free basis and can boost adjusted earnings per share immediately, with the value of capital expected to be covered within the primary year.

The purchase builds on the recent acquisition of Needlers, which provides PPE to the food manufacturing sector. The pair are going to be combined and together, John Liscombe and Needlers ‘will provide a full range offer and expertise across key sectors within safety and PPE’.

‘The combination will enable the group to capture a greater share of wallet with existing customers and establish a meaningful presence during a product category during which we anticipate attractive underlying growth over the future ,’ said Electrocomponents.

Electrocomponents shares were up 1.3% in early trade at 983.0.