TODAY’S FAYRE – Wednesday 23rd April 2014

TODAY’S FAYRE – Wednesday 23rd April 2014

“Helen, thy beauty is to me
Like those Nicean barks of yore
That gently, o’er a perfumed sea,
The weary, way-worn wanderer bore
To his own native shore.

On desperate seas long wont to roam,
Thy hyacinth hair, thy classic face,
Thy Naiad airs have brought me home
To the glory that was Greece,
And the grandeur that was Rome.

Lo, in yon brilliant window-niche
How statue-like I see thee stand,
The agate lamp within thy hand,
Ah! Psyche, from the regions which
Are Holy Land!”

Edgar Allan Poe – poet – 1809-1840

Forget the human side to the Moyes debacle. His appointment ended up being a business horror story, which showed poor judgement on the part of Sir Alex Ferguson, Ed Woodward and Sir Bobby Charlton. David Moyes is a journeyman football manager without that special sparkle needed to drive a great football club on to new aspirational heights.

Failure for the Red Devils is unthinkable. No Champions League next year is failure. It will cost the club £25 million. The Club floated in New York 2 years ago, partly to cut the debt from £700 million down to £380 million. The Glazers still own about 85% of the shares and they need franked income to service the debt of their other US enterprises in Florida. Moyes had to go! Simple as that!

To become manager of Manchester United will involve intense scrutiny from the global media. The candidates will need to have exemplary CVs, with very limited stains on their character. Dear Old Ryan Giggs, who has taken over until the end of the season – well the press are already having the drains up over his private life.

It was a big ‘Purple & Yellow’ day for Nigel Farage yesterday. Now that he has attracted the attention of BBC Nick Robinson, Sky’s Adam Boulton and Faisal Islam and ITV’s Tom Bradby and Chris Ship – all of whom seem looking to give him a hard time – it will be interesting to see how he comes out of these testing weeks.

It really was drug-frenzied Tuesday around the world. The Pfizer/Astra Zeneca deal certainly gained some traction yesterday with Astra’s share price rallying initially by 7% before settling up 4.2% at the close. We know that Pfizer has a $70 billion cash mountain, but it is still hard to see the synergy between these two. If Pfizer come back with an increased bid (£46-£50 a share), then we will know it is for real. Scientific jobs and drug development positions in the UK could well be at risk in centres such as Cambridge. However if a push comes to a shove Panmure’s excellent pharmaceutical analyst Savvas Neophytou thinks it very unlikely that a deal will be consummated.

Conversely GSK shares rallied 5% yesterday in approval of the 3-way deal involving Novartis. Both GSK and Novartis want to focus on what they excel at. Without being disrespectful GSK is probably not top notch in oncology; so GSK will sell is oncology operation to Novartis for $16 billion. In return it will buy Novartis’s vaccination business for $7 billion. GSK is becoming more of a health company and this vaccine business is seen as very complimentary. At the same time Novartis will sell its animal health care business to Eli Lilly of the US for $5.4 billion. Subject to shareholder approval at GSK to this complicated deal, £4 billion will be returned to shareholders.

I had no idea that botox was such a huge global concept. Bill Ackman, the entrepreneur acting in concert with Canada’s Valeant, which owns Bausch & Lomb (contact lenses amongst other products) have had their beady eyes on Allergan, the botox titan for some time. I was absolutely blown away that Allegan is valued at $40 billion – what a gargantuan valuation! Anyway there is every prospect that a deal between these two being concluded, with Valeant tabling an unsolicited $47 a share to Allegan.

The Street of Dreams enjoyed a decent session riding on the coattails of drug M&A, with the DOW & S&P both adding 0.4%. The NASDAQ rallied by 0.97%. Apart from McDonald’s, which just missed the results were good and even after hours, Yum Brands!, owners of KFC beat expectations thanks to a tremendous run in China, though total sales were a smidgen light at $2.72 billion. This morning slightly dispiriting HSBC flash China PMI data saw Asia post mixed efforts with Shanghai and Hang Seng remaining below the Plimsoll line and the NIKKEI closing +1%. Hong Kong has postponed the IPO of WH group until next week, due to less ebullient trading conditions.

The FTSE added 56 points to 6681 yesterday thanks again to drugs and despite mining stocks losing some glitter. The DAX closed up 2%. This morning we have seen a decent flurry of earnings. Sports Direct saw sales up 10.3% for the 9 weeks to 30th March 2014. Say what you like about Mike Ashley – he still produces the goods. It also looks as though over 40 people will draw a £100k bonus this year. Sales totalled £336 million and in passing Sports Direct shares have rallied by 1176% in the last 5 years. ARM Holdings saw revenues up 16% for the last trading period with a pre-tax profit of £97 million – up 9%. In the last quarter AB Foods saw profits up by 1% at £497 million. Again it was Primark and not sugar that brought home the bacon. Sales in Primark may have increased in excess of 13%. Panmure’s Graham Jones has upgraded AB Foods to a ‘BUY.’

Ericsson missed its sales target but the mobile operator believes it will be back on course for the year. The £700 million IPO of Card Factory to raise £90 million courtesy of Charterhouse is expected to take place shortly – all part of the online retail flurry! Despite Clinton Cards struggling, Card Factory seems quite ‘gung-ho’ about its prospects.

I cannot be bothered to argue with Vince Cable and his continued bleating about bonuses and remuneration packages. It has nothing to do with him. Shareholders must step up to the plate and assume responsibility. Just arrant nonsense. So much progress has already been made in this area particularly by banks.

These are David Buik personal views

Twitter – @truemagic68

David Buik

Market Commentator

D +44 (0)20 7886 2775
Panmure Gordon & Co
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