Connect with us

Published

on

The UK financial watchdog will announce plans to change the rules on bringing companies into public ownership after a series of high profile businesses snubbed the London Stock Exchange.

The Financial Conduct Authority (FCA) will on Wednesday publish proposed changes to rules on listing companies on the London Stock Exchange.

It hopes to make regulation more effective, easier to understand and more competitive after the number of companies listing in the UK has fallen by 40% since 2008, according to The UK Listing Review, undertaken by Lord Hill.

The regulator says the current rules are “seen by some” as “too complicated and onerous”. Politicians and regulators hope that increased listing in the UK will help economic growth.

Despite three prime ministers lobbying for it to list in London, major Cambridge-based microchip designer Arm decided to have its initial public offering (IPO) of shares on the New York Stock Exchange. Its owners viewed floating in New York the best way to recoup their $32bn (£26.7bn) investment in the company.

Some in Arm’s parent company, Softbank, and the government, were critical of FCA and blamed “onerous” rules for the decision to go with New York.

The world’s biggest supplier of building materials, CRH, also announced in March it was moving its primary listing to New York.

Read more
‘Bombed-out valuations’ still a worry for the City despite ‘encouraging’ Deutsche Bank takeover of Numis Securities
UK stock market relocations to New York do not amount to a crisis | Ian King

Concerns about companies exiting London for New York were reinforced when Paddy Power and Betfair owner, Flutter, announced it’s to pursue a secondary listing across the Atlantic.

The FCA’s proposed rules are designed to help founders retain control in their companies by enabling them to hold shares with more voting rights.

The changes in the consultation paper, if enacted, would remove the two classes of listings and create a single category. Currently there are standard and premium listing segments.

The FCA says this move would “remove eligibility requirements that can deter early-stage companies, be more permissive on dual class share structures, and remove mandatory shareholder votes on transactions such as acquisitions”.

Removing some mandatory votes would “reduce frictions to companies pursuing their business strategies”, the watchdog says.

Please use Chrome browser for a more accessible video player

London Stock Exchange CEO David Schwimmer spoke in March about what could be done to encourage London listing

Concern, however, has been raised about the impact of the changes on investor rights,

“We strongly support the principles behind listing rule reform to make the UK more competitive, but eroding shareholder rights risks undermining market standards, and this is not the right answer,” the chief executive of a UK investment platform said.

“Dual-class structures, which come with differential voting rights, erode shareholder rights,” Richard Wilson of Interactive Investor, said.

“Distorted rights distort governance and accountability. When company founders seek external capital from shareholders, as equity owners they must respect their shareholder rights. One share, one vote is a bedrock of shareholder democracy and we are concerned to see that the spectre of dual share classes, which we have actively lobbied against, still looms large.”

Stakeholders will have eight weeks to consider the proposals and issue responses. Once responses from interested parties are received the FCA will create a policy statement and publish it in late 2023 or early 2024.

Work on reforming rules has been ongoing since Brexit and Lord Hill began The UK Listing Review in 2020.

Responding to the consultation paper Lord Hill said “I very much welcome these proposals from the FCA, which build on the direction of travel we tried to set out in our listing review.

“If implemented, London would be able to stand toe to toe with our international competitors.”

But factors beyond listing rules will influence where companies list, the FCA chief executive said.

“While regulation plays an important part, a company’s decision on whether, and where to list, is influenced by many factors so substantive change will require a concerted effort from government and industry as well.”

“Our proposed reforms would significantly rebalance the burden of regulation to the benefit of listed companies and investors who are willing to set their own risk appetite and terms of engagement,” Nikhil Rathi said.

Continue Reading

Business

US and EU agree trade deal, says Donald Trump

Published

on

By

US and EU agree trade deal, says Donald Trump

The United States and European Union have agreed a trade deal, says Donald Trump.

The announcement was made as the US president met European Commission chief Ursula von der Leyen at one of his golf resorts in Scotland.

Speaking after talks in Turnberry, Mr Trump said the EU deal was the “biggest deal ever made” and it will be “great for cars”.

The US will impose 15% tariffs on EU goods into America, after Mr Trump had threatened a 30% levy.

He said there will be an EU investment of $600bn in the US, the bloc will buy $750bn in US energy and will also purchase US military equipment.

Mr Trump had earlier said the main sticking point was “fairness”, citing barriers to US exports of cars and agriculture.

He went into the talks demanding fairer trade with the 27-member EU and threatening steep tariffs to achieve that, while insisting the US will not go below 15% import taxes.

More from World

For months, Mr Trump has threatened most of the world with large tariffs in the hope of shrinking major US trade deficits with many key trading partners, including the EU.

Ms von der Leyen said the agreement would include 15% tariffs across the board, saying it would help rebalance trade between the two large trading partners.

In case there was no deal and the US had imposed 30% tariffs from 1 August, the EU has prepared counter-tariffs on €93bn (£81bn) of US goods.

Ahead of their meeting on Sunday, Ms von der Leyen described Mr Trump as a “tough negotiator and dealmaker”.

Follow the World
Follow the World

Listen to The World with Richard Engel and Yalda Hakim every Wednesday

Tap to follow

This breaking news story is being updated and more details will be published shortly.

Please refresh the page for the latest version.

You can receive breaking news alerts on a smartphone or tablet via the Sky News app. You can also follow us on WhatsApp and subscribe to our YouTube channel to keep up with the latest news.

Continue Reading

Business

Bread producers Hovis and Kingsmill close in on historic merger

Published

on

By

Bread producers Hovis and Kingsmill close in on historic merger

The owners of Hovis and Kingsmill are closing in on a definitive agreement to merge two of Britain’s most famous grocery brands following months of talks.

Sky News has learnt Associated British Foods (ABF), the London-listed company which owns Kingsmill’s immediate parent, Allied Bakeries, has proposed paying roughly £75m to acquire Hovis from its long-term private equity backers.

Banking sources said a deal could be formally agreed to combine the businesses as early as the end of next week, although they cautioned the complexity of the transaction meant the timing could yet slip.

Confirmation of a tie-up would come nearly three months after Sky News revealed ABF and Endless – Hovis’s owner since 2020 – were in discussions.

Industry sources have estimated that a combined group could benefit from up to £50m of annual cost savings from a merger.

ABF has also been exploring options for the future of Allied Bakeries separate from its talks with Hovis in the event a deal could not be agreed or is prevented from completing by competition regulators.

If it does go ahead, the merger will unite two historic bread producers under common ownership, with Allied Bakeries having been founded in 1935 by Willard Garfield Weston, part of the family which continues to control ABF.

More from Money

Hovis traces its history back even further, having been created in 1890 when Herbert Grime scooped a £25 prize for coming up with the name Hovis, which was derived from the Latin ‘Hominis Vis’ – meaning “strength of man”.

Persistent inflation, competition from speciality bread producers and shifting consumer habits towards lower-carb diets have combined to impair breadmakers’ financial health in recent decades, however.

In accounts filed at Companies House earlier this month, Hovis said it had “achieved positive financial progress despite continued tough trading conditions”.

The company reported sales of £439.6m in the 52 weeks to 28 September last year, down from £477.6m in the 53 weeks to 30 September 2023.

Earnings before interest, tax, depreciation and amortisation fell from £20.9m to £18.7m, which Hovis said was the result of the revenue decline and higher distribution costs.

“Overall bread share remained stable, despite significant price inflation and the ongoing cost-of-living crisis, demonstrating the resilience of the Hovis brand and its iconic status as one of Britain’s most loved food brands,” the accounts said.

This week, the trade publication The Grocer reported that Britain’s big four supermarkets, including Asda and Sainsbury’s, had delisted a number of Hovis-branded products.

The publication quoted a Hovis spokeswoman as saying the company was “aware of some adjustments to Hovis product lines in certain stores”.

“We remain fully committed to working collaboratively with our retail partners to grow our mutual businesses.”

The overall UK bakery market is estimated to be worth about £5bn in annual sales, with the equivalent of 11m loaves being sold each day.

Critical to the prospects of a merger of Allied Bakeries, which also owns the Sunblest and Allinson’s bread brands, and Hovis taking place will be the view of the Competition and Markets Authority (CMA) at a time when economic regulators are under intense pressure from the government to support growth.

Warburtons, the family-owned business which is the largest bakery group in Britain, is estimated to have a 34% share of the branded wrapped sliced bread sector, with Hovis on 24% and Allied on 17%, according to industry insiders.

A merger of Hovis and Kingsmill would give the combined group the largest share of that segment of the market, although one source said Warburtons’ overall turnover would remain higher because of the breadth of its product range.

Responding to Sky News’ report in May of the talks, ABF said: “Allied Bakeries continues to face a very challenging market.

“We are evaluating strategic options for Allied Bakeries against this backdrop and we remain committed to increasing long-term shareholder value.”

In a separate presentation to analysts, ABF – which is also in the process of closing its Vivergo bioethanol plant in Hull after pleading for government support – described the losses at Allied, which also owns own-label bread manufacturer Speedibake, as unsustainable.

The company does not disclose details of Allied Bakeries’ financial performance.

Prior to its ownership by Endless, Hovis was owned by Mr Kipling-maker Premier Foods and the Gores family.

At the time of the most recent takeover, High Wycombe-based Hovis employed about 2,700 people and operated eight bakery sites, as well as its own flour mill.

Hovis’s current chief executive, Jon Jenkins, is a former boss of Allied Milling and Baking.

This weekend, ABF declined to comment, while Endless could not be reached for comment.

Continue Reading

Business

Good economic news as sunny weather boosted retail sales

Published

on

By

Good economic news as sunny weather boosted retail sales

Retail sales grew in June as warm weather boosted spending and day trips, official figures show.

Spending on goods such as food, clothes and household items rose 0.9%, the Office for National Statistics (ONS) said.

It’s a bounce back from the 2.8% dip in May, but last month’s figure was below economists’ forecast 1.2% uplift as consumers dealt with higher prices from increased inflation.

Money blog: The odd rules that could land you with a big fine on holiday

Also weighing on spending was reduced consumer confidence amid talk of higher taxes, according to a closely watched indicator from market research firm GfK.

Retail sales figures are significant as they measure household consumption, the largest expenditure in the UK economy.

Growing retail sales can mean economic growth, which the government has repeatedly said is its top priority.

More on Retail

Please use Chrome browser for a more accessible video player

What does ‘inflation is rising’ mean?

Where have people been shopping?

June’s retail sales rise came as people bought more in supermarkets, and retailers said drinks sales were up.

While hot and sunny weather boosted some brick-and-mortar shops, the heat led some to head online.

Read more from Money:
Satellite tracker Spaceflux reaches lift-off with £5m funding boost
Trade war uncertainty prompts halt to eurozone rate cuts

Non-store retailers, which include mainly online shops, but also market stalls, had sold the most in more than three years.

Not since February 2022 had sales been so high as the Met Office said England had its warmest ever June, and the second warmest for the UK as a whole.

The June increases suggest that the May drop was a bump in the road. When looked at as a whole, the first six months of the year saw retail sales up 1.7%.

Filling up the car for day trips to take advantage of the sun played an important role in the retail sales growth.

When fuel is excluded, the rise was smaller, just 0.6%.

Welcome news

Despite lower consumer sentiment and more expensive goods, consumers are benefitting from rising wages and are cutting back on savings.

The ONS lifestyle survey – backed up by hard data like the Bank of England’s money and credit figures – shows that households have rebuilt their rainy day savings and are cutting back on the amount of money they squirrel away each month.

Continue Reading

Trending