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Market report: TP Icap knocked by Liquidnet buyout

Louis Ashworth
·2-min read
Babcock
Babcock

TP Icap was the FTSE 250’s biggest faller after it set out plans to slash its dividend to fund a takeover of Liquidnet.

The interdealer broker is staking growth plans on its $600m (£465m) to $700m purchase of Liquidnet, which facilitates “dark pool” trading – private exchanges in which major investors can trade without revealing their plans in advance. To fund the deal TP Icap will aim to raise $450m from investors in an equity placement, as well as cutting its £94m dividend plan in half.

Shore Capital’s Vivek Raja warned the acquisition would dilute TP Icap’s shares and could “potentially increase tensions” with the group’s investment banking clients, who might become rivals. The shares closed down 44.8p at 228.2p.

Elsewhere, Canadian security giant Gardaworld officially went hostile with its 190p-per-share offer for G4S, which was rejected by the outsourcer’s board. Several investors have already turned their nose up at Gardaworld’s offer, which values the company at £2.97bn.

Gardaworld said G4S had “a long history of overpromising and under-delivering and has consistently failed its stakeholders over the last decade”. G4S advised shareholders to “take absolutely no action in relation to the unattractive and opportunistic offer”. G4S climbed 11.2p to 200.3p.

Covid-19’s latest casualty was the catering giant Compass, which was the FTSE 100’s second-biggest faller, after warning it expected a £100m impairment due to the pandemic. The company’s revenues remained well below pre-virus levels, down 36pc year on year over July, August and September compared to a 44pc fall between April and June.

The group said it had dragged its way to a profit on a trading level, but warned the outlook was uncertain even though many of its clients – including schools and businesses – have reopened their canteens. Compass closed down 39p at £11.69.

Meanwhile, shares in gambling site operator 888 Holdings soared, after it revealed a surge in first-half profits to £50.9m – compared with £22.2m for the same period last year – and declared a special dividend. Lockdowns across the world drove gamblers to the FTSE 250 group’s websites, sending revenues up 37pc over the period. 

“Given the strength of current trading and the potential value of its assets in a consolidating market we anticipate both a rating and an earnings driven increase in the share price,” Stifel’s Bridie Barrett said. The shares closed up 43.5p at 252p.

Babcock was another top FTSE 250 riser, jumping as much as 7pc after naming David Mellors – formerly chief financial officer of aerospace supplier Cobham – as its new CFO. Mr Mellors will fully take up the role at the end of November, replacing Franco Martinelli, who is retiring. Its shares closed up 18.1p at 250.4p.