he FTSE 100 index is set for a steadier session after Monday’s rollercoaster , when sentiment was rocked by contagion fears over debt-laden Chinese property firm Evergrande but airline stocks rose sharply on the easing of transatlantic travel restrictions.
Today’s session has kicked off with more merger and acquisition activity, with National Express and Stagecoach confirming talks about a potential tie-up. There are also interim results from B&Q owner Kingfisher and an update from caterer Compass.
Four decades of Stagecoach
Sir Brian Souter and sister Dame Ann Gloag co-founded the business in 1980 with the running of two second-hand buses. The business is now the UK’s biggest bus and coach operator, with 8,300 vehicles serving communities in England, Scotland and Wales.
Stagecoach also operated the first privatised rail services in 1996 and later ran key networks including the South Western and East Midlands franchises as well as a 22 year partnership with Virgin for train services on the West Coast inter-city rail franchise.
In June, the company reported a big slide in profits as it warned it will be “some time” before demand for its services returns to pre-Covid levels.
The founders still own a quarter of the London bus operator through family shareholdings, but revealed plans in April to reduce this to 5% over the next ten years.
Sir Brian said at the time: “We remain significant long-term shareholders in Stagecoach and remain supportive of the company’s strategy and management team.”
The founders will see their shares rolled into National Express if the all-share bid from the coach operator gets the go ahead.
FTSE steadies after China turbulence
Concerns over the solvency of Chinese property developer Evergrande sent London’s FTSE 100 index more than 2% lower at one point on Monday, before the top flight finished a more respectable 0.9% down at 6,903.91.
The calmer trend, which was helped in afternoon trading by plans in the US to open borders to vaccinated passengers from Europe, is set to continue at the open in London today.
CMC Markets is forecasting the FTSE 100 index will open 45 points higher at 6,949.
Wall Street markets, meanwhile, slipped to a two-month low last night, not helped by jitters ahead of the latest two-day meeting of the Federal Reserve getting underway later today.
CMC’s chief markets analyst Michael Hewson said: “The topic of tapering is likely to feature highly, along with speculation of where Fed members see the likely timing of future rate rises, by way of their dot plots.
“The bigger question given the risks emanating from events in China is whether the Fed adopts a less hawkish stance tomorrow in order to buy itself some time until the situation becomes clearer.”
National Express and Stagecoach in merger talks
Coach operator National Express and bus company Stagecoach have confirmed they are in talks about a potential merger.
Stagecoach said there were significant operational efficiencies from a tie-up, such as National Express utilising its depot network to run and maintain coach operations.
The Perth-based company’s shareholders will receive 0.36 new National Express ordinary shares for each share, giving them about 25% of the combined group.
Stagecoach said the terms represent an 18% premium on their respective closing prices.
It added: “The boards of Stagecoach and National Express believe that the potential combination would be a strategically compelling proposition with the potential to realise significant growth and cost synergies, as well as delivering strong value creation for both sets of shareholders.”
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