Three things you need to know in the financial markets this morning from investment writer, Tony Cross
Costa Coffee
Whitbread has for some months been in the process of spinning out its Costa Coffee division into a separate company. The initial expectation was that this would become a listed company in its own right, but an announcement made this morning shows that they have been talking to Coca Cola about a £3.9bn deal to buy the business, and the transaction has been agreed. Whitbread believe this delivers a significantly higher valuation for Costa Coffee than would have been seen with an IPO – expect a bounce in Whitbread’s share price at the open.
Sage Group
Sage Group has announced that its CEO has stepped down. The CFO will take responsibility for the CEO role until a successor is found. News like this could rattle the market owing to the disconnect, or conversely could be seen as the start of a new chapter for the business. The fact the outgoing CEO will remain available to the business for the next nine months may however provide some certainty.
The Restaurant Group
The Restaurant Group has published half year results this morning which underline the struggle the sector is facing. England’s success in the World Cup has already been widely reported as suppressing sales over the summer, and the company has reported like for like sales as being down 3.7% against the same period last year. Intense competition and consumers who are wary of the economic outlook are adding to the air of caution here, although it’s interesting to note that post-World Cup sales have found some support, with sales over the last six weeks up 2.4% on the 2017 number.
