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Debenhams terminal decline and rising pork prices


Debenhams terminal decline

It seems to me that the whole Debenhams saga is getting almost as infuriating as Brexit negotiations, but after rejecting Sports Direct’s Mike Ashley’s latest improved offer to rescue the business, Debenhams has put itself on the brink of administration.

Shares were suspended earlier this morning and the company is due to give another update later.

It looks to me like the management were out to save their own skin as Ashley’s offers were all on the condition that he became chief exec, but now it’s the creditors – and not the shareholders – who are in the driving seat regarding Debenhams’ future.

I think Debenhams is a business that is in terminal decline and Ashley could well have squeezed some value out of its acquisition given potential synergies with House of Fraser but his efforts have so far come to nothing.

Maybe he’ll get to hoover up parts of it or even the whole thing at firesale prices further down the line as surely this stock is a dog with fleas.

Rising pork prices

You have probably become accustomed to seeing commentary on oil prices staying higher for longer – well it seems that the same is going to be true for pork prices.

African swine fever is sweeping through China at the moment, resulting in the slaughter of 19% of its breeding herd, according to analysts.

Pig prices have shot up by 37% so far in March and US hog futures have gone up by almost 50%.

This is a big deal as China produces half of the world’s pork.

FTSE250 company Cranswick is one company that could potentially benefit from this crisis as it is a producer of sausages, bacon, pies and sirloin beef.

The company’s share price has had a tough time – particularly after a recent profit warning – but rising pork prices could help it a lot.

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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