FTSE 250 movers: Private equity bids boost Wood Group, Network Intl

Payments firm Network International said on Monday that it has received a non-binding takeover proposal from a consortium of CVC and Francisco Partners about a cash offer of 387p a share.

This follows a series of prior proposals that were rejected.

Network said that having "carefully evaluated" the proposal with its financial advisers, it has concluded that it would be minded to recommend it should a firm intention to make an offer be announced.

"As such, the board has agreed to provide the consortium with access to confirmatory due diligence," it said.

Shares in Wood Group surged on Monday after the oil and gas engineering firm said it had decided to start talks with US private equity group Apollo on a potential £1.66bn takeover.

Wood has rejected four proposals from Apollo but has now decided to grant access to documents for due diligence after a fifth approach at 240p a share, the company said on Monday. The stock rose more than 7% to 228p on the news.

It added that a deadline for a firm bid had been extended to May 17 from April 19.

"Apollo has stated to the board that it values the skills and capabilities of Wood's employees and believes the company is well positioned in its markets and at the forefront of the energy transition and industrial decarbonisation," Wood Group said in a statement.

Germany and UK business park operator Sirius Real Estate said in a trading update on Monday that despite a challenging economic backdrop, it achieved an overall rent roll increase of 8.1% in the financial year just ended.

The FTSE 250 company said that performance in the 12 months ended 31 March reflected its ability to capture rental growth in the current inflationary environment.

It reported like-for-like rent roll growth of 7.7%, making for the ninth consecutive year of like-for-like rent roll growth above 5%.

The firm, which was expecting to deliver full-year results in line with market expectations, said its cash collection remained robust, with over 98.5% on a rolling 12-month basis.

In Germany, rental rates grew in line with the rent roll, reflecting stable occupancy rates in the country.

In the recently acquired UK business, BizSpace, Sirius said it successfully firmed rates to position its assets for better long-term returns.

Rent roll growth in the UK was in line with the group level, and rental rates increased “well in excess” of inflation.

The company ceded a small amount of occupancy in return for higher rates, which it believed positions the business well to take advantage of any recovery in the macroeconomic climate.

Sirius said its balance sheet remained strong, with cash reserves at year-end of €123m and around 90% of its debt maturing in excess of three years.

The group successfully re-financed its Berlin Hyp €170m facility at a 4.26% interest rate for a seven-year term, which from November would take the overall weighted average group cost of debt to 1.9%.

Sirius also noted that acquisitions and disposals were largely matched, with approximately €45m of each.

Acquisitions focussed on Germany, where the group used its operating platform to continue to drive value.

The disposals strategy remained opportunistic, with a focus on non-core or mature assets with little upside, where the group could achieve returns in excess of book value.

Sirius said it achieved a 25% combined premium to book value on the six disposals completed during the last 12 months.

“Against a challenging market backdrop during the year, Sirius has delivered another period of strong operational performance,” said chief executive officer Andrew Coombs.

“The group expects to deliver results for the financial year ended 31 March in line with market expectations, and I look forward to the announcement of our fully audited results on 5 June.”

International Distribution Services rallied on Monday after Royal Mail and the Communication Workers Union said over the weekend that they had reached an agreement on pay and employment terms.

The CWU said in a statement on Saturday that after nearly a year of talks, the two sides had reached a negotiators' agreement in principle.

"The proposed agreement will now be considered by the executive of the union before being voted on by the union's membership," the CWU said.

"An announcement on the detailed content of the proposed agreement will be made when it is ratified by the union's executive committee. It is expected this will take place next week."

At 0920 BST, shares in Royal Mail parent IDS were up 5.2% at 243.60p.

Victoria Scholar, head of investment at Interactive Investor, said: "The agreement marks an end to the period of heightened uncertainty for the group which has been grappling with industrial action including a series of nationwide strikes involving over 110,000 postal staff last year.

"Shareholders have had a difficult time with this stock which has plunged from a high of around 591.00p in June 2021 to a low below 200.00p late last year. But the bulls have been gathering momentum with shares rebounding by around 25% in the past six months to just shy of 250.00p.

"If the agreement marks an end to the recent strike action, this will be a major win for the company as it looks to shift its workers dispute to the rear-view mirror. Plus, there are hopes that the UK’s inflationary pressures will ease this year, also supporting real terms wage growth for workers and helping to alleviate the sense of discontent over pay."

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "The walk-outs have put the group into a precarious position in terms of liquidity. It’s delayed the group’s attempt to re-size operations in the face of falling letter and parcel volumes and has meant the group will only have limited breathing room when it comes to its loan agreements.

"The breakthrough will be a huge relief, but still needs to pass hurdles of approval by the union’s executives and the members. Even once the heavy bag of industrial strife has been offloaded, the group faces a long road back to profitability."