What to Watch: Just Eat takeover, CBI warning, Ryanair profits fall

Edmund Heaphy
Finance and news reporter
A Just Eat motorbike courier seen in Spain. Photo: Miguel Candela/SOPA Images/LightRocket via Getty Images

Takeaway.com proposes £5bn Just Eat takeover

Amsterdam-based Takeaway.com (T5W.F) said on Monday that it had reached an “agreement in principle” for a £5bn takeover of London-based Just Eat (JE.L), in a move that would create one of the largest food delivery giants in the world.

While companies already operate in more than 20 countries, including the UK, Ireland, Australia, Brazil, Mexico, Germany, and Israel, there is little geographical overlap between the two companies.

The all-share deal would see Takeaway.com acquire the London-based Just Eat for 731p a share, a 15% premium on Friday’s closing price — creating a company with roughly 360m global takeaway orders.

Just Eat is currently in a heated battle in the UK with Deliveroo and Uber Eats. Amazon in May announced a £575m investment in Deliveroo, but that deal has been put on hold pending an inquiry by the competition watchdog.

UK and EU not ready for no-deal Brexit, say business chiefs

Neither the UK or European Union are ready for the impact of a no-deal Brexit, the Confederation of British Industry has said.

While the group said that UK businesses had already spent billions on no-deal Brexit contingency planning, they are still hindered by unclear advice, confused timelines, costs, and complexity.

The business lobby group said that up to 24 of 27 areas of the UK economy would experience disruption if the UK crashed out of the EU without a deal.

“While the UK's preparations to date are welcome, the unprecedented nature of Brexit means some aspects cannot be mitigated,” it said.

“Businesses are desperate to move beyond Brexit. They have huge belief in the UK and getting a deal will open many doors that have been closed by uncertainty,” said Josh Hardie, deputy-director general of the Confederation of British Industry.

The EU is just as poorly prepared if not more so, according to the group, which said that “there are no areas of relevance to the economy where the UK, the EU and the business community are all prepared well enough for no-deal”.

“It cannot be beyond the wit of the continent's greatest negotiators to find a way through and agree a deal. But until this becomes a reality, all must prepare to leave without one,” Hardie said.

Ryanair profits plunge

Low-cost behemoth Ryanair (RYA.L) on Monday reported a 24% fall in pre-tax profits to €262.3m (£236m) in the three months to the end of June. While the figure was broadly in line with guidance from the airline — which issued a profit warning earlier — analysts had forecast a smaller fall in first-quarter profits.

Ryanair pointed to lower fares and higher fuel and staff costs, even as passenger numbers increased 11% to 42 million and revenue climbed by 11% €2.31bn.

The airline said that its two weakest markets were Germany and the UK, with Ryanair blaming Lufthansa’s purchase of Air Berlin — which it said is selling “excess capacity at below cost prices” — and the UK, where Brexit concerns are weighing negatively on consumer confidence and spending.

Average fairs decreased 6% during the quarter, even as it made 14% more from ancillary services, like priority boarding, baggage fees, and food sales.

Sports Direct shares plummet after results shambles

Sports Direct (SPD.L) shares plummeted on Monday morning in an “almighty fallout” from its delayed results on Friday, which revealed a huge unpaid tax bill and significant problems with its House of Fraser takeover.

Shares were down 16% at 8.15am in London, after markets were left in the dark on Friday by the business’ highly unusual release of its results hours late and after the close of trading.

The company left investors rattled by repeatedly delaying the results, which were due to be released two weeks ago and then on Friday morning.

It revealed problems linked to its takeover of House of Fraser on Friday when its latest preliminary results were finally published.

The company reported a 6% decline in core earnings in the year to 28 April, as Sports Direct CEO Mike Ashley said some House of Fraser stores “lose money on zero rent.”

European stocks mixed

European stocks got off to a mixed start on Monday. The FTSE 100 (^FTSE) was up by 0.77%, while Germany’s DAX (^GDAXI) was down by 0.05%. France’s CAC 40 (^FCHI) was down by 0.18%.

This followed a weak trading session in Asia. The Nikkei 225 (^N225) is down by 0.19%, and the SSE Composite (000001.SS) was down by 0.12%. The Hang Seng (^HSI) was down by 1.26%.

Sterling was down 0.33% against the dollar (GBPUSD=X) on Monday, to around $1.233, and up 0.23% against the euro (GBPEUR=X), to around €1.109.

What to expect in the US

Futures are pointing to a lower opening for US stocks.

S&P 500 futures (ES=F) are down by 0.03% and Dow Jones Industrial Average futures (YM=F) are down by 0.01%. Nasdaq futures (NQ=F) are up down by 0.03%.

Companies reporting later on Monday in the US include: