Market Prognosis

A concise summary of the major macro events of the past 24 hours, and selected UK company-specific news.

November 16, 2023

Hotel Chocolat goes to Mars

Macro & Overnight

Xi and Joe took four hours of talks yesterday to agree not to go to war without calling each other first, but not much else.

The equity market rally paused yesterday and overnight after the S&P has risen 7% this month amid short-term signs of being technically overbought.

UK Company News

It’s a busy day in the UK with the unloved UK smaller company sector receiving two bids worth over £700m. 

Young & Co will acquire City Pubs in a shares and cash deal that values City Pubs at 145p per share, £162m, a 46% premium. 

Mars will acquire Hotel Chocolat at 375p per share, valuing the company at a £534m premium of 170%.  

So, it isn’t just Elon Musk, but CEO Angus Thirwell and the rest of the Hotel Chocolat team who are going to Mars. This huge premium that the privately held Mars FMCG company is paying to acquire the posh chocolatier reflects the latent long-term value in some of the UK’s smaller listed companies, many, including Hotel Chocolat, having suffered recent setbacks. Knowing when buyers of these assets come along is the hard part. However, what is clear to see is the premium values they are prepared to offer. Today’s moves on Hotel Chocolat and The City Pub Company illustrate the value the most unloved part of the developed world stock markets provides for long-term asset acquirers.     

The financial holding company Close Bros updated that its loan book grew with solid margins and stable credit performance. Net interest margin was 7.6%. Asset management delivered decent net inflows at the top end of the target range. Winterflood’s performance (operating loss of 2.5m) further weakened, but we remain well placed for any recovery. 

Energean, the energy producer whose principal asset is the Karish field offshore Israel, reported results for the first nine months of 2023. Critically, it confirmed no negative production impact from the ongoing security situation in Israel. It is on track to deliver full-year production per the latest guidance. Over the period, it had revenues of over $1bn, an 85% increase and continued to reduce leverage significantly.  

Prognosticator 

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