Market Prognosis

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

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March 5, 2024

Spirent accepts £1bn cash offer

Macro

Gold has broken out from the two-year ceiling of $2100/oz. having risen 7% over the last two weeks.

Gold can be considered the old man of “outside” money and follows Bitcoin, the digital upstart, to new highs on likely fears of financial repression and currency debasement.

UK Companies

Spirent agreed to a cash offer of 175p, valuing Spirent at just over £1bn and a 61% premium from NASDAQ-listed Viavi, formerly JDS Uniphase.  

Another big premium takeout in the UK small & mid cap space today. The big premium looks less attractive when considering Spirent traded at c twice this value as recently as October 2021. 

Beeks, the managed cloud provider, announced that it is the preferred cloud computing and connectivity vendor for one of the world’s largest banking groups with a £5m deal over five years. It said Exchange Cloud is a transformational opportunity. 

Greggs UK’s leading food-to-go brand growth to nearly 2500 shops said that sales in company-managed shops are up 8.2% in the first nine weeks of 2024. Its outlook for 2024 is unchanged.  

Headlam said its UK volume declined 5% in 2023, in line with the market, reflecting a reduction in residential property transactions (which fell 20% in 2023). Weakness observed at the end of 2023 has continued into the first few weeks of 2024. Group revenue in February 2024 was 6% lower than in 2023. While it sees a delayed market recovery in the short term, it expects volumes to improve significantly over the medium term as housing market activity picks up. 

STV reported that the advertising market shows resilience and growth in 2024, while studios have a strong forward order book. Revenue and operating profit performance will be H2 weighted, reflecting Studio’s delivery schedules. The CEO is departing to take up a new role.  

Travis Perkins’ recovery in the UK construction sector is unlikely to gather momentum before the UK general election. It plans for another year of weak demand, with overhead and cash management actions. Its best estimate at this stage is that FY24 adjusted operating profit will be in the range of £160m to £180m, inclusive of around £10m of property profits and around £20m of losses in Toolstation France.

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