Everyone knows who’s really to blame: President Obama. Once he’d been over here, banging on about the Brexit dangers, Jeff Sprecher was in a right fix.
How could the boss of Intercontinental Exchange, the owner of the New York Stock Exchange, go around breaking up a European union when the president himself was stridently warning against such antics? What sort of back-of-the-queue behaviour would that be? So, instead, Mr Sprecher’s decided to blame the Brits for ICE’s failure to bust up a cosy £21 billion merger between the London Stock Exchange and Deutsche Börse. And, boy, does he now sound wet.
Did you hear all that moaning from Mr Sprecher yesterday over how “the LSE chairman and CEO did not engage with ICE”, despite its March 1 announcement that it was “considering making an offer”? Poor fellow. What was he expecting from Donald Brydon and Xavier Rolet, an Obama-like audience with Prince George? Yes, maybe the LSE’s top duo was a little reluctant to meet Mr Sprecher. But wasn’t it a bit incumbent on him to come up with a proposal they could discuss?
Besides, how hard can it be to break up a nil-premium merger of equals — just about the most hated construct in the City? The LSE had handed ICE data on which to base a counterbid and its investors were certainly open to one: they’re only getting 45.6 per cent of the Anglo-German merger despite the LSE growing faster than Deutsche, admittedly helped by buying index business Russell and LCH.Clearnet. And meanwhile, German politicians don’t much like the deal either, not least with the looming Brexit risk.
So, whatever Mr Sprecher’s whingeing, maybe there’s another reason he backed out: ICE couldn’t really afford the LSE. True, valued at about £20 billion, the company has twice the LSE’s market cap. But ICE also has a debt-to-ebitda ratio of 2.5 times after an acquisition spree including October’s $5.2 billion purchase of Interactive Data Corp. Paying cash for the LSE would have left the New York exchange owner far too geared for some of its investors and US politicians — and transatlantic paper bids are tricky.
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The upshot is that, unless the Chicago Mercantile Exchange or an outsider such as the Hong Kong bourse pitches up, the LSE’s great German bunk-up will be a done deal. Yes, 45 per cent of its investors will be British and €450 million of synergies are apparently on the way. Yet that’s not the takeover premium some wanted. One consolation: the merged group will be slightly bigger than ICE. Perhaps Mr Sprecher’s moaning has only just begun.
Trolley dash
Now we know where Mike Coupe gets his inspiration. Eighteen months ago, the J Sainsbury boss launched Trolley Talk, an online forum where 4,000 shoppers a week help him make “the right strategic decisions”. Since then, he’s bought Argos and is now branching into mortgages. Do keep those ideas coming.
Who knows whether either will prove the right decision? But at least Mr Coupe is having a go at growing the business, despite his belief that food price deflation is here to stay and the market will be “competitive” for the “foreseeable future”.
It’s landed him with some full-year figures heading in the wrong direction: like-for-like sales down 0.9 per cent, underlying pre-tax profits almost 14 per cent lower and an 8.3 per cent cut to the dividend. Yet Sainsbury’s 2.74 per cent retail operating margin, also down 0.33 of a point, is still the best of the quoted supermarket groups and Sainsbury’s is retaining market share. None of Tesco, Morrisons or particularly Asda can say as much, all still losing out to the Aldi/Lidl discounters.
True, Tesco and Walmart-owned Asda have pockets deep enough to crank up the pricing pressure. And there’s no outlook statement from Sainsbury’s, apparently to comply with Takeover Panel rules over the Argos deal. But Sainsbury’s has long proved it can cope with bigger rivals, given its offer is based on more than price. So the market reaction looks a bit harsh, with the shares falling 6 per cent to 267¾p. They’re now on a multiple of 12.5 times, yielding 4 per cent. Decent value, too, assuming Mr Coupe’s Trolley comrades don’t push him into something really daft.
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Results business
Once upon a time, every pundit had the same opinion: Leicester’s best player was Lord Wolfson of Aspley Guise. Not any more. The Next boss can’t even get into the squad, not least because he keeps turning up in the wrong kit: faux fur gilets during the “unusually warm” November and December and pineapple print frocks for freezing March and April.
The result? He’s now decided to expand the range of possible outcomes for his performance this year to anywhere between minus or plus 3.5 per cent, at least when it comes to the sales shift he might put in: worse than his previous range of minus 1 to plus 4. No doubt he’s laying it on a bit thick, and the shares, helped by news on the directory, actually rose 3.5 per cent to £51.50. Even so, with his lordship on current form, Jamie Vardy won’t be sweating on his starting place.
Into extra time?
HM Revenue & Customs seems to think it’s playing Spot the Foul. Every time Sportech wins a court case against it, the taxman demands a review of the video footage it claims the ref didn’t see. Now all three Court of Appeal adjudicators have ruled in Sportech’s favour, upholding its view that Spot the Ball is a game of chance, not skill, so qualifying for a £97 million VAT rebate. HMRC has until May 13 to appeal again. But this game’s been going since 2009. It can’t keep time-wasting.