Toshiba bid to spark wider M&A speculation as unconditional trading in IPO flop Deliveroo begins, Saga demonstrates its resilience despite pandemic disruption

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“While many of us may still be feeling a bit sluggish after a bank holiday spent consuming mountains of chocolate – there’s no sign of lethargy for the FTSE 100 which built on yesterday’s gains as its post-Easter bounce continued,” says AJ Bell Financial Analyst Danni Hewson.

“Among the catalysts for this latest leg higher for equities is news of a blockbuster private equity bid for Japanese conglomerate Toshiba which is likely to prompt speculation about which companies could be next to fall prey to the wall of cash private equity firms have built up in recent years.

“The UK market, which has seen its fair share of takeover action of late, is an obvious candidate for M&A speculation as the relative weakness of the pound and the wider underperformance of UK stocks against their global counterparts has made it an attractive pond for potential acquirers to fish in.

“Also giving the FTSE 100 a bit of a lift was a brief update from Royal Dutch Shell from which the biggest takeaway was probably that the core oil and gas operations were profitable again in the first quarter thanks to higher commodity prices, rather than the $200 million hit from the Texas winter storms earlier in the year.

“UK stocks are slowly being rehabilitated with the milestone of the domestically-focused FTSE 250 recovering all of its pandemic losses by last night’s close.

“And the start of unconditional trading in Deliveroo – recast as Flopperoo in some quarters after its disastrous market debut – at least hasn’t led to more pain for the business with the shares making modest gains as all investors are able to start buying and selling the shares.

“A strike by riders though will keep the takeaways platform in the spotlight for the wrong reasons on Wednesday.”

Saga

“Despite the heavy impact of the pandemic on its travel business, most notably its cruise operations, over-50s specialist Saga impressively managed to narrow its full year losses considerably and generate more cash than the market expected.

“The company looks like it is being quite conservative about when travel restrictions will end with the resumption of cruises, until now slated for May, not expected until later in 2021.

“This seems more prudent than some of the airlines and tour operators which appear to be clinging more vocally to hopes of a summer close to normality.

“Certainly there are indications of big pent up demand from the part of the population which Saga serves, as they get vaccinated and look to reclaim their lives, with cruise bookings up year-on-year.

“The diversification provided by its insurance business has also come into its own with the division producing a resilient performance through the course of the pandemic.

“Despite taking over at the start of a period of almost unprecedented disruption caused by Covid-19 Euan Sutherland looks to be doing a good job of righting the Saga ship, which had been steered badly off course after its 2014 IPO.

“Once we emerge into a new normal, Saga will look to benefit from the continuing growth of the over-50s demographic in a way it has singularly failed to do in the past.”

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