LONDON BRIEFING: Preferred bidder decides against embracing Ted Baker

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Ted Baker on Tuesday said it was informed by its preferred bidder late Monday that it does not intend to proceed with an offer for the fashion retailer.

The bidder indicated that its reason for not proceeding was not linked to its due diligence review of the company, Ted Baker explained.

The London-based seller of clothing and accessories said it will now go back and look at other proposals received as part of its formal sale process, but there can be no certainty that an offer will be made.

Ted Baker kicked off a formal sales process in April. At the time, it had said that Sycamore Partners Management LP, the New York-based private equity firm whose approaches had triggered the sales process, was participating. However, Ted Baker later confirmed that Sycamore was no longer participating in the sales process.

Late last month, Ted Baker said it had narrowed its pretax loss to £44.1 million in the financial year that ended January 29 from £107.7 million the previous year. Revenue climbed 21% to £428.2 million from £355.3 million. Total brand sales increased to £918 million from £745 million the previous year, with an improved performance seen across all its channels and markets.

Ted Baker has suffered setbacks in recent years that have sent its shares tumbling and resulted in management changes. It was hit by complaints of inappropriate hugging made against then-chief executive Ray Kelvin in 2019. It then went through three CEOs within a year, as well as several profit warnings.

Ted Baker shares were down 20% early Tuesday amid a wider flat market.

Here is what you need to know at the London market open:

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MARKETS

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FTSE 100: marginally lower, down 1.51 points at 7,606.71

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Hang Seng: down 0.4% at 21,562.49

Nikkei 225: closed up 0.1% at 27,943.95

S&P/ASX 200: closed down 1.5% at 7,095.70

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DJIA: closed marginally higher, up 16.08 points at 32,915.78

S&P 500: closed up 0.3% at 4,121.43

Nasdaq Composite: closed up 0.4% at 12,061.37

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EUR: soft at $1.0680 ($1.0688)

GBP: down at $1.2450 ($1.2528)

USD: up at JP¥132.90 (JP¥131.61)

GOLD: lower at $1,840.76 per ounce ($1,844.10)

OIL (Brent): higher at $120.00 a barrel ($119.27)

(changes since previous London equities close)

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ECONOMICS AND GENERAL

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Tuesday's key economic events still to come

0930 BST UK S&P Global-CIPS services purchasing managers' index

0830 EDT US international trade in goods & services

1500 EDT US consumer credit

1630 EDT US API weekly statistical bulletin

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UK Prime Minister Boris Johnson is set to meet his Cabinet on Tuesday as he seeks to keep his premiership afloat by putting a bruising confidence ballot firmly behind him. Johnson insisted he had secured a ‘decisive’ victory despite 148 of his own members of Parliament voting to oust him on Monday night, arguing the Government could now ‘move on’ and focus on what ‘really matters to people’. He also poured cold water on the prospect of a snap election, saying he was ‘certainly not interested’ in the idea. But while allies of Johnson have insisted his ballot victory should draw a line under the question of his leadership, Labour is moving to apply further pressure on the PM by pushing a Commons vote on standards. Tory MPs voted by 211 to 148 in support of Johnson on Monday, but the scale of the revolt against his leadership left him wounded. When Theresa May faced a confidence vote in 2018 she secured the support of 63% of her MPs, but was still forced out within six months. For Johnson, this was 59%, as 41% of his MPs voted against him, a worse result than for May.

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Australia's central bank hiked interest rates, warning as well of more increases as officials try to rein in ‘significantly’ high inflation. The Reserve Bank of Australia upped its main lending rate by half a percentage point to 0.85%. It also increased the interest rate on exchange settlement balances by 50 basis points to 75 basis points. Governor Philip Lowe pointed to ‘significant’ inflation rises as the reason behind the bank's move.

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German industrial orders fell for the third month in a row in April, as Russia's war in Ukraine dampened the outlook for Europe's largest economy. New orders fell by 2.7% over the previous month, according to figures provided by the economy ministry. The renewed drop was ‘primarily due to the escalation of the Ukraine conflict’, the ministry said in a statement. Overall, incoming orders were 6.2% below their level of a year ago, when the coronavirus pandemic was weighing more heavily on industry. The fall was seen particularly in capital goods, used in production, which decreased 4.3% compared with the previous month. Orders for consumer goods were down 2.6%, while those of intermediate goods dipped 0.3%.

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BROKER RATING CHANGES

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Jefferies raises Anglo American to 'buy' (hold) - price target 4,500 (3,800) pence

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Jefferies raises Rio Tinto to 'buy' (hold) - price target 6,800 (6,700) pence

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Jefferies raises South32 to 'buy' (hold) - price target 325 (290) pence

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Barclays raises British Land to 'overweight' (under weight) - price target 580 (500) pence

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COMPANIES - FTSE 100

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Pearson said it has agreed to sell its local K12 Courseware businesses in Italy and Germany to European K12 learning services company Sanoma for £163 million, which will be paid in cash. Under the terms, Pearson will also enter into an agreement with Sanoma for it to distribute Pearson's English Language Teaching products in Italy. The sale was part of the education materials company's ongoing strategic review, which Pearson said it continues to ‘make good progress’ in the remaining areas of the review.

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COMPANIES - FTSE 250

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Waste management firm Biffa said it has received a series of ‘unsolicited and indicative’ proposals from private equity firm Energy Capital Partners. ECP's proposal is in respect of a possible offer at a price of 445 pence per Biffa share in cash, valuing the company at around £1.35 billion. The offer is a 37% premium to Biffa's closing price of 325p on Monday. Biffa said its board has concluded that should a firm offer be made on the same financial terms as the proposal it would be ‘minded to recommend it’ to Biffa shareholders. Turning to current business, Biffa said it continues to trade well, with underlying performance being in line with the board's expectations. Volumes have remained at expected levels, and Biffa continues to mitigate inflationary pressures, it added.

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National Express said revenue continues to track close to 2019's pre-pandemic level, leaving the transport operator on track for 2022 full year revenue of around £2.7 billion and a profit margin of 7%. Further, National Express said it expects progress toward its 9% average profit margin target from 2022 to 2027 and recovery to its pre-pandemic margin level of around 10% in the later stages of that period. This is expected to drive more than £100 million of earnings before interest and tax growth over the same period, it said. National Express also said it was ‘rigorous’ in its capital allocation, reinvesting free cash flow generation into organic opportunities and expects to resume dividend payments for the 2022 full-year.

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Tuesday's shareholder meetings

Animalcare Group PLC - AGM

Arix Bioscience PLC - AGM

Centrica PLC - AGM

Integrated Diagnostics Holdings PLC - AGM

Kooth PLC - AGM

Ondine Biomedical Inc - AGM

Osirium Technologies PLC - AGM

SpaceandPeople PLC - AGM

TruFin PLC - AGM

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