Friday tips round-up: RPC Group, SSP
After many years, Icelandic packaging manufacturer Promens has been taken over by RPC Group, instead of the other way around, as at one point had seemed possible. The transaction is the British group's fourth this year and values its rival at £307m. The acqusition will be mostly financed through a deeply discounted one-for-three rights issue at 320p.
FTSE 250
19,601.98
17:09 25/04/24
FTSE 350
4,434.34
17:09 25/04/24
FTSE All-Share
4,387.94
16:49 25/04/24
General Industrials
6,780.26
17:09 25/04/24
RPC Group
792.60p
17:00 28/06/19
SSP Group
199.30p
17:05 25/04/24
However, far from weakening on the prospect of so much cheap equity coming to market shares in RPC shot higher. That would seem to belie investors' optimism regarding the prospects for the tie-up. Both companies operate in what is a niche but still highly fragmented market, as can be gleaned from RPC's improving margins, as per the outfit's latest figures to the end of September. Selling on 12 times' this year's earnings the stock looks like good value. Buy for the long-term, says The Times's Tempus.
SSP's share price has been well-behaved this year. An exception among private equity floats this year. The company operates food outlets at major transport hubs, such as airports and railway stations. Amongst the brands which it operates are Upper Crust and Caffe Ritazza. The firm looks to grow by adding to its presence at those hube where it is under-represented.
At a large site it will often be seen operating seven or eight of its brands simultaneously. The firm also stands to gain from the expansion in air travel, which industry forecasters project will do so at about a 6% clip this year. Nevertheless,the stock sells on about 18 times earnings, which looks a bit rich and suggests no immediate upside. "Best avoided for now," Tempus says.