(Costa) Coffee To Go?

Monday, April 23: the FTSE 100 continued to march higher, following a performance which saw the index gain 2.79% in the prior seven days. Positive price action from miners initially lifted the primary index until news hit the wires that the U.S. Treasury had tempered its stance regarding sanctions against United Co. Rusal, the world’s second largest aluminium manufacturer. This prompted a slide in hard commodities, and a wiping out of intraday gains from miners. Financial stocks picked up the slack with St. James’s Place(+2.82%) on the back of a favourable broker comment as the blue chip index closed +0.42%.
Capita(+13.14%) led the FTSE 250 higher after simultaneously announcing final results for FY2017 and a fully underwritten £700m rights issue. The rights issue will involve three new share for each two already held at a price of 70.0 pence each, reflecting a 56% discount to the stock’s closing price on Friday of 159.8p and a 34% discount to the theoretical ex rights price the shares should trade at post issue. The resulting proceeds will be used for further investment in the business, delivery of new Group strategy and debt reduction. The company recorded a pretax loss of £513.1m compared with a loss of £89.8m for the prior year, whilst revenue slipped 3% to £4.23bn. Management reiterated prior guidance, whilst also advising that due to the short-term trading outlook and level of debts that it would not be paying a dividend.
Whitbread Chief Executive Officer Alison Brittain is expected to outline the possibility of a spin-out of Costa Coffee in Whitbread’s FY results on Wednesday according to The Sunday Times, to the joy of activist investors who have been pushing the agenda for months. Ms. Brittain claimed she isn’t “philosophically opposed” to a spin-off of Costa Coffee from the Premier Inn hotel chain owner, and the case of a break-up is a matter of “when, not if”.
Across Europe, indices were up at the close with the FTSE 100 +0.42%, the DAX 30 +0.25% and the CAC 40 +0.47%.

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