MARKET REPORT: Private equity giants licking their lips after Essentra suggests it will be exiting the packaging market

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The private equity giant was licking its lips after Esantra suggested exiting the packaging market.

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The plastic goods and cigarette filter maker announced a ‘strategic review’ of the division, which is responsible for £363m in annual sales, after saying last month that it would move to focus solely on components.

It said a similar review of its filter business, which generates £278.3m annual sales, is progressing as planned.

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Change of Direction: Esantra Announces ‘Strategic Review’ of Packaging Division

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Finance boss Lily Liu is also leaving the company next June and will focus purely on making changes for components worth £255m in annual sales for the business.

The Milton Keynes-based conglomerate has sold arms to US private equity firms in the past, prompting speculation that it may also be grooming bidders for its unwanted divisions. In 2019 it sold its specialty tape business to Los Angeles-based OpenGate Capital for £61m.

Private equity buyers have bought British firms worth 68.5 billion pounds this year, including Asda and Morrison and most recently Unilever’s tea division. Essentra, which manufactures plastic caps, workholding clamps, fasteners and knobs, was spun off from the FTSE 100 listed Bunzl (0.8p, or 21p, up to 2835p) in 2005.

Shares of Essentra fell 1.3 percent, or 4p, to 309p. Jefferies analysts said: ‘We view the progress of the strategic review as positive for sentiment, and we reiterate our buy recommendation.’

The investment bank expects the stock to rise to 425p. This was grim news on the blue chip FTSE 100, which fell 3.64 per cent or 266.34 points to 7044.03 yesterday amid heavy uncertainty over the latest COVID version. The FTSE 250 fell 3.19 per cent or 742.07 points to end at 22537.89. Meanwhile, sofa and flooring vendor SCS said it has seen a slowdown in ‘big ticket’ sales as the supply chain crisis leads to extended delivery times. The Sunderland-based company, which has 100 stores nationwide, said sales from the 16 weeks to November 20 were down 10.6 percent from a year ago, when SCS saw an ‘unprecedented’ jump in store reopenings.

They were up 0.9 percent from the same period two years before the pandemic. Shares fell 8.6 per cent or 21.5p to 227.5p.

Beverage maker Diageo offered relief to pensioners and savers who were starved of payments during the pandemic.

Johnnie Walker and the owner of Guinness announced that it will buy back £550m worth of shares between now and 4 March.

It plans to return £4.5 billion to shareholders by June 30, 2024. It has bought back £1.7bn of shares so far, as of yesterday, 12 November. Buybacks give shareholders a boost because when the repurchased shares are canceled they drive up the value of the remaining stock. Shares of Diageo fell 3.9 percent, or 152.5p, to 3759.5p amid widespread market chaos.

Former Tesco boss Sir Terry Leahy has joined electric car charging start-up Mynergy as it is reportedly making the London list. It will join rival Pod Point which listed this month and shares have gained more than 15 percent since then. Shares of Pod Point fell 1.6 per cent, or 4p, to 250p yesterday.

Telecommunications conglomerate BT moved into a lucrative London office yesterday as it continues to under pressure from French telecommunications and media company Altice.

One Brahms in Aldgate is part of the firm’s ‘Root and Branch’ transformation programme.

Reports came this month that Altice founder Patrick Drahi was looking to increase his stake in the group. BT shares fell 4.3 per cent, or 6.85p, to 154p.

Am member therapeutics firm Silence confirmed that it will be delisted from Junior Exchange next week. It proposed delisting on 15 October and the move was approved by its shareholders on 1 November. Shares fell 1.8 percent, or 10p, to 540p.

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