Lloyd’s of London insurer Brit (LSE: BRIT) is up 10.3% today as the company became the latest insurer to succumb to a buy-out offer from a larger peer. In this case, the larger peer was Fairfax Financial Holdings, the Canadian property and casualty insurer. The price offered was 305p per share in cash, comprising 280p in cash and an expected dividend of 25p per Brit share — a premium of 11.2% to Brit’s previous closing price.
And it looks as if the deal is set to go ahead. Indeed, Fairfax has received commitments to accept the offer from private equity firms Apollo Global and CVC Capital Partners, which together own 73% of Brit’s share capital. So, it’s unlikely the deal will fall through.
Brit only returned to the public markets last year and since its IPO, including today’s gains, the company has returned 29.4%, outperforming the wider market. Today’s news caps a great 12 months for the company.
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Sector outperformer
Oil service group John Wood (LSE: WG) has jumped 9% today after unveiling an upbeat set of full-year results, despite the oil sector’s dismal outlook. Pre-tax profit rose to $424.2m from $412.3 million a year earlier. Revenue rose 7.8% to $7.62bn.
However, it seems as if investors are really excited about Wood Group’s future prospects and low valuation. For example, the embattled oil services provider has set out to cut costs and reduce capital spending this year, which should help it remain profitable in a tough operating environment. Cost savings of $30m are expected during 2015.
Moreover, management reported today that the group is signing a high level of contract renewals, which is providing “good visibility into 2015 and beyond”. This is great news for shareholders, as it offers reassurance that Wood Group is avoiding much of the slowdown affecting the wider oil services sector.
With this in mind, Wood Group looks cheap as the company currently trades at a forward P/E of 10.6, compared to the oil equipment and services sector average of 12.4.
Heavy volume
Small-cap Goldbridges Global Resources (LSE: GBGR) jumped as much as 10% in early trade this morning on heavy volume. Over 750,000 shares of Goldbridges changed hands this morning compared to the average daily volume of 500,000.
It seems as if investors are still celebrating, following the announcement last week that Goldbridges had received a final $2.2m payment from Akmola Gold LLP in accordance with a settlement agreement signed between the two companies in 2013.
This payment should only boost Goldbridges’ performance this year. The company is already benefiting from higher output at its Sekisovskoye gold mine and reduced operating costs. Earnings per share for the six months to 30 June 2014 came in at $0.19, up from a loss of US$0.24/share in H1 2013. Goldbridges is on track to report an operating profit of $6.6m this year.
Goldbridges’ market value currently stands at around £60m, so the company looks to be appropriately priced when compared to projected full-year operating profit.
