Weekly stock market round-up

RBS already owns Citizens Financial will now be making a quarter of its profits in the US. The combination of Citizens and Charter will create the seventh-largest US bank by assets and deposits. The industry there is remarkably fragmented; there are few nationwide banks, but a plethora of regional ones. Citizens is strong in the affluent New England area, while Charter’s core area is the Mid West.

Lots of British companies make a mess of acquisitions in the US, but RBS’s track record suggests it is unlikely to come a cropper. Its takeover of NatWest in 1999 has been hailed as an outstanding success.

New low-cost airlines with implausibly silly names have been spreading over Britain’s runways like a rash of late. That’s one reason why easyJet was forced to warn on profits this week, having previously been ‘cautiously optimistic’ about the rest of the year.


Both it and rival Ryanair have invested heavily in new planes just at the time when rival operations are mushrooming, meaning there are simply too many seats on the market. Fortunately, this problem isn’t likely to last. Most of the start-ups are poorly funded and won’t survive long. Indeed, one such rival, Duo, went into administration this week.

Lord Kirkham, founder of the DFS furniture chain, has increased his indicative offer for taking the group private to 435p a share from an initial pitch of 415p. Shareholders will also get to keep the interim dividend, taking the effective total to 442p.

Most analysts think this is still on the mean side, but the company’s independent directors, who represent shareholders in such situations, are prepared to recommend the bid in the absence of anything better. We recommend hanging on for now, just in case. Britain’s pubs could be in for a summer of discontent, if recent trading news is anything to go by. Industry giant JD Wetherspoon has reported slower sales growth, while Regent Inns, which operates the ‘Walkabout’ chain of warehouse-sized boozers, has said full-year profits are going to be well short of last year’s. Eldridge Pope, a smaller chain, is in even worse straits. The basic problem, as any police constable will tell you, is that there are just too many pubs in our town centres. They are all under-cutting each other in order to drum up business. The effects are acutely felt by ‘managed’ pubs, where the brewery appoints the landlord, rather than ‘tenanted’ operation, where the landlord rents the pub and assumes all the trading risk himself. Many operators are pinning their summer hopes on a boozy Euro 2004 – so if Becks and co disappoint, stand by for more profit warnings.

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