Online supermarket Ocado surprised the City yesterday by announcing plans to raise £500m through a bond offering to fund its rapid expansion.
The company, best known for delivering groceries in the UK, is making a name for itself around the world with its automated robot warehouses.
It signed the latest such deal with Japanese supermarket Aeon last week. The agreement, for an undisclosed amount, will add £25m to Ocado’s operating costs next year.
Analysts and investors alike seemed spooked by the announcement, which raised concerns that perhaps Ocado has bitten off more than it can chew.
Even an update that revenues in its retail arm rose by as much as 11 per cent in the 13 weeks to December 1 failed to buoy its shares, which fell 7.4 per cent, or 98p, to 1227p by the close, making it the FTSE 100’s biggest faller.
Traders also kept a close eye on companies thought most likely to move in the FTSE reshuffle. Companies’ market values by the end of today will determine whether they will be moved into or out of the FTSE 100 and FTSE 250.
Easyjet, whose shares rose 1 per cent, or 13p, to 1325p, is thought to be in line for an upgrade into the blue-chip index, while Footsie-listed insurer Hiscox, which has been stung by a string of natural disaster payouts, is expected to be downgraded to the mid-caps.
Hiscox’s stock edged 1.2 per cent lower, or 16p, to 1347p last night.
Sirius Minerals’s shares slid 5.9 per cent, or 0.22p, to 3.47p, despite an upbeat broker note from house broker Shore Capital. In an analysis of Sirius’s latest restructuring plan, Shore said the company could get by with raising £310m, rather than the previously mooted £460m, to finish its fertiliser mine under the North York Moors.
The Footsie started the week climbing higher but, after President Trump’s latest market- moving tweets, it went into a steady decline and by the close had fallen 0.8 per cent, or 60.59 points, to 7285.94.
Trump used Twitter to announce he was again slapping tariffs on steel and aluminium shipped from Brazil and Argentina, and blamed the countries for devaluing their currencies, which he said is ‘not good’ for US farmers.
Brazil’s main steel industry body, Instituto Aco Brasil, likely spoke for many when it said it was ‘perplexed’ by the move.
The FTSE 250 also went into reverse, shedding 0.5 per cent, or 112.39 points, to 20700.21.
Fresnillo disappointed by saying it expects the amount of gold and silver it produces this year to be at the lower end of estimates. Shares fell 1 per cent, or 6.2p, to 571.4p.
Anglo-German holiday firm Tui was also in the red (down 3.4 per cent, or 36p, to 1027.5p) after Bernstein analysts cut its rating from ‘outperform’ to ‘market-perform’.
And Trainline tumbled 3.4 per cent, or 16p, to 451p, after Labour said over the weekend it was plotting a rival ‘one-stop shop’ rail-ticket website if it wins power in next week’s General Election.
Mid-cap property developer Capital & Counties will convert to a real estate investment trust before the end of the year after it agreed to sell its interests in the Earls Court development to APG and Delancey for £425m. Investors seemed to be nonplussed by the transition, with shares up 0.1 per cent, or 0.3p, up to 242.7p.
Ailing banknote printer De La Rue sank 7.8 per cent, or 12p, to 141p, despite reports that Crystal Amber – which is already its second-largest investor – is planning to double its 7.1 per cent stake.
Homeserve (down 0.8 per cent, or 10p, to 1195p) pushed ahead with its North America expansion by buying Servline, which specialises in repairing rural water pipes in 18 US states, for an undisclosed amount.
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