Tuesday tips round-up: Publicis Omnicom, National Grid, Hammerson

30th Jul 2013 06:45

The tie-up of Publicis and Omnicom has been pitched as a "merger of equals" but one party is very likely to be getting the better of the other, the Financial Times' Lex column believes. Publicis is acquiring Omnicom and its shareholders will end up owning half of the company with revenues that are two-thirds larger than the French group's. However, Publicis is taking a risk as its revenues are growing at a faster annual rate and its operating margins are higher than Omnicom's. "So while Publicis shareholders appear to get more than their fair share of the combined company, the French group's strengths are being diluted overnight," Lex reckons. The newly merged company threatens to topple WPP as the leader in the industry and will have greater bargaining power with clients and suppliers. Yet size is not an unalloyed good as advertising is a fast-changing business.National Grid's shares have experienced some wild gyrations since the start of the year, The Times' Tempus column notes. It has been an interesting year for the company as it has been able to settle with the regulator on how much it can make at its regulated UK activities, about two thirds of all the assets. This has allowed the firm to declare its dividend policy which is the most significant factor for the 1.1m investors. At Monday's annual meeting, the firm revealed its was investing between £25bn and £26bn in expanding its regulated assets. The company has yet to say how it intends to achieve its growth targets that will be the main subject of a presentation to investors next Tuesday. However, it is already negotiating with suppliers and contractors, who will be expected to provide efficiencies and better terms. National Grid has also promised that dividends will be raised by at least the rate of inflation "for the foreseeable future". Property group Hammerson has reported a 2.5% rise in like-for-like net rental income in the first six months of this to £140.4m. Pre-tax profits were up from £13.9m to £80.8m, including revaluation changes, and the interim dividend rose by 7.8pc to 8.3p. Hammerson has no regrets about turning its back on the London office market to concentrate on retailing in the UK and France. It comes despite the questions over the future of retailing in all its guises and the company remains committed to three core UK developments representing investment of £2.0bn, The Telegraph's Questor column said. Critics feel Hammerson will face awkward decisions about its ambitious investment programme unless the uncertainties facing retailing and the high street are resolved. But David Atkins, Chief Executive, feels that while household budgets in the UK and France remain under pressure, encouraging signs of an improvement in the British economy increases the prospect of the group achieving strong growth over the medium term. Questor recommends a 'hold' rating. RDPlease note: Digital Look provides a round-up of news, tips and information that is impacting share prices and the market. Digital Look cannot take any responsibility for information provided by third parties. This is for your general information only as not intended to be relied upon by users in making an investment decision or any other decision. Please obtain a copy of the relevant publication and carry out your own research before considering acting on any of this information.