The London Stock Exchange (LSE) has confirmed it is in advanced merger talks with TMX of Canada in a move that would create the largest market in the world by number of listings. By combining businesses the enlarged entity would also be the number one market for natural resources, mining, energy and clean technology. Moreover the combined group will be the leading destination for growth companies from emerging markets that are seeking a listing.
The merger would create a £6 billion business offering access to a deep pool of international capital. Significant cost savings of £35 million by year three rising to £100 million in year five also provide a compelling attraction for the move. Shares in the LSE are up 8 per cent this morning to 965p as investors warm to the deal and the expectation that it will be earnings enhancing in the first full year following completion.
Combining forces makes commercial logic while also bringing 20 trading markets and platforms across North America and Europe. This will span cash equities, derivatives and fixed income. The move also brings together a substantial degree of technology expertise as well as a huge provider of global information.
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GB Group (AIM: GBG) has released a positive update on trading for the year to March. Operating profits are comfortably ahead of expectations and show 24 per cent growth. What’s slightly unsettling, especially given the demanding prospective p/e ratio of 30, is the news that long-time CEO Richard Law is to step down.
NetDimensions (AIM: NETD) shares enjoyed a strong recovery in the years following the financial crisis, only to run out of steam last summer. The subsequent 40 per cent fall in the share price looks like it’s now played out, with the stock responding well to recent results.
Crimson Tide (AIM: TIDE) is a tiny tech company with only £1.4 million sales just reported for the 2015 year. However it’s highly unusual for its size in that it’s profitable and generates cash. Sales are forecast to grow to £2.4 million next year and if this momentum can be built on, the shares could get interesting.
Mi-Pay (AIM: MPAY) has announced results which show reduced losses and evidence that things are moving in the right direction. The company provides payment services for mobiles; so it’s certainly exposed to a growing markets. Costs and cash outflows have been reduced, while the value of customer transactions grew by 31 per cent in 2015.
Specialist paper maker James Cropper (AIM: CRPR) has pleased the market with an upbeat end-of-year trading statement. After a good run the shares had spent a few months consolidating; but today’s news has seen them move up 15 per cent and into new all-time high territory.
Transense (AIM: TRT) was founded twenty five years ago and has been listed on AIM since 1999; but has yet to report a profit. It’s tough for many small tech stocks trying to sell innovative products to much larger organisations and Transense is clearly no exception. However the fact that the company is still soldiering on suggests it might have something worth persevering with.