8th Sep 2015 07:19
LONDON (Alliance News) - Merger and acquisition activity gave a further charge to a positive early London market Tuesday, with FTSE 250 insurer Amlin agreeing to be bought, while Paddy Power and Betfair confirmed the terms of their own merger.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.9% at 6,131.21
FTSE 250: up 0.8% at 16,982.58
AIM ALL-SHARE: up 0.2% at 734.22
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Hang Seng: up 2.8% at 21,159.30
Nikkei 225: closed down 2.4% at 17,427.08
DJIA and S&P 500: closed Monday for holiday
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GBP: up at USD1.5382
EUR: up at USD1.1188
GOLD: flat at USD1,121.04 per ounce
OIL (Brent): up at USD48.21 a barrel
(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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Tuesday's Key Economic Events still to come
(all times in BST)
10:00 EU Gross Domestic Product
11:00 US NFIB Business Optimism Index
15:00 US Labor Market Conditions Index
20:00 US Consumer Credit
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The total value of like-for-like sales in the UK was down 1.0% on year in August, the British Retail Consortium said on Tuesday - following the 1.2% increase in July. Overall retail sales added 0.1% after climbing 2.7% in the previous month. Non-food sales surged an annual 17.2%, accelerating from 16.3% a month earlier. Online sales of non-food products advanced 6.5% on year.
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China posted a merchandise trade surplus of USD60.24 billion in August, the National Customs Office said. That was well above forecasts for a surplus of USD48.0 billion and up from USD43.03 billion in July. Exports were down 5.5% on year - bettering expectations for a fall of 6.6% after tumbling 8.3% in the previous month. Imports skidded an annual 13.8% versus expectations for a fall of 7.9% after dropping 8.1% a month earlier.
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German exports and imports grew more than expected in July, taking the trade surplus to a record level, data published by Destatis showed. Exports rose 2.4% month-on-month to EUR103.4 billion in July. This was the fastest growth since December 2014. Economists had forecast shipments to grow 1% reversing a 1.1% fall in June. At the same time, imports advanced 2.2% to EUR80.6 billion in July. Imports had declined 0.8% in June. Imports were expected to rise 0.7%. These were the highest seasonally adjusted monthly figures ever calculated both for exports and for imports, Destatis said.
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Japanese Prime Minister Shinzo Abe was re-elected unopposed as president of the ruling Liberal Democratic Party, while falling short of his pledge to boost the country's economic growth. His re-election coincided with a government report showing the first contraction in three quarters amid sluggish consumer spending following last year's sale tax hike. "Our mission is to completely get the country out of deflation and ensure robust growth of the economy toward the future," the premier told his supporters before filing candidacy Tuesday. Abe took office as premier in December 2012, vowing to reinvigorate the world's third-largest economy.
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Japan's gross domestic product was upwardly revised for the second quarter of 2015, the Cabinet Office said on Tuesday - but the country's economy still fell into contraction, contracting 0.3% on quarter. That's an upward revision from -0.4% in last month's preliminary reading, and it beat forecasts for -0.5%. GDP had expanded 1.1% on quarter in the three months prior. On a yearly basis, GDP contracted 1.2% - but that also was upwardly revised from the preliminary reading of -1.6%, and it beat forecasts for -1/8%.
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The European Commission offered measures worth EUR500 million to help farmers facing economic problems, but they said the package was not sufficient, following a day of angry protest in Brussels. Farmers have been hard-hit by a Russian ban on European food imports, implemented amid political tensions over the crisis in Ukraine. Slowing growth in China and a summer drought in Europe have also contributed to the pressure on farms, whose incomes have plunged. The situation is said to be especially dire in the dairy, pork, beef, fruit and vegetable sectors. The commission presented its aid package to EU agriculture ministers at special talks on the challenges facing the industry. The bulk of the funding is to go directly to member states, with the advice that they spend it predominantly on dairy farmers.
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BROKER RATING CHANGES
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UBS RAISES BP TO 'BUY' ('NEUTRAL') - PRICE TARGET 420 (450) PENCE
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SOCGEN RAISES UNITED UTILITIES TO 'BUY' ('HOLD') - TARGET 940 PENCE
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UBS CUTS PREMIER OIL TO 'SELL' ('NEUTRAL') - TARGET 75 (130) PENCE
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COMPANIES - FTSE 100
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RSA Insurance Group said it has signed contracts to sell its operations in Latin America to Suramericana, the insurance subsidiary of Colombia's Grupo de Inversiones Suramericana, for about GBP403 million in cash, the last of its larger businesses to be disposed of under a restructuring plan. In a statement, RSA said that Zurich Insurance Group, which has shown interest in making a GBP5.6 billion takeover offer for its smaller rival, was made aware of the sale process. "This transaction is not conditional on the outcome of their possible offer for RSA," the company said.
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Whitbread reported a rise in sales in the first half of its financial year, boosted by growth in both its Premier Inn and Costa businesses, and it said it is on track to meet expectations for the full year. The hotel and coffee shop operator said that total sales in the 24 weeks to August 13 grew 11.8%, or 3.9% on a like-for-like basis on the same period the year before. In the second quarter, total sales increased 11.1% and rose 3.3% on a like-for-like basis. "We are developing plans to adopt the recently announced National Living Wage. We shall mitigate this substantial cost increase over time with a combination of productivity improvements, boosted by investment in systems and training, efficiency savings and some selective price increases," Chief Executive Andy Harrison said.
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Hikma Pharmaceuticals said it has struck a deal to acquire Egypt-based EIMC United Pharmaceuticals for an undisclosed amount. Hikma said EIMC United specialises in oncology products and said the deal will strengthen its position in the Egyptian market and will add an attractive oncology and injectables pipeline to its portfolio, with the potential to add around 50 products by 2020.
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Royal London Asset Management is set to vote against the re-election of Sports Direct International founder Mike Ashley as executive deputy chairman at the company's annual general meeting on Wednesday, the Financial Times reported. Royal London said it has lost confidence in the company's board and would vote against Ashley's re-election for the first time. Ashley Hamilton Claxton, corporate governance manager at Royal London, one of the City's most prominent institutional investors, said the investment manager is "very concerned about the long list of corporate governance failings that have not been addressed."
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COMPANIES - FTSE 250
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Amlin said it has agreed to be acquired by Mitsui Sumitomo Insurance in a deal valuing the UK insurer at about GBP3.47 billion, as the wave of mergers and acquisitions continues across the industry. Mitsui Sumitomo Insurance, which is owned by Japan's MS&AD Insurance Group Holdings Inc, will pay 670 pence per Amlin share. In addition, Amlin shareholder will be able to receive the insurer's 8.4 pence interim dividend declared last month.
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Berkeley Group Holdings reiterated its earnings guidance as it said it has continued to expand its operations in its current financial year so far. The housebuilder, which will be promoted to the FTSE 100 later this month, said that since the start of its financial year at the start of May, it has continued to invest across its business, signing contracts to acquire five sites and investing further in order to hit its three-year earnings targets. Chairman Tony Pidgeley, in a statement issued ahead of the company's annual general meeting, said that following the positive start to the year, the group reiterates its guidance for earnings of GBP2.0 billion to be delivered in aggregate over its 2016, 2017 and 2018 financial years.
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Housebuilder Redrow posted big rises in pretax profit and revenue and doubled its dividend payout as its 2015 financial year saw it selling more houses at higher prices. The FTSE 250 company said its pretax profit for the year to the end of June was GBP204.0 million, up from GBP133.0 million a year earlier, while revenue increased to GBP1.15 billion from GBP864.0 million. The group declared a full-year dividend of 6.0 pence per share, double the year before.
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Paddy Power said it has reached an agreement with Betfair Group on the terms of a recommended all-share merger between the two companies. The merged entity, to be called Paddy Power Betfair, will result in Paddy Power shareholders owning 52% of the combined group, while Betfair shareholders will own 48%. Betfair shareholders will receive 0.4254 new Paddy Power Betfair shares in exchange for each Betfair share. Paddy Power shareholders will also receive a special dividend of EUR80 million.
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Ashmore Group reported higher pretax profit in its last financial year, as the asset manager defended the fundamentals of emerging markets. Chief Executive Mark Coombs said that sentiment towards emerging markets is being influenced by macroeconomic factors such as the timing of the first US interest rate increase and China's rebalancing of its economy. Ashmore said it made a GBP181.3 million pretax profit in the financial year ended June 30, compared with GBP171.6 million the prior year. Net revenue was up by 8% to GBP283.3 million as higher performance fees and the strength of the dollar more than offset lower management fees on a fall in assets under management to USD58.9 billion from USD75.0 billion over the course of the year.
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Pub operator Greene King said its like-for-like sales were higher in the first 18 weeks of its financial year, with solid performances across its divisions. The company said its like-for-like retail sales in the 18 weeks to September 6 rose 1.3% year on year, with 1.9% growth in the latter ten weeks of that period. Excluding the impact of drink-driving regulations put in place in Scotland, like-for-like retail sales were up 1.8% in the 18 weeks and up 2.4% for the ten week period.
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Recycling packaging company DS Smith said it has made good progress since the start of its current financial year in May and said its trading has been in line with its expectations. The company said it has seen robust volume growth so far in the financial year and said its return on sales and on capital employed are both improved year-on-year.
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Animal genetics company Genus said its pretax profit was boosted in its recently-ended financial year by volume growth and acquisitions, as revenue increased and it hiked its dividend payout. The company said its pretax profit for the year to the end of June was GBP57.8 million, up from GBP38.2 million a year earlier. Revenue rose to GBP398.5 million from GBP372.2 million, as the group achieved volume growth of 6% across its porcine and dairy and beef operations. The company said it will pay a final dividend of 13.4 pence per share, bringing its total dividend payout to 19.5 pence, up 10% year-on-year.
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COMPANIES - LONDON MAIN MARKET AND AIM
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Hochschild Mining said commercial production has begun at the Inmaculada mine and the company has made a "significant new discovery" at the Pallancata mine, both in Peru.
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COMPANIES - INTERNATIONAL
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Striking pilots are to ground nearly half of long-haul flights at German airline Lufthansa on Tuesday. The strikes will then shift to short- and medium-distance flights Wednesday, the pilot's union said. It was unclear how the strike's continuation would impact flight schedules. After being told unionized pilots would refuse to work long flights from 8 am to midnight, the airline cancelled 84 scheduled long-haul flights, but said 90 would take off as normal with non-union crews under an emergency schedule.
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The EU is set to approve General Electric Co's USD17 billion acquisition of Alstom SA's power business on Tuesday, according to reports citing people familiar with the matter. The final major hurdle to the merger-approval from US antitrust authorities-is also likely to be cleared as early as Tuesday, the reports said.
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South Korean conglomerate Samsung Electronics Co plans to eliminate 10% of staff at its headquarters, as the world's biggest smartphone maker loses sales to Apple Inc. and Chinese vendors, Korea Economic Daily reported. The report indicated that the company targets staff in the human resources, public relations and finance departments. The company also plans to cut some expenses next year. The moves come after new high-end Galaxy smartphones failed to impress consumers, triggering five straight monthly declines and wiping out more than USD40 billion in Samsung's market value since April.
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Oil Search Ltd said it has received a non-binding indicative proposal from Australian oil and gas producer Woodside Petroleum to acquire all its shares. Oil Search is a Papua New Guinea-focused oil and gas company. Woodside Petroleum has offered a consideration of one Woodside share for every four shares held in Oil Search, valuing the target company at AUD11.6 billion, or USD8.06 billion, based on its last traded price.
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Online retail giant Amazon.com Inc plans to release a USD50 tablet with a 6-inch screen, in time for this year's holidays, the Wall Street Journal reported citing people familiar with the matter. That would make it one of the least-expensive tablets on the market and half the price of the company's current Fire HD 6-inch tablet.
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Tuesday's Scheduled AGMs/EGMs
Aga Rangemaster (re Middleby takeover offer)
Falkland Islands Holdings
Mulberry Group
Oxford Instruments
Greene King
DS Smith
Byotrol
Berkeley Group
Liontrust Asset Management
BATM Advanced Communications
CH Bailey
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By Tom Waite; [email protected]; @thomaslwaite
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