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LONDON BRIEFING: Possible offers for Network International, John Wood

17th Apr 2023 07:52

(Alliance News) - Stock prices in London were called higher on Monday, following Asian equities into the green.

The dollar added to Friday's gains, after largely positive US bank earnings changed the outlook for interest rate moves by the Federal Reserve.

"While the disruption caused by the SVB collapse did create some ripples in the US economy in the month of March, the sharp rally in US two-year yields and upbeat assessment of the US economy from Friday's Q1 banking numbers has caused markets to scale back their bets on the number of possible rate cuts by year-end, which had started to get priced in by markets in the early part of last week," said CMC's Michael Hewson.

There will be more earnings from US banks this week, with Goldman Sachs and Bank of America reporting on Tuesday.

In early UK company news, both Network International and John Wood updated on potential takeover offers, while QinetiQ now expects a stronger annual performance after a solid fourth quarter.

Here is what you need to know at the London market open:

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MARKETS

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FTSE 100: called up 19.5 points, 0.3%, at 7,891.41

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Hang Seng: up 1.2% at 20,677.10

Nikkei 225: up 0.1% at 28,532.22

S&P/ASX 200: closed up 0.3% at 7,379.80

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DJIA: closed down 143.22 points, 0.4%, at 33,886.47

S&P 500: closed down 0.2% at 4,137.64

Nasdaq Composite: closed down 0.4% at 12,123.47

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EUR: firm at USD1.0992 (USD1.0987)

GBP: soft at USD1.2420 (USD1.2427)

USD: up at JPY133.93 (JPY133.68)

Gold: up at USD2,012.01 per ounce (USD1,997.18)

(Brent): down at USD86.26 a barrel (USD86.42)

(changes since previous London equities close)

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ECONOMICS

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Monday's key economic events still to come:

UK BoE Deputy Governor Jon Cunliffe speaks

10:00 EDT US NAHB housing market index

12:00 EDT US Fed Richmond President Thomas Barkin speaks

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Former US president Bill Clinton will join other political leaders from Northern Ireland's peace process era at a major conference commemorating the Good Friday Agreement. Ex-prime minister Tony Blair and former taoiseach Bertie Ahern will also participate in the three-day event at Queen's University in Belfast 25 years on from the landmark accord. Senator George Mitchell, who chaired the peace negotiations in 1998, will take part as well. Former US secretary of state Hillary Clinton is hosting the conference as part of her role as chancellor at Queen's. UK Prime Minister Rishi Sunak and Irish Taoiseach Leo Varadkar are due to attend later in the week.

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BROKER RATING CHANGES

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RBC raises RS Group to 'outperform' ('sector perform') - target 1000 pence

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COMPANIES - FTSE 100

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AstraZeneca said a phase three trial showed that its Imfinzi treatment, in combination with neoadjuvant chemotherapy before surgery and as adjuvant monotherapy after surgery, had positive results in non-small cell lung cancer. The pharmaceutical firm said that the Aegean phase three trial showed Imfinzi in the combination led to a "statistically significant and clinically meaningful improvement" in event-free survival compared to neoadjuvant chemotherapy alone, followed by surgery, for patients with resectable early-stage non-small cell lung cancer.

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Barclays is set to cut over 100 roles at its investment banks, according to a Sky News report late Sunday. This comes amid a lower rate of dealmaking and initial public offerings, Sky noted. It would be the second round of layoffs in less than six months, Sky noted, given that last November Barclays was reported to have axed around 200 jobs at its investment bank.

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COMPANIES - FTSE 250

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Network International Holdings confirmed it has received a non-binding takeover proposal from private equity firm CVC Capital Partners and tech-focused investor Francisco Partners Funds. The Middle East and Africa-focused payments provider said the proposal is for a possible cash offer of 387 pence per share. The offer would be a 27% premium to Friday's closing price of 304.05p. The new proposal follows a series of previous proposals that were rejected, Network noted. The board would be minded to recommend the offer to shareholders, should a firm offer be made, it said. The consortium now has until May 11 to announce the firm intention to make an offer, or withdraw from the takeover process.

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Energy sector-focused engineering and consulting business John Wood said it is engaging with Apollo Management Holding LP about its final takeover proposal of 240p per share. Apollo had announced the fifth proposal in early April. "Having now weighed all relevant factors, particularly feedback received from Wood shareholders, the board has decided to engage with Apollo to see if a firm offer can be made on the same financial terms as the final proposal," it explained. It will now give Apollo access to due diligence materials and has agreed to extend the put-up-or-shut-up deadline for Apollo to May 17. Shares in John Wood closed at 210.50p on Friday.

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QinetiQ reported a "strong operational performance" in its final quarter to March 31. The defence technology company now expects annual results to be ahead of its previous guidance, and at the upper end of market expectations. Annual order intake rose 40% year-on-year to a record high of over GBP1.7 billion, with underlying operating profit expected to be "at least" GBP175 million. QinetiQ also noted the integration of its recent acquisitions Avantus and Air Affairs is progressing well.

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OTHER COMPANIES

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RTW Venture Fund noted that its largest holding, Prometheus Biosciences, was acquired by Merck via a subsidiary. Merck bought the California-based biotech company for nearly USD10.8 billion, or USD200 per cash in cash. Prometheus's share price was at USD114.01 when the New York Stock Exchange closed on Friday, so the price represents a 75% premium. RTW said Prometheus accounted for around 15% of its net asset value at the end of March. "As such, the company expects that this will translate into a material accretion to the NAV," it said. Prometheus is developing a treatment for autoimmune diseases, including ulcerative colitis and Crohn's disease, dubbed PRA023.

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Medical diagnostics firm Omega Diagnostics said it expects annual revenue in the year that ended March 31 to be GBP7.5 million from continuing operations, down from GBP8.6 million a year before. This was in line with its guidance provided in January. Due to "lower-than-expected" production yields and higher costs for raw materials, its loss before interest, tax, depreciation and amortisation is now expected to be around GBP2.0 million. The firm noted its dispute continued with the Department of Health & Social Care over a GBP2.5 million payment related to Covid-19 lateral flow tests. A formal mediation meeting is scheduled to take place late this month. "It is not clear what the outcome of this meeting will be or whether the outcome will be disclosable due to confidentiality arrangements," Omega said.

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By Elizabeth Winter, Alliance News senior markets reporter

Comments and questions to [email protected]

Copyright 2023 Alliance News Ltd. All Rights Reserved.

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