29th Jul 2019 07:44
(Alliance News) - Stock prices in London were seen opening marginally higher on Monday, following record index highs in the US on Friday, as attention shifts to a trio of central bank meetings this week, with an interest rate cut widely expected from the US Federal Reserve.
In early UK company news, merger activity was the dominant theme with London Stock Exchange Group confirming discussions to acquire financial data analytics provider Refinitiv Holdings from Thomson Reuters and Blackstone. In addition, Just Eat confirmed talks for a possible merger with Takeaway.com to create a GBP9 billion Anglo-Dutch food ordering company.
IG futures indicate the FTSE 100 index is to open 5.54 points higher at 7,554.60. The blue-chip index closed 60.01 points, or 0.8%, higher at 7,549.06 on Friday.
Just Eat confirmed it has reached an agreement in principle on the key terms of a possible all-share combination with Dutch rival Takeaway.com to create Just Eat Takeaway.com NV.
FTSE 100-constituent Just Eat has a market capitalisation of GBP4.33 billion. It is scheduled to report half-year results on Wednesday. Amsterdam-listed Takeaway.com has a market cap of EUR5.06 billion.
Under the terms of the deal, Just Eat shareholders would be entitled to receive 0.09744 of a Takeaway.com share in exchange for each Just Eat share.
Just Eat shareholders would own 52.2% of the new business, with the offer valuing Just Eat at 731 pence per share based on Takeaway.com's closing share price on Friday of EUR83.55. This represents a premium of 15% to Just Eat's closing share price on Friday.
Just Eat said it is intended that Mike Evans, currently the chair of Just Eat, will assume the role of chairman of the combined group. Takeaway.com Chair Adriaan Nuhn will assume the role of vice-chairman combined group.
Takeaway.com Chief Executive Jitse Groen will become CEO of the combined group. Just Eat Chief Financial Officer Paul Harrison will be CFO of the new company. Brent Wissink, currently CFO of Takeaway.com, and Jorg Gerbig, currently COO of Takeaway.com, will be Co-COOs.
Just Eat currently has an interim CEO Peter Duffy.
The new company will be incorporated, headquartered and domiciled in Amsterdam. However it will maintain a premium listing on the London Stock Exchange and a significant part of its operations in the UK, Just Eat said.
London Stock Exchange Group confirmed on Saturday it is in talks to buy Refinitiv Holdings, the financial market data group that was last year hived off from Thomson Reuters to a joint venture led by private equity group Blackstone.
LSE was responding to a report that first appeared in the Financial Times and was picked up by other UK media.
LSE, which in addition to operating the stock exchange and LCH clearing system also is the provider of FTSE and Russell market indices, said the possible acquisition would give Refinitiv an enterprise value including debt of USD27 billion.
The transaction would be all in shares, with new LSE shares issued that would give Thomson Reuters, Blackstone and the other owners of Refinitiv at 37% stake in the enlarged group but less than 30% of voting rights. Taking more than 30% of the voting rights in LSE would require the new shareholders to make a full takeover offer for the listed stock exchange operator.
Under the deal terms, LSE would continue to be chaired by Don Robert and led by CEO David Schwimmer, with David Warren as CFO.
LSE said that together with Refinitiv, the combined group would be the largest listed global financial markets infrastructure provider by revenue, with combined annual revenues of over GBP6 billion in 2018 and would be well positioned to deliver "attractive top line growth over the medium-term". In addition, LSE said it believes that annual run-rate cost synergies in excess of GBP350 million would be deliverable in the five years after completion and that the transaction would deliver strong adjusted earnings per share accretion in the first full year after completion.
However, the LSE warned there is no certainty that discussions will progress or that a transaction will take place.
Ryanair Holdings reported that its first quarter operating revenue rose year-on-year but pretax profit fell due to increased costs.
In the period ended June 30, the Irish budget airline posted a pretax profit of EUR262.3 million, down 24% from GBP345.4 million. Operating revenue rose 11% year-on-year to EUR2.31 billion from EUR2.08 billion, however.
Wall Street enjoyed a strong session on Friday, with both the S&P 500 and Nasdaq setting new records following generally positive US company earnings, alongside the expectations of a US interest rate cut. The Dow Jones Industrial Average was up 0.2%, the S&P 500 up 0.7% and the Nasdaq Composite up 1.1%.
The US Federal Reserve's interest rate decision comes at 1900 BST on Wednesday, followed by a press conference with Fed Chair Jerome Powell at 1930 BST.
According to the closely watched CME FedWatch tool, economists currently forecast an 81% probability of a cut to US interest rates to 2.00% to 2.25% and a 19% chance of a cut to 1.75% to 2.00%. The current interest rate range is 2.25% to 2.50%.
The Japanese Nikkei 225 index closed down 0.4% on Monday. In China, the Shanghai Composite is down 0.3%, while the Hang Seng index in Hong Kong is down 1.5%.
Asian equity markets were lower, with investors cautious ahead of US-China talks in Shanghai this week and amid more civil unrest in Hong Kong.
Two-day discussions begin on Tuesday with a Washington delegation led by White House Trade Representative Robert Lighthizer.
Ahead this week, the Bank of Japan and the Bank of England will make their own rate decisions, on Tuesday and Thursday respectively.
The pound was quoted at USD1.2363 early Monday, lower than quoted at USD1.2377 late Friday, amid no-deal Brexit fears.
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LSE.LJust Eat