26th Aug 2022 07:44
Alliance News) - Stock prices in London were seen opening higher on Friday following a rally in New York overnight, as markets look ahead to a speech by US Federal Reserve Chair Jerome Powell.
In early UK company news, software provider Micro Focus International has agreed to be taken over by Canadian rival OpenText in a GBP5.1 billion deal. Fund management company JTC made a US acquisition. UK energy regular Ofgem called for more support from the incoming UK prime minister after hiking the energy price cap for Britain by 80%.
IG futures indicate the FTSE 100 index is to open 25.06 points higher at 7,504.80. The index closed up 8.23 points, or 0.1%, at 7,479.74 on Thursday.
Micro Focus International said it has reached an agreement to be acquired by Canadian enterprise information management software provider OpenText.
Under the terms of the deal, OpenText will offer Micro Focus shareholders 532 pence in cash per Micro Focus share, valuing the Newbury-based software firm at GBP1.8 billion on a fully diluted basis and at GBP5.1 billion on an enterprise value basis.
The offer price represents a 98% premium to the closing share price of 268 pence on Wednesday, the last business day before the announcement.
Micro Focus said the combined entity is expected to generate USD6.2 billion in annualised revenue and USD2.2 billion annualised adjusted earnings before interest, tax, depreciation, and amortisation, while maintaining OpenText's aspirations of adjusted Ebitda margin of 37% to 39% in 2025.
Micro Focus said its directors intend to recommend unanimously that Micro Focus shareholders vote in favour of the takeover at a court meeting and the resolutions to be proposed at a general meeting.
OpenText shares closed down 0.2% at USD48.14 in New York on Thursday.
"We intend to fund the all-cash acquisition with existing cash, new debt and our existing revolving credit facility. OpenText does not contemplate raising any equity to fund the acquisition," said Chief Executive Mark Barrenechea on Thursday.
JTC said it will acquire non-deposit trust company New York Private Trust Co in cash for an undisclosed sum.
NYPTC is headquartered in Delaware and offers a broad range of fiduciary services, including trust services, estate administration services, and white label trust services to high net worth and ultra-high net worth individuals and families and corporate clients.
JTC said the proposed acquisition of NYPTC supports its strategy to further develop its presence in the high growth US market and to develop a US domestic trust services offering.
Further, NYPTC is highly complementary to JTC's existing private client operations in the US, which have grown organically since 2013 and include offices in Miami, New York and South Dakota, JTC said.
UK energy regulator Ofgem on Friday announced it will increase the annual energy price cap on default tariffs by 80%.
From October 1, energy suppliers in Britain can charge up to GBP3,549 per year for energy bills from the previous cap of GBP1,971.
The cap for households on prepayment meter bills will rise by 79% to GBP3,608 from GBP2,017.
Ofgem said the increase reflects the "continued rise in global wholesale gas prices", which began to surge as the restrictions across the world eased from the Covid pandemic and have been driven higher to record levels by Russia "slowly switching off gas supplies to Europe".
Ofgem regulates energy prices for England, Scotland and Wales, while Utility Regulator sets the price cap in Northern Ireland.
Ofgem CEO Jonathan Brearley said: "The government support package is delivering help right now, but it's clear the new prime minister will need to act further to tackle the impact of the price rises that are coming in October and next year. We are working with ministers, consumer groups and industry on a set of options for the incoming prime minister that will require urgent action.
"The response will need to match the scale of the crisis we have before us. With the right support in place and with regulator, government, industry and consumers working together, we can find a way through this."
US Fed Chair Powell will deliver a keynote speech on Friday at 1500 BST at the annual gathering of top central bankers at Jackson Hole, Wyoming.
Powell is widely expected to confirm that more interest rate hikes are on the way as Fed officials try to bring inflation down from highs not seen in four decades.
The key issue facing investors is by how much the US central bank will tighten over the coming months, with expectations for a 50 basis points lift in September, after two successive 75 basis points moves in June and July.
"Everyone remembers Powell's mistake about sticking to the inflation is transitory at last year's Jackson Hole symposium, so he will be extra motivated to make sure his message is clear and aggressive about fighting inflation," said Oanda Markets analyst Ed Moya.
"The Fed is ready to be locked in tightening mode until inflation eases and the latest inflation pretty much confirms that won't happen until next year. The labour market is still too strong and that will continue to feed into rising wages and drive home the point that the Fed can remain aggressive with raising rates."
New York ended higher on Thursday, with the Dow Jones Industrial Average up 1.0%, S&P 500 up 1.4% and Nasdaq Composite up 1.7%.
In Asia on Friday, the Nikkei 225 index in Tokyo closed up 0.6%. In China, the Shanghai Composite was down 0.1%, while the Hang Seng index in Hong Kong was up 0.5%. The S&P/ASX 200 in Sydney finished up 0.8%.
Shares in technology companies in Hong Kong and Shanghai surged thanks to news that China-US regulatory talks were progressing.
More than 200 Chinese firms have for months had the threat of New York delisting hanging over them as they are caught in a wide-ranging row between the superpowers. But reports said that Beijing had called on top accounting firms to prepare to bring US-listed companies' audit papers to Hong Kong, to be reviewed by US officials.
US lawmakers set a 2024 deadline for the removal of businesses that do not comply with listing rules and the latest move could provide a big step in avoiding that.
"Having got off to a poor start to the week, US markets finished yesterday with a decent rebound ahead of today's speech by Fed Chairman Jay Powell. European markets have also stabilised in the past couple of days after some early week declines and are expected to open modestly higher this morning," said CMC Markets analyst Michael Hewson.
The pound was quoted at USD1.1806 early Friday, down from USD1.1815 at the London equities close Thursday.
The euro was priced at USD0.9965, down from USD0.9975. Against the yen, the dollar was trading at JPY136.94 in London, higher against JPY136.72.
Brent oil was quoted at USD100.31 a barrel on Friday, down from USD100.48 a barrel at the London equities close Thursday. Gold stood at USD1,758.44 an ounce, firm against USD1,756.33.
In the economic calendar, there is US personal consumption expenditure data at 1330 BST.
By Arvind Bhunjun; [email protected]
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