21st Jun 2021 11:00
(Alliance News) - The following is a summary of top news stories Monday.
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COMPANIES
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Wm Morrison Supermarkets has rejected a GBP5.5 billion takeover bid from a private equity firm, believing it "significantly undervalued" the company. Clayton, Dubilier & Rice earlier noted press reports of a potential transaction involving Morrisons and confirmed that it was "considering a possible cash offer". CD&R, which has until July 17 to announce a firm intention to make an offer under UK takeover rules, added in a statement that there can be "no certainty an offer will be made". Morrisons said it rejected a conditional cash offer from CD&R of 230 pence per share – which amounts to just over GBP5.5 billion. Morrisons shares closed down 1.8% at 178.45p in London on Friday, meaning the proposal offered a 29% premium. Shares were trading 32% higher at 235.12p on Monday. In a statement, the supermarket chain said: "The board of Morrisons evaluated the conditional proposal together with its financial adviser, Rothschild & Co, and unanimously concluded that the conditional proposal significantly undervalued Morrisons and its future prospects." However, the Financial Times reported on Sunday that CD&R will continue its pursuit of Morrisons.
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Lone Star Global Acquisitions said it has made a fifth and final takeover bid for engineering firm Senior, worth 200 pence per share. With 419.4 million shares in issue, the offer values Senior at GBP838.8 million. This fifth bid presents a 69% premium to Senior's closing price on May 27 of 118.3p, the last closing price prior to the start of the offer period, and is 8.1% above the fourth proposal of 185p which was put to the Senior board last Monday. Senior rejected the 185p bid on Tuesday, private equity firm Lone Star noted. Lone Star said: "The financial terms of the fifth proposal are final and will not be increased, except that Lone Star reserves the right to increase the amount of the offer price if there is an announcement on or after the date of this announcement of an offer or a possible offer for Senior by a third party offeror or potential offeror."
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Johannesburg-listed media firm Naspers and subsidiary Prosus, which is listed in both Amsterdam and South Africa, published their annual results, reporting a doubled profit on chunkier revenue, due to a higher share in equity-accounted results. For the year ended March 31, Naspers reported a pretax profit of USD7.22 billion, nearly doubled from USD3.58 billion the year before, driven by a higher share of equity-accounted results by 81% at USD7.10 billion from USD3.93 billion. This was boosted by Tencent Holdings and Swiggy. However, the group posted a widened operating loss of USD1.19 billion from USD720 million, driven by an increase in the cash-settled share-based payment expense as a result of marked improvements in e-commerce and technology valuations. Prosus itself reported a largely similar year, with pretax profit nearly doubling to USD7.33 billion from USD3.74 billion, also driven by a higher share in equity-accounted results. Meanwhile, revenue from contracts with customers grew 54% year-on-year to USD5.12 billion from USD3.33 billion, while on an economic-interest basis revenue rose 34% to USD28.75 billion, buoyed by the Food Delivery and Etail businesses.
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Capita on Monday said it has agreed to sell Axelos, its joint venture with the UK government, to PeopleCert International. The deal values Axelos at GBP380.0 million on a cash-free, debt-free basis. Capita owns 51% of the business, and will receive proceeds of GBP172.5 million from the sale plus an GBP11.1 million dividend, for a total of GBP183.6 million. The UK government, which owns the remaining 49% of Axelos, also will sell its stake. London-based outsourcing company Capita said it will use the proceeds to strengthen its balance sheet, meet upcoming debt repayments and support its transformation plan. Axelos, which owns the rights to project management techniques developed by the UK government, was set up in 2013.
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Commonwealth Bank of Australia said it has agreed to sell its Australian general insurance business, known as CommInsure General Insurance, to general insurer Hollard Insurance Co Pty Ltd. The Sydney-based bank will sell the business for an upfront consideration of AUD625 million, about USD468 million, with deferred payments based on certain milestone, and an additional investment from Hollard, throughout a 15-year strategic alliance formed between both companies. The agreement is for the distribution of home and motor vehicle insurance products to CBA's retail customers in Australia. CBA will also gain income from this agreement. The sale is subject to approval from the Australian Prudential Regulation Authority and is expected to be completed in mid-2022.
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The antitrust overhaul package unveiled in the US Congress targeting Big Tech, if enacted, could have far-reaching effects on how people use the internet and on America's biggest and most successful companies. The five bills, due for a committee vote on Wednesday, could pave the way for a reorganization or breakup of giants such as Alphabet's Google, Facebook, Apple and Amazon.com, while reshaping the entire internet ecosystem. The measures would stop tech giants from operating a platform for third parties while offering competing services on those platforms, dealing a major blow to the likes of Apple and Amazon. Lawmakers also are seeking to ban tech firms from prioritizing their own products or services, with Google clearly in mind. Another measure would require data "portability" and "interoperability," which could make it easier for people to quit Facebook, for example, while keeping their data and contacts.
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MARKETS
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A rocky start to the week, driven by the US Federal Reserve's hawkish tilt, gave way to some moderate gains in Europe by mid-morning with US futures pointing green. However, a week with continued focus on central bankers, headlined by the Bank of England's interest rate decision on Thursday, means there could be further volatility ahead. "All eyes are likely to remain on monetary policies this week with traders waiting for Christine Lagarde's appearance before the EU parliament today and Jerome Powell's speech later this week," said Pierre Veyret at ActivTrades.
UK supermarket chains J Sainsbury and Tesco, along with online grocer Ocado, rallied on news of London-listed Wm Morrison's takeover suitor. Even shares in France's Carrefour notched a 1.0% gain in Paris. "Amazon has long been touted as a potential buyer for Morrisons to help give it a much stronger foothold in the UK grocery markets so that's an obvious name to watch," noted AJ Bell investment director Russ Mould.
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CAC 40: up 0.2% at 6,583.83
DAX 30: up 0.4% at 15,516.73
FTSE 100: up 0.2% at 7,033.68
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Hang Seng: closed down 1.1% at 28,489.00
Nikkei 225: closed down 3.3% at 28,010.93
S&P/ASX 200: closed down 1.8% at 7,235.30
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DJIA: called up 0.7%
S&P 500: called up 0.6%
Nasdaq Composite: called up 0.6%
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EUR: up at USD1.1895 (USD1.1854)
GBP: up at USD1.3871 (USD1.3799)
USD: down at JPY110.10 (JPY110.26)
GOLD: up at USD1,783.35 per ounce (USD1,775.60)
OIL (Brent): up at USD73.89 a barrel (USD73.56)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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The People's Bank of China left interest rates unchanged again as expected, the central bank announced on Monday. China's central bank has now kept its benchmark interest rate at the same level for 14 months in a row. The one-year loan prime rate was held at 3.85%, the last time the rate was changed was back in April 2020. The five-year rate also was unmoved at 4.65%. The loan prime rate is a lending reference rate set monthly by 18 banks. The People's Bank of China revamped the mechanism to price loan prime rate in August 2019, loosely pegging it to the medium-term lending facility. The current rate for the medium lending facility is 2.95%.
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China has broadened a crackdown on its massive cryptocurrency mining industry with a ban on mines in a key southwestern province. Chinese mines power nearly 80% of the global trade in cryptocurrencies despite a domestic trading ban since 2017, but in recent months several provinces have ordered mines to close as Beijing turns a sharp eye to the industry. Authorities in the province of Sichuan ordered the closure of 26 mines last week, according to a notice widely circulated on Chinese social media and confirmed by a former bitcoin miner. The notice reportedly instructed power companies to stop supplying electricity to all cryptocurrency mines by Sunday. It vowed a "complete clean-up" and ordered local governments to carry out a "dragnet-style investigation" to find and shut down suspected crypto mines.
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France's far-right led by Marine Le Pen insisted Monday it could recover from a disappointing first round of regional polls marked by a strong result from the traditional right and another feeble performance by President Emmanuel Macron's ruling party. The vote on Sunday was widely watched as the last national electoral test ahead of presidential and parliamentary elections next year which polls currently show as being a close race between Le Pen and Macron. The National Rally of Le Pen badly underperformed forecasts, while Macron's centrist Republic on the Move party received barely over 10% of ballots in an election marked by record high abstention. The vote determines who leads the 13 regions of mainland France, with the outcome due to be decided in second round run-off on this coming Sunday. The abstention rate of 66.1-68.6% – the highest for an election since at least 1958 – has shocked observers and led to speculation about the causes.
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More than one million Covid-19 jabs were booked in just two days after the NHS opened its vaccination programme to all remaining adults in England. A total of 1,008,472 appointments were arranged over Friday and Saturday through the booking service, NHS England said – an average of more than 21,000 every hour, or six every second. The full figure is likely to be higher as it does not include appointments at local GP-led vaccination services or people getting the jab at walk-in centres. The NHS has now administered around 62 million doses since Margaret Keenan became the first member of the public to get a jab on December 8. Four in five adults have now received their first vaccination, according to NHS England figures – with three in five having both.
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UK health secretary Matt Hancock has said he plans to scrap the requirement for people who have had two Covid-19 jabs and come into contact with an infected person to isolate for 10 days. The health secretary said the approach is currently being piloted but will be introduced as soon as possible once clinicians have looked at the data. Under the plan, the 10-day quarantine period could be axed in favour of daily lateral flow tests. Hancock told BBC Breakfast the approach is being piloted "to check that that will be effective, but it is something that we're working on". He added: "We're not ready to be able to take that step yet, but it's something that I want to see and we will introduce, subject to clinical advice, as soon as it's reasonable to do so." Asked whether the remaining restrictions are likely to be lifted before the new England road map date of July 19, Hancock said experts will examine the figures shortly.
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Fitch Ratings late Friday affirmed the UK's long-term foreign-currency issuer default rating at AA-, but has upped its outlook to Stable from Negative. "Recent macroeconomic, labour market and fiscal outturns since the start of 2021 have shown the UK economy and public finances to be more resilient to the impact of the pandemic shock than Fitch had expected," the credit ratings agency explained. It continued: "Better adaptation of businesses to working with the economic restrictions and greater resilience of private consumption and investment have resulted in an upward revision of our real GDP growth estimate and forecast for 2020 to 2021 to negative 9.8% and 6.6%, respectively from negative 10.3% and 5% respectively. We forecast growth moderating to 5% in 2022." Fitch expects the unemployment rate to average just 5.4% in 2021, down from 7.3% at its previous review, supported by government job-support schemes.
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By Lucy Heming;Â [email protected]
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