(Alliance News) - Stock prices in London are seen opening ever-so slightly higher on Monday in a cautious start to the new week, with markets tracking geopolitical developments and rising Covid-19 cases in China, while also awaiting fresh drivers in a quiet day in the economic calendar.
In early UK corporate news, National Grid agreed a deal to sell a majority stake in its UK gas transmission and metering business. AstraZeneca has had a Covid-19 antibody receive EU approval.
Barclays warned of a GBP450 million hit, due to the over-issuance of structured notes and exchange traded notes. The UK government has further reduced its stake in NatWest.
FTSE 250-listed auto distributor and retailer Inchcape has expanded its footprint with an acquisition, while Ted Baker said a private equity takeover tilt undervalues the fashion retailer.
IG says futures indicate the FTSE 100 index of large-caps to open up 6.5 points, or 0.1%, at 7,489.85 on Monday. The FTSE 100 closed up 15.97 points, or 0.2%, at 7,483.35 on Friday.
National Grid said it will receive GBP2.2 billion from the sale of a 60% interest in its gas transmission and metering unit in the UK. It will sell the holding to a consortium of "long-term infrastructure investors".
The consortium includes Macquarie Asset Management and British Columbia Investment Management.
The deal implies an enterprise value of GBP9.6 billion for the unit, which National Grid labels as NGG.
"Following the transaction, National Grid will own a 40% minority equity interest in NGG via a new holding company called 'GasT TopCo'. In addition, National Grid will also receive approximately GBP2.0 billion from additional debt financing at completion," the FTSE 100 company explained.
"National Grid has also entered into an option agreement with the consortium for the potential sale of the remaining 40% of equity in GasT TopCo. The option may be exercised by the consortium between January 1, 2023 and June 30, 2023."
London-listed infrastructure investment fund Pantheon Infrastructure said it has agreed to invest roughly GBP40 million alongside the consortium.
Drug maker AstraZeneca said its Evusheld antibody combination for the prevention of Covid-19 has been approved in the EU for use "in a broad population". It is now approved for use in adults and adolescents aged 12 years and older weighing at least 40 kilogrammes.
Primary analysis from a phase III probe showed the drug demonstrated a 77% reduction in the risk of developing symptomatic Covid-19, compared to a placebo. Six-month median analysis showed an 83% reduction.
Barclays said securities issued as part of its US shelf registration statement during a period of roughly one-year exceeded the registered amount.
Some purchasers now have a right of rescission, which would require Barclays to buy back the instruments at the original purchase price.
Barclays expects rescission losses of GBP450 million, net of tax. The charges will be reflected in its first quarter earnings. It also means its GBP1 billion buyback will now kick off in the second quarter.
"Barclays Bank PLC intends to file a new automatic shelf registration statement with the [US Securities & Exchange Commission] as soon as practicable. Barclays remains committed to its structured products business in the US," the company said.
Also in the banking sector, the UK government said it has successfully sold just under 550 million shares in lender NatWest, netting GBP1.21 billion. The sale means that the government's stake in the bank has been reduced below 50%.
The government now has a 48.1% stake in NatWest, falling from 50.6%.
The UK government first began building its majority stake in the bank from October 2008 during the financial crisis as it looked to inject funds into the banking system. As a result, the government ended up holding an 81% stake in the lender - called Royal Bank of Scotland Group at the time - after a hefty GBP45.5 billion taxpayer bailout.
Among London mid-caps, Inchcape said it has added first-time distribution relationships with Porsche and Volvo, while it has broadened its coverage with Jaguar Land Rover to 12 markets, up from 8.
Inchcape has secured the new and expanded relationships through the majority buy of Ditec, which is the distributor of Porsche, Volvo and Jaguar Land Rover in Chile.
It has acquired a 70% stake.
"Ditec will add GBP130 million of annualised revenue to the Americas & Africa region, the group's fastest growing region, with pro-forma revenue of GBP1.3 billion, which has grown both organically and by acquisition from GBP300m in 2016," Inchcape said.
Elsewhere in M&A news, Ted Baker confirmed it received, and rejected, two unsolicited, non-binding takeover proposals from Sycamore Partners Management.
The first offer was for 130 pence per share on March 18, with a second coming four days later at 137.5p per share. Ted Baker's stock closed at 125.81p on Friday, giving the retailer a market capitalisation of GBP232.3 million.
Ted Baker rebuffed both offers.
"The board of Ted Baker carefully reviewed both of Sycamore's proposals with its advisers and concluded they significantly undervalued Ted Baker and failed to compensate shareholders for the significant upside that can be delivered by Ted Baker as a listed company. Ted Baker is a leading global brand with a strong future. The management actions taken over the last two years have put the business on a firm footing, and it is now well on the way to recovery following a turbulent period. The board is focused on delivering value for Ted Baker's shareholders well in excess of the price offered by Sycamore," the company said.
Ahead of the European open, the mood was cautious. With a thin data calendar, there was greater focus on the ongoing conflict between Russia and Ukraine, as well as the Covid-19 situation in China.
"Geopolitical tensions have taken another ugly turn over the weekend as President Joe Biden said President Putin could not remain in power. Traders are already nervous about Kremlin's previous remarks where they showed their anger towards the US after Biden labelled Putin a war criminal," Avatrade analyst Naeem Aslam commented.
Russian and Ukrainian negotiators will resume face-to-face peace talks as soon as Monday, probing whether a near-stalemate in fighting has forced Moscow to temper its demands.
It remains to be seen whether talks will be hampered by US President Joe Biden's shock declaration that Putin "cannot remain in power".
The ad-libbed remark sparked outrage in Moscow and sowed widespread concern in Washington and abroad, seeming to undercut Biden's own efforts on a European visit to underscore a carefully crafted unity in support of Kyiv.
In the US on Friday, Wall Street ended mostly higher, with the Dow Jones Industrial Average ending up 0.4% and the S&P 500 up 0.5% but the Nasdaq Composite down 0.2%.
In Asia on Monday, the Japanese Nikkei 225 index fell 0.7%. In China, the Shanghai Composite was down 0.2%, while the Hang Seng Index in Hong Kong was up 0.6%. The S&P/ASX 200 in Sydney closed up 0.1%.
Millions of people in China's financial hub were confined to their homes on Monday as the eastern half of Shanghai went into lockdown to curb the nation's biggest Covid outbreak.
Authorities announced late on Sunday that it would carry out a two-phased lockdown of the city of around 25 million people to carry out mass testing.
The government had sought to avoid the kind of hard lockdowns regularly deployed in other Chinese cities, opting instead for rolling localised lockdowns, in an effort to protect Shanghai's economy. But Shanghai has in recent weeks become China's Covid hotspot, and on Monday another record high was reported with 3,500 new confirmed cases.
Oil prices slipped on the Shanghai lockdown news. Brent oil was trading at USD115.62 a barrel, down from USD120.08 late Friday.
Shares in London-listed miners will be in focus when the market opens, as China is a key buyer of minerals.
Sterling was quoted at USD1.3140 early Monday in London, down from USD1.3185 at the London equities close on Friday.
The euro traded at USD1.0958 early Monday, lower than USD1.0987 late Friday. Against the yen, the dollar rose to JPY123.12 versus JPY122.06.
Gold was quoted at USD1,936.93 an ounce early Monday, easing from USD1,955.60 on Friday.
Monday's economic calendar is quiet, with traders likely to focus on comments from Bank of England Governor Andrew Bailey, who speaks in Brussels at 1200 BST.
By Eric Cunha; ericcunha@alliancenews.com
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