(Alliance News) - Mergers and acquisitions were back on the agenda for smaller UK companies Tuesday, after the discussion of a mega-deal between AstraZeneca and Gilead Sciences excited the market on Monday.
Technology firm RWS Holdings announced two acquisitions on Tuesday alongside its half-year numbers, spending up to USD41 million combined on Iconic Translation Machines in Ireland and Webdunia in India, Thailand and the US. Iconic develops neural machine translation solutions, while Webdunia provides translation and localization services.
City Of London Investment Group meanwhile said it has agreed an all-share takeover of Karpus Management in the US. City Of London Investment Group will issue 24.1 million shares at 325 pence, worth GBP78.4 million. The owners of Karpus, which has USD3.2 billion in funds under management for 2,273 client accounts, will hold 47.6% of the enlarged company.
RWS shares were up 1.3% early Tuesday, while City of London Investment Group was up 6.2%.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.3% at 6,451.73
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Hang Seng: up 1.7% at 25,203.96
Nikkei 225: closed down 0.4% at 23,091.03
DJIA: closed up 461.46 points, 1.7%, at 27,572.44
S&P 500: closed up 1.2% at 3,232.39
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GBP: up at USD1.2715 (USD1.2689)
EUR: down at USD1.1275 (USD1.1294)
Gold: up at USD1,695.44 per ounce (USD1,691.14)
Oil (Brent): flat at USD41.07 a barrel (USD41.14)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Tuesday's Key Economic Events still to come
US two-day Federal Open Market Committee meeting starts
1100 CEST EU gross domestic product
1100 CEST EU employment
0600 EDT US NFIB index of small business optimism
0855 EDT US Johnson Redbook retail sales index
1000 EDT US monthly wholesale trade
1000 EDT US Job openings & labor turnover survey
1630 EDT US API weekly statistical nulletin
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UK retail sales remained in decline last month, though the May figure made for much better reading for a sector that has been battered by the Covid-19 crisis. The British Retail Consortium-KPMG sales monitor showed May sales dropped by 5.9% year-on-year, versus a 1.9% fall in the year prior. Despite the May fall being the second worst on record in the UK, it was an improvement from the 19% plunge registered in April. It also compares favourably to the three-month average fall of 9.4% but is worse than the 12-month average of a 2.6% decline. On a like-for-like basis, UK retail sales fell 7.9% annually in May, compared to a 2.2% decline a year earlier. In-store non-food sales slumped 50% in the three months to May.
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The outlook for the UK's coronavirus-blighted labour market is at its bleakest for almost 30 years despite the easing lockdown, a survey showed. Employment consultancy ManpowerGroup revealed the outcome of a survey of 1,056 UK employers, which comes as Britain continues to relax its Covid-19 lockdown. "Hiring intentions for the third quarter of 2020 are down to minus 12%, with a sharp drop across all major sectors," ManpowerGroup said in a statement, noting this was the worst level since it began the survey in 1992. On a more optimistic note, ManpowerGroup added that most UK businesses expected to return to normality over the next twelve months.
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Germany recorded the largest month-on-month decline in exports in April since the introduction of foreign trade statistics in 1950, Destatis said. Germany exported goods to the value of EUR75.7 billion in April, down 24% on the prior month. Exports decreased by 31% year-on-year. The Federal Statistical Office also reported imported goods to the value of 72.2 billion euros in April, down 17% month-on-month and down 22% year-on-year.
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The US Federal Reserve once again announced changes to its Main Street Lending Program to reach more companies struggling to deal with the damage done by the coronavirus shutdowns. The facility, which has not yet launched, once again slashed in half the minimum loan amount, taking it down to USD250,000 from USD500,000 previously, the Fed said. The central bank originally conceived the program with a USD1 million minimum, as it rushed to find ways to support businesses that are too big to benefit from the Paycheck Protection Program run by the Treasury Department.
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BROKER RATING CHANGES
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GOLDMAN SACHS RESUMES CONTOURGLOBAL WITH 'NEUTRAL' - TARGET 219 PENCE
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CITIGROUP CUTS BIFFA TO 'SELL' ('NEUTRAL') - TARGET 210 PENCE
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COMPANIES - FTSE 100
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British American Tobacco said it is performing well against a backdrop of a very challenging and volatile trading environment. BAT said it continues to see good pricing and strong volume and value share growth across its combustibles business, with good market share growth across all three of the new categories - vapour, tobacco heating and modern oral. BAT said the strong operational performance is reflected in its continued commitment to its 65% dividend payout policy. The Rothmans and Dunhill cigarette maker said trading in developed markets is strong, with continued good pricing and little evidence of accelerated downtrading to date. BAT pointed to a particularly strong performance from its business in the US, which has been highly resilient throughout the Covid-19 crisis. However, in developing markets including Bangladesh, Vietnam and Malaysia, BAT said the hit to trading from Covid-19 has been "more pronounced". BAT expects an annual headwind of 3% from Covid-19 on constant currency adjusted revenue. BAT expects annual constant currency-adjusted revenue growth in a range of 1.0% to 3.0%, down from the lower end of the 3% to 5% range expected previously.
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Industrial software firm AVEVA Group said annual profit nearly doubled on higher revenue. For the year ended March 31, revenue rose 8.8% to GBP833.8 million from GBP766.6 million in financial 2019, and pretax profit surged 97% to GBP92 million from GBP46.7 million. AVEVA kept its final dividend unchanged at 29.0 pence, which it said reflected its strong balance sheet position and cash generation. The company reported growth across all geographic regions, with Asia-Pacific showing particular strength. Further, AVEVA implemented its AVEVA Flex subscription model during the year, which it said supported strong growth in subscriptions. AVEVA said global economic disruption relating to Covid-19 is expected to hurt the growth rate of the industrial software market in the short term, but it said its strategy and medium-term objectives remain unchanged.
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Budget airline easyJet may have to cut more jobs thanks to the new UK quarantine for international arrivals, Sky News reported. In an interview with a Sky News reporter, easyJet Chief Executive Johan Lundgren said he "feared" further job losses in the company if the quarantine period is longer than expected. "This is affecting millions of people and it's also affecting the UK vacation industry which has been a leading sector across global aviation," Lundgren said.
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COMPANIES - FTSE 250
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Residential property developer Bellway said it has "carefully and gradually" restarted construction and sales activity in England & Wales, and its current forward sales position remains substantial which should enable a strong liquidity position in the months ahead. The Newcastle-based company recommenced construction work on around 230 sites and has opened all remaining sales offices in England on Monday last week, following a trial starting from May 18, it said. Bellway noted that current productivity rate remains minimal and work is primarily limited to homes nearing completion. Bellway's current order book stands at 6,038 homes, or GBP1.57 billion, compared with 6,312 homes, or GBP1.64 billion, as at June 2, 2019. In the 10 months to May 31, 2020, the company sold 6,721 homes versus 7,674 homes a year ago, including 708 which completed on or after March 23, the UK lockdown date.
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COMPANIES - MAIN MARKET AND AIM
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Jet2 has delayed resuming flights by two weeks until mid-July. The airline and tour operator Jet2holidays had been due to restart flights and package holidays on July 1, but has pushed the date back to July 15. Customers who had been due to travel before then will be contacted and have the option to rebook for a later date, get a credit note or request a full refund. In a statement on Monday, Jet2, which is owned by Dart Group, said: "In view of the ongoing travel restrictions that are in place as a result of the Covid-19 pandemic, we have taken the decision to recommence our flights and holidays programme on July 15th.
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COMPANIES - GLOBAL
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The UK Competition & Markets Authority said it will not be referring the acquisition by Danone of Harrogate Water Brands to a phase 2 investigation. At the end of February, the French food-products company had agreed to buy a majority stake in UK-based bottled water company Harrogate Water for an undisclosed sum. The Harrogate Spring Water brand is expected to expand Danone's existing bottled water range, which already includes major brands such as Evian and Volvic.
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Tuesday's Shareholder Meetings
S&U
Menhaden
Nostrum Oil & Gas
Alpha Real Trust (re share buyback of 14.9% of shares)
Tissue Regenix (re fundraise)
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By Tom Waite; thomaslwaite@alliancenews.com
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