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LONDON (Alliance News) - Stocks in the UK opened lower Friday, following the lead of Asian markets after disappointing Japanese Tankan survey results, while supermarket J Sainsbury ended its long-running pursuit of Home Retail Group after agreeing a deal to acquire the Argos owner.
Sainsbury's will pay 55.00 pence per share in cash, plus 0.321 of a Sainsbury's share to acquire Home Retail, valuing the company at GBP1.2 billion. Including the GBP200.0 million capital return Home Retail shareholders already stood to get from the sale of the Homebase DIY and garden centre business, the deal values Home Retail at GBP1.4 billion.
Sainsbury's said the deal values Home Retail at a premium of around 74% to its closing price on January 4, the day prior to Sainsbury's disclosing its offer. The acquisition is expected to be completed in the third quarter of 2016.
The agreement ends Sainsbury's pursuit of Home Retail. The FTSE 100-listed grocer disclosed in January it had approached Home Retail in November about a possible cash and shares acquisition.
After the open, Sainsbury's shares were down 1.5%, while Home Retail was down 0.7%.
The FTSE 100 was down 1.2%, or 73.9 points, at 6,101.00. The FTSE 250 was down 0.85 at 16,793.88 and the AIM All-Share was down 0.1% at 710.08
In Europe, the CAC 40 in Paris was off 1.4%, as was the DAX 30 in Frankfurt.
In Asia the Japanese Nikkei 225 index closed down 3.6% after the Bank of Japan's Tankan survey showed Japanese companies losing confidence amid slumping domestic spending and slow growth in emerging economies.
The large manufacturers' index came in with a score of 6 for the first three months of the year, down sharply from the reading of 12 recorded for the fourth quarter. The non-manufacturing index slipped to 22 from the fourth quarter's 25.
The Shanghai Composite closed flat, while the Hang Seng in Hong Kong ended down 1.0%.
Elsewhere in corporate news, recent excitement surrounding mergers and acquisitions in the hotels industry came off the boil after China's Angbang Insurance reportedly walked away from its attempt to acquire Starwood Hotels & Resorts Worldwide, withdrawing its USD14 billion bid.
The move clears the way for Marriott International, which has bid USD13.6 billion, to acquire Starwood.
In London, InterContinental Hotels Group was one of the worst performers in the FTSE 100, down 2.5%. The stock rose when Angbang stated its intention to bid for Starwood earlier this month, partly on the thought that Marriott would turn to IHG if unsuccessful buying Starwood.
Drax Group shares were up 1.4% after the power generation company said it expects to deliver 2016 earnings at the top end of market expectations as it revealed it has been awarded a new contract from National Grid.
Drax said earnings before interest, tax, depreciation and amortisation are now anticipated to be at the higher end of expectations in 2016 after reviewing its revenue and cost estimates, as well as the recent weakness in commodity markets, it said. Based on a range of current market forecasts, the company said Ebitda will be toward the top end of a range between GBP132.0 million to GBP161.0 million.
Arrow Global said it agreed terms to acquire consumer debt purchasing and collections business InVesting BV for around GBP78.5 million.
Arrow, the debt buyer and manager, will pay the consideration in cash from existing cash resources and a new GBP50.0 million financing facility.
Arrow said the acquisition of InVesting, which operates in the Netherlands and Belgium, will create a leading player in the Benelux debt purchasing market, boosted Arrow's existing operations in the UK and Portugal. The news sent the stock to the top of the FTSE All-Share gainers list, up 4.3%.
In the AIM All-Share index, Ascent Resources was the worst performer. The company said it agrees its valuation has increased significantly since Cadogan Petroleum made a preliminary approach about combining the two London-listed firms, stating it understands why Cadogan pulled the plug on the deal.
Cadogan revealed late Thursday it would not be making an offer for Ascent because Ascent's share price had soared since it made its approach earlier this month.
Ascent Resources shares closed at only 0.93 pence per share on March 23, the last trading day before Cadogan made its approach, and closed down 12% on Thursday to 6.20 pence per share - meaning Ascent's share price, and therefore valuation, is 6.5 times higher than it was before Cadogan made its approach. Early Friday the stock was down 68% to 1.90p.
Cadogan shares traded down 1.3%.
Investors are awaiting the US jobs report Friday, released at 1330 BST. According to FXStreet, the market expects the US economy to have added 205,000 nonfarm jobs in March, lower than the 242,000 seen in February. The US unemployment rate is expected to hold steady at 4.9%.
Also in the economic calendar are Markit manufacturing purchasing managers' indices for France at 0850 BST, Germany at 0855 BST, the eurozone at 0900 BST, the UK at 0930 BST and the US at 1445 BST. Eurozone unemployment is at 1000 BST, and the US Reuters/Michigan consumer sentiment index is at 1500 BST, as is ISM manufacturing PMI and construction spending.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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