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LONDON (Alliance News) - Shares in Rexam have risen by a quarter Thursday after it got a GBP4.30 billion takeover approach from rival Ball Corp of the US and said the two companies are in talks.
The British drinks can maker said Ball's proposal values Rexam at 610 pence a share, well above its current share price, and is based on a consideration of about two-thirds cash and one third new Ball shares. Ball now has to make a firm offer by 1700 GMT on March 5 under UK takeover rules or walk away for at least six months.
Rexam shares were up 24.5% to 556.00 pence midday Thursday.
BT Group has now agreed its acquisition of mobile network EE for GBP12.5 billion in cash and shares, a deal that will give EE's joint owners Deutsche Telekom and Orange stakes in BT.
BT will pay the cash amount through a combination of new debt financing and around GBP1 billion from the placing of new BT shares. It said this placing will be launched in due course. BT also will issue about 1.2 billion new new shares, valued at around GBP5.1 billion, to Deutsche Telekom for a 12% stake in BT, along with a small cash payment, and 400 million new shares to Orange valued at around GBP1.7 billion and GBP3.4 billion in cash, giving it a 4% stake.
Rival Vodafone Group, which is now playing catch-up as its rivals increasingly package offerings of TV, broadband, mobile and fixed line connections, confirmed its full-year earnings guidance as it said a decline in its service revenue slowed to 0.4% year-on-year in its third quarter.
The company continues to expect to post full-year earnings before interest, tax, depreciation and amortisation of GBP11.6 billion to GBP11.9 billion, and it expects to be free cash flow positive after all capital expenditure. Its guidance excludes its acquisition of Grupo Corporativo Ono SA, which it acquired in a EUR7.2 billion deal last March.
AstraZeneca moved to further bolster its respiratory drug pipeline by acquiring the rights to Actavis PLC's branded respiratory business in the US and Canada, as it reported lower earnings for 2014 due to increased investments it is making in accelerating its existing portfolio.
The pharmaceutical giant said it will buy the rights to Actavis' North American respiratory business for an initial USD600 million plus low single-digit royalties above a certain revenue threshold. AstraZeneca will also pay Actavis an additional USD100 million and Actavis has agreed to a number of contractual consents and approvals, including certain amendments to the ongoing collaboration agreements between AstraZeneca and Actavis. It didn't give any further details of the amendments.
The deal means AstraZeneca will own the development and commercial rights in the US and Canada for chronic obstructive pulmonary disease treatments Tudorza Pressair and Daliresp. It will also own development rights in the countries for LAS40464, a dry powder inhaler treatment already approved in the EU under the brand name Duaklir Genuair.
AstraZeneca reported core earnings per share of USD4.28 for 2014, down 15% on the year after its fourth quarter core EPS dropped 38% to USD0.76, missing analysts' expectations of USD0.82.
The company said earnings were down due to investments it is making in its growth platforms and in accelerating its drugs pipeline. It had previously forecast that earnings would suffer due to these investments for a couple of years, with the company set to return to growth in 2017.
For 2015, AstraZeneca expects overall sales revenue to decline by mid single-digit percent at constant exchange rates, while core EPS is expected to increase by low single-digit percent, also at constant rates. It also said it will continue to seek "externalisation revenue from partnerships and licensing select products and technologies", which some analysts said suggested that more deals like the Actavis deal are on the cards.
The Bank of England just left its key interest rate at the historic low of 0.50%, as expected.
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Markets: The FTSE 100 is lower as the European Central Bank turns up the pressure on Greece over its vow to renegotiate the terms of its debt bailout. The euro is higher against the dollar after the European Commission raised its economic growth forecast for the Eurozone for 2015 and 2016.
US stocks are set for a higher open, with stock futures indicating the DJIA will open up 0.3%, the S&P 500 up 0.4% and the Nasdaq 100 up 0.2%.
FTSE 100: down 0.4% at 6,833.15
FTSE 250: up 0.3% at 16,618.59
AIM ALL-SHARE: up 0.1% at 694.53
GBP-USD: up at USD1.5243
EUR-USD: up at USD1.1424
GOLD: down at USD1,261.66 an ounce
OIL (Brent): up at USD54.85 a barrel
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Other Top Corporate News
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GlaxoSmithKline said it was selling its 7.9% stake in Danish biotechnology company Genmab via a share placing. GlaxoSmithKline held 4.47 million shares in Copenhagen-listed Genmab. The final offer price was set at DKK430.00 a share, meaning gross proceeds were about GBP194 million. Glaxo said that since its decision to sell its marketed Oncology portfolio to healthcare provider Novartis in April last year, it has considered its stake in Genmab to be a "non-core asset".
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Medical devices company Smith & Nephew reported higher revenue and trading profit for 2014, although earnings per share were hit by restructuring and acquisition costs. Its trading profit rose to USD1.06 billion for the year as a whole, from USD987 million in 2013, as revenue rose to USD4.62 billion, from USD4.35 billion. Trading profit rose to USD325 million in the fourth quarter, from USD292 million a year earlier, as revenue rose to USD1.25 billion, from USD1.18 billion.
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EasyJet reported flat passenger numbers in January and a slight year-on-year decline in its load factor, while Aer Lingus posted a fall in passengers but an uptick in its load factor in the month. easyJet said it carried 4 million passengers in January 2015, flat year-on-year, while its load factor fell by 0.3 percentage point to 85.1% from 85.4%. Aer Lingus' said it carried 546,000 passengers in January, down 4.5% from the 572,000 carried a year earlier. But its load factor in the month was up by 2.4 percentage points to 68.9% from 66.5%.
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Low cost airline Ryanair Holdings has welcomed the EU General Court's decision to annul the European Commission's 2012 decision on Irish air travel tax, which means it does not have to pay the Irish State roughly EUR12 million in respect of the Air Travel Tax between 2009 and 20011.
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Catering company Compass Group said it made a strong start to its new financial year, citing like-for-like revenue growth, with modest pricing and sales volume improvements in its first quarter. The company said organic revenue grew by 5.7% in the three months to end-December, whilst it also improved its operating margin.
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Tesco became the subject of another investigation related to its profit overstatement as the UK's newly-empowered Groceries Code Adjudicator said it will launch a probe after concluding it has sufficient reason to suspect the retailer has breached the Groceries Supply Code of Practice. UK Business Secretary Vince Cable last week tabled measures in Parliament, passed by MPs, which will give the Groceries Code Adjudicator powers to fine supermarkets in the UK that breach the Groceries Code in their relationships with their suppliers. The adjudicator, Christine Tacon, said she had made the decision to launch an investigation into Tesco after considering information submitted regarding practices associated with the FTSE 100-listed supermarket's profit overstatement in September 2014.
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Premier Farnell said it expects to report an increase in sales for its full financial year on the back of higher sales in the fourth quarter, but said its operating margin has come under pressure. The group said its average sales per day for the year to February 1 rose 3.3% overall. Sales in the second half rose by the same amount, with third quarter sales up 2.7% but fourth quarter sales increasing 4.4%.
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Specialist insurer Beazley reported a 16% drop in pretax profit in 2014, citing reserve releases lower than its five-year average and higher foreign exchange losses due to the strength of its US dollar reporting currency, compared to currencies it uses in operations and to pay staff. Beazley increased its dividend for the year to 9.3 pence from 8.8 pence, though its special dividend to shareholders was lowered to 11.8 pence from 16.1 pence for the prior year. In a statement, Beazley said it made a USD261.9 pretax profit in 2014, compared with USD313.3 million in the prior year, as revenue grew by 4% to USD1.77 billion and expenses swelled by 11% to USD1.49 billion.
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UK pub operator Enterprise Inns said it maintained the "positive momentum" of its previous financial year into the first 18 weeks of its new financial year, reporting like-for-like net income growth for its leased and tenanted estate of 0.3%. However, that growth is slightly lower than the 0.5% like-for-like net income it reported for the fourth quarter of its financial year that ended in September, with Enterprise Inns citing a softening in beer volumes during January.
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Grainger said its average sale prices rose in the first four months of its financial year, but said the start date for its new chairman has been delayed and said it is considering its options regarding the money it is owed from the sale of its Equity Release (Increments) Ltd business last year. The residential property company said its average sales price in the fourth months to the end of January was up 3.9% against September 2014 vacant possession value. The rise is slower than for the same period last year, when its reported a 7.1% rise in its average sales value for the four months to the end of January 2014. The group said it completed GBP102.3 million in sales in the four months, again lower than the GBP104 million reported a year earlier.
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AIM Movers
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Environmental Recycling Technologies shares are up by nearly a quarter after it granted a non-exclusive licence for its patented powder impression moulding process to Earth Enterprises Inc in the US. The licence allows for the manufacture and sale of flat sheet products within the US and Colorado-based Earth Enterprises will pay Environmental Recycling a licence and knowledge transfer fee of USD150,000 as well as an annual royalty based on the volume of products sold. Ceramic Fuel Cells is up after it received a loan-note conversion notice from Bergen Global Opportunity Fund for USD200,000 of the secured convertible loan notes issued under a March 2014 agreement, meaning it will issue 65.6 million new shares at AUD0.004 each to the fund. AfriAg is another gainer after it won a contract to transport fresh produce farmed by Vanduzi, part of the Mozfoods (SA) business owned by the Gatsby Foundation in Mozambique. Avanti Communications Group is up after it raised GBP60.6 million by issuing new shares as part of a financing that fully funds the construction and launch of the HYLAS 4 satellite and takes it through to the point when it expects to be cash flow positive. Pressure Technologies shares are down by a quarter after it told markets to revise down expectations for its current financial year in light of the recent sharp decline in the oil price. The company said it was carrying out a full review of prospects across the business after clients in the oil market started cutting capital spending in response to the oil price decline. RapidCloud International is down after it appointed Cindy Choo as its new finance director, effective immediately. InfraStrata is another faller after it launched a share placing and subscription to raise GBP2.1 million at 4 pence a share, money it will use to fund working capital needs in 2015 and to fund work at the Islandmagee gas storage project in County Antrim, Northern Ireland. Corero Network Security is down after it said it expects its loss for the year to be in line with market expectations, but said revenue for the year will be slightly lower on the back of weaker fourth quarter sales.
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Top Economics And General
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UK house prices increased for the third straight month in January, survey data from Lloyds Banking Group's Halifax division showed. House prices climbed 2.0% month-on-month in January, faster than the 1.1% rise in the previous month. Economists had expected house prices to remain flat during the month. The latest monthly increase was the highest January growth since 2009, when it went up 2.4%. On a quarterly basis, house prices rose at a faster rate of 1.9% in the three months ended January after increasing 0.3% in the three months ended December. This was the first increase in the quarterly growth rate since July.
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The European Commission raised its growth forecasts for Eurozone for this year and next, citing strengthened domestic and foreign demand, very accommodative monetary policy and a broadly neutral fiscal stance. In its winter forecast, the executive arm of the EU forecast 1.3% growth in the euro area for this year, which was higher than the 1.1% predicted in November. The growth outlook for 2016 was also raised to 1.9% from 1.7%. The EU economy as a whole was forecast to expand 1.7% this year and 2.1% in 2016.
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The Greek finance minister's push to renegotiate the country's bailout stands to face a tough opponent on Thursday when he holds talks with German Finance Minister Wolfgang Schaeuble. The meeting between Yanis Varoufakis and Schaeuble comes after the European Central Bank decided to turn up the pressure on Greece over its vow to renegotiate the terms of its bailout by refusing to accept Greek government bonds as security for loans. The ECB had previously given the Greek government a waiver on the use of its bonds as security, but said in a statement that it would lift that exemption as of February 11.
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German factory orders recovered and increased at a faster-than-expected pace in December, figures from Destatis showed. Factory orders grew a seasonally and working-day adjusted 4.2% month-on-month in December, much faster than economists' expectations for a 1.5% increase. In November, orders declined a revised 2.4%, the same rate of decline as in October.
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US Secretary of State John Kerry visits Kiev on Thursday amid worries that the fighting in eastern Ukraine will escalate further. Kerry was to meet Ukrainian President Petro Poroshenko, Prime Minister Arseniy Yatsenyuk, Foreign Minister Pavlo Klimkin and members of Ukraine's parliament, the US Embassy in Kiev said. The visit kicks off another round of diplomacy in the ongoing crisis, as Kerry travels to Germany later in the day to attend the annual Munich Security Conference.
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Billionaire Warren Buffett said he does not expect the Federal Reserve to raise interest rates anytime in 2015 due to the strong US dollar and the global uncertainty. He made the comment while discussing several topics in an interview on the Fox Business Network. "It'd be very tough for the Fed to raise rates. That would exacerbate the problem. I don't think it'll be very feasible to do. I think it would have a lot of international repercussions," Buffett said.
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Afternoon Watchlist (all times in GMT)
12:30 US Challenger Job Cuts
13:30 US Initial/Continuing Jobless Claims
13:30 US Trade Balance
15:30 US EIA Natural Gas Storage change
23:50 Japan JP Foreign Reserves
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Friday's Key UK Corporate Events
Shaftesbury - AGM Statement
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Friday's Key Economic Events (all times in GMT)
07:00 Germany Industrial Production
07:45 France Budget
07:45 France Trade Balance
09:30 UK Trade Balance
13:30 US Nonfarm Payrolls
17:45 US Fed's Lockhart speech
20:00 US Consumer Credit Change
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