(Alliance News) - Deal making continued on Monday - not yet the US and China on trade despite positive noises over the weekend, but among London-listed firms.
Sage Group said it has entered into an agreement for the sale of its Sage Pay business to payments firm Elavon, a subsidiary of US Bancorp, for GBP232 million.
Sage expects to report a statutory profit on disposal of GBP180 million on completion, it said, which is expected in the second quarter of its financial 2020.
Back in September, the FTSE 100-listed accounting software firm confirmed press reports that it was evaluating strategic options for its Pay division, including a sale.
For the year to the end of September 2018, Sage Pay had revenue of GBP41 million and operating profit of GBP15 million.
Meanwhile, Consort Medical was subject to an agreed takeover bid from a subsidiary of Swedish pharmaceutical firm Recipharm.
Recipharm will acquire the London Main Market-listed medical devices maker for GBP505 million, paying 1,010p for each Consort share, about a 40% premium. The deal gives the company an enterprise value of GBP627 million, including debt.
On Friday, London listings Amerisur Resources, Carpetright and Eddie Stobart Logistics all agreed to purchases.
Sage shares were down 0.2% early Monday, while Consort Medical shares were up 40%.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: flat at 7,302.17
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Hang Seng: up 1.2% at 26,644.60
Nikkei 225: closed up 0.5% at 23,416.76
DJIA: closed up 222.93 points, 0.8%, at 28,004.89
S&P 500: closed up 0.8% at 3,120.46
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GBP: up at USD1.2951 (USD1.2901)
EUR: firm at USD1.1062 (USD1.1050)
Gold: soft at USD1,464.00 per ounce (USD1,466.80)
Oil (Brent): firm at USD63.40 a barrel (USD62.80)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Monday's Key Economic Events still to come
1000 EST US NAHB housing market index
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Top Chinese and US trade negotiators held "constructive" discussions over the phone on a preliminary trade deal between the two countries, China's commerce ministry announced in a statement on Sunday. The long-running trade war between Washington and Beijing has weighed on the global economy and spooked markets, with the two sides imposing punitive tariffs on hundreds of billions of dollars in two-way trade. US President Trump announced a "phase one" trade deal last month which has yet to be signed. Vice Premier Liu He spoke with US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin on Saturday, and had "constructive discussion on each side's core concerns regarding the phase-one agreement", the Chinese commerce ministry said. The two sides will "continue to maintain close communication", it added, without providing further details.
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Pro-democracy demonstrators holed up in a Hong Kong university campus set the main entrance ablaze Monday after police warned they may use live rounds, deepening fears over how nearly six months of unrest across the city will end. The violence extended a dangerous new phase of the crisis, which over the past week has seen schools shut down, roads barricaded and Chinese soldiers briefly leave their local barracks to clean up streets. China has refused to budge on any of the protesters' key demands, which include free elections for the city of 7.5 million people and an end to the perceived erosion of liberties under China's tightening grip. Beijing has instead repeatedly warned it will not tolerate any dissent, and concerns are growing it could intervene militarily to quell the unrest.
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Political uncertainty in the UK drove the largest year-on-year slump in would be sellers of houses in over ten years in November, Rightmove said, though buyers were tempted by cheaper house prices. The Rightmove Monthly House Price index showed November average house prices fell by 1.3% from October, but edged 0.3% higher year-on-year. Rightmove said: "Would-be sellers are not only faced with the usual lower asking prices in the run-up to Christmas, but also a unique autumn combination of a Brexit deadline followed by a looming general election." The number of new-sellers dropped by just shy of 15% year-on-year, the largest annual fall since August 2009.
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The number of UK manufacturing companies entering insolvency has hit a five-year high, new research suggests. There was a 7% increase in the last year, to 1,466, said chartered accountants and business advisers Moore. The rise is being driven partly by Brexit-related uncertainty and a broader slowdown across Europe, said the report.
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Boris Johnson will cut employers' National Insurance as part of a range of tax cuts as he seeks to get the business community back on side. The UK prime minister will tell business leaders on Monday that the Tories will put an end to Brexit "uncertainty and confusion" if they are returned to power on December 12. In a major general election pledge, the Conservative Party said a Tory government would cut business rates, launching a fundamental review at their first budget. The party said they will increase the employment allowance from GBP3,000 to GBP4,000, providing a cut in National Insurance of up to GBP1,000 for more than half a million businesses.
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The incoming president of the European Council said the EU stands ready to negotiate a trade deal with the UK once Brexit happens. On a visit to Dublin on Friday, Charles Michel would not be drawn on whether it was realistic to anticipate an agreement being struck in the 11 months between the current exit date in January and the end of the transition period in December 2020. "We will see, it is not my intention to predict," he said. The former Belgian prime minister expressed hope a deal could be achieved in matter of "months", but suggested a lot depended on the outcome of the UK election.
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Fitch Ratings late Friday said it has affirmed Ireland's long-term foreign-currency issuer default rating at A+ with a stable outlook. Fitch noted that the Irish government had adopted a no-deal Brexit as a central assumption in its 2020 budget process back in October. However, since then, the risk of a no-deal Brexit by the UK, which would be harmful to Ireland, has been reduced. Fitch said the stable outlook for Ireland's debt rating balances strong underlying economic growth against "sizeable risks" such as Brexit, shifts in international policies on corporate taxation, and trade wars.
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BROKER RATING CHANGES
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BARCLAYS CUTS BT GROUP TO 'UNDERWEIGHT' ('EQUAL WEIGHT') - TARGET 160 (240) PENCE
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JEFFERIES RAISES HSBC TO 'BUY' (HOLD) - PRICE TARGET 790 (691) PENCE
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COMPANIES - FTSE 250
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Technical products and services firm Diploma reported full-year revenue growth of 12% to GBP544.7 million. Pretax profit stretched 15% year-on-year to GBP83.5 million, and Diploma upped its full-year dividend to 29.0 pence per share from 25.5p. Looking ahead, Diploma said: "Despite the uncertain political and economic environment impacting industrial markets, the board remains confident of further progress in the current financial year as moderately lower underlying growth will be offset by a strong contribution from acquisitions." Diploma spent GBP78.3 million, a record investment, on acquisitions in the year ended September 30.
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COMPANIES - INTERNATIONAL
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Barrick Gold said it has reached an agreement to sell its 50% interest in Kalgoorlie consolidated gold mines in Western Australia. The Toronto-headquartered mining company said it will sell the mines to Saracen Mineral Holdings Ltd for a total consideration of USD750 million in cash. Barrick intends to use the proceeds from the sale to further strengthen the balance sheet, it said, invest in the future and support its commitment to deliver returns to its shareholders.
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Japan's Z Holdings, formerly Yahoo Japan, will merge with mobile chat app operator Line, the firms said, in a bid to boost the customer base for their digital services. SoftBank Corp, the parent of Z Holdings, and South Korea's Naver, Line's parent company, agreed the merger of ZHD and Line, SoftBank and Naver said in a joint statement. Line will be delisted after SoftBank and Naver make a tender offer, with the merger expected to happen in October 2020. SoftBank Corp, a mobile unit of telecom and investment giant SoftBank Group, holds a 44% stake in Z Holdings, while Line is controlled by Naver.
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Monday's Shareholder Meetings
no events scheduled
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By Tom Waite; thomaslwaite@alliancenews.com
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