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(Alliance News) - A string of M&A news added to a positive environment for equities early Wednesday, with both GoCo and AA accepting takeover offers, while Kingfisher bought in Europe.
GoCo was up 19% early Wednesday, while AA - whose acquisition has been well flagged - was up 6.3%.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.2% at 6,445.75
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Hang Seng: up 0.3% at 26,669.75
Nikkei 225: closed up 0.5% at 26,296.86
DJIA: closed up 454.97 points, 1.5%, at 30,046.24
S&P 500: closed up 1.6% at 3,635.41
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GBP: up at USD1.3372 (USD1.3357)
EUR: up at USD1.1910 (USD1.1882)
Gold: up at USD1,808.96 per ounce (USD1,805.23)
Oil (Brent): up at USD48.31 a barrel (USD47.68)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Wednesday's Key Economic Events still to come
UK Chancellor Rishi Sunak delivers one-year spending review.
0700 EST US MBA weekly mortgage applications survey
0830 EST US durable goods orders
0830 EST US 2nd estimate GDP
0830 EST US jobless claims
1000 EST US new home sales
1000 EST US personal income & outlays
1200 EST US EIA weekly natural gas storage report
1400 EST US Federal Open Market Committee meeting minutes
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Rishi Sunak is pledging to make jobs his "number one priority" as he sets out his first Spending Review against the backdrop of an economy ravaged by the effects of Covid-19. In his Commons statement on Wednesday, the UK chancellor will announce the launch of a three-year 'Restart' programme, worth GBP2.9 billion, which will help more than a million unemployed people get back into work in the wake of the pandemic. Ahead of his statement, the Sunak has insisted he is not planning a return to "austerity" and would continue to support the economy as it sought to recover from the fall-out from the pandemic.
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A restaurant dining ban in Los Angeles was due to come into force Wednesday as officials warned Americans to stay home for the Thanksgiving holiday, while parts of Europe eyed looser lockdowns over the festive season. The three-week order in America's second-biggest city will begin as California faces record Covid-19 cases, and its health secretary urges people to avoid large family gatherings. The US government's health protection agency has for the first time called on Americans not to travel for the annual holiday, which usually sees families get together over turkey, yams and cranberry sauce. With the US confronted by soaring numbers of deaths and new cases, plans to deliver a vaccine to Americans are accelerating. More than six million doses of the Pfizer-BioNTech Covid-19 vaccine will be available in the first week after it is cleared for emergency use – which is likely next month – and 40 million by the end of December, according to officials. There were more than 86,000 coronavirus hospitalizations in the US on Tuesday, a record, as well as 167,000 new cases and more than 2,000 deaths.
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US President-Elect Joe Biden has stressed the importance of keeping the Irish border open following Brexit. Speaking to reporters in Wilmington, Delaware, on Tuesday, he said: "We do not want a guarded border. We want to make sure – we've worked too long to get Ireland worked out, and I talked with the British prime minister, I talked with the Taoiseach, I talked with others, I talked to the French. "The idea of having a border north and south once again being closed is just not right, we've just got to keep the border open." Biden discussed Brexit with UK Prime Minister Boris Johnson earlier in November during one of his first phone calls to other world leaders as president-elect, warning him Brexit must not jeopardise the Northern Ireland peace process.
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BROKER RATING CHANGES
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CREDIT SUISSE RAISES DIAGEO TO 'OUTPERFORM' (NEUTRAL) - PRICE TARGET 3,450 (2,750) PENCE
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JPMORGAN INITIATES CLINIGEN WITH 'NEUTRAL' - TARGET 650 PENCE
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COMPANIES - FTSE 100
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Industrial turnaround specialist Melrose Industries said it is currently trading at the top end of board expectations for 2020. "The performance of the group in the period reflected the faster than expected recovery in automotive markets, first seen over the summer, the continued strong performance in Nortek Air Management, and the more challenging, although currently stable, market conditions in Aerospace," said Melrose. While the firm is "encouraged" by its robust trading, Melrose added that caution is needed on any predictions for next year given global uncertainty. The Aerospace division is expected to be broadly breakeven for the year, with restructuring and cost savings offsetting a challenging trading backdrop. For Automotive & Powder Metallurgy, both businesses saw an improvement in trading in the four months to October 31. Nortek Air Management has continued to trade well in the period, with "impressive" revenue growth of 13% year-on-year.
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United Utilities registered profit growth for its half-year and lifted its payout. Revenue in the six months to September 30 fell 4.4% to GBP894.4 million from GBP935.5 million year-on-year, though pretax profit rose 3.1% to GBP201.1 million from GBP195.1 million. Finance expense fell 47% to GBP132.0 million from GBP193.9 million. The water and water waste utility declared an interim dividend of 14.41p, up from 14.20p a year before. "Despite the pandemic, our operational performance in this first year of the new regulatory period is on track. We are accelerating our capital expenditure to bring forward benefits and help support 17,700 jobs in the supply chain. We recognise the role that we can play in a successful society, economy and a thriving natural environment and are confident in our ability to deliver our AMP7 plans to achieve this," said Chief Executive Steve Mogford.
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DIY retailer Kingfisher said it has bought NeedHelp, one of Europe's leading home improvement services marketplaces, for EUR10 million. Guillaume de Kergariou, who founded NeedHelp in 2014, has reinvested proceeds from the sale to buy back a 20% stake in the business, resulting in Kingfisher holding an 80% stake. He will continue as CEO.
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COMPANIES - FTSE 250
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Magazine publisher Future said it has agreed to takeover price comparison site GoCo in a deal worth GBP594 million. Under the combination, GoCo shareholders will be entitled to receive 0.052497 new shares in magazine publisher Future and 33 pence in cash, valuing each GoCo share at 136p each. This represents a premium of 24% to Tuesday's closing price, when GoCo shares closed at 110p. GoCo shareholders will own around 19% of the combined group. GoCo directors intend to recommend shareholders vote in favour of the deal, as do Future's directors. Future expects the transition to be "immediately" earnings per share accretive. "We believe that the combination is a unique strategic opportunity to create a leading global specialist media and intent platform, capitalising on the growing consumer demand for informed and value driven purchasing decisions enabled by intent driven content, which will deliver strong returns for all shareholders," said Future Chair Richard Huntingford.
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Future also published its full-year results. Revenue surged 53% to GBP339.6 million in the financial year to September 30, and pretax profit rallied four-fold to GBP52.0 million from GBP12.7 million. Future said the revenue growth was driven by a combination of organic growth and acquisitions, underpinned by a 56% rise in total online users. Future recommended a final dividend of 1.6p.
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FTSE Russell indicated that Hammerson, McCarthy & Stone and Temple Bar Investment Trust all could rejoin the FTSE 250 index of London mid-cap stocks after next week's review. Based on Friday's data, FTSE Russell signalled no changes to the blue-chip FTSE 100. James Fisher & Sons, Greencore Group and Petrofac are on track to drop out. Hammerson and Temple Bar were both bumped from the FTSE 250 index in September, and McCarthy & Stone was demoted in June. The FTSE index review will use data from next Tuesday's close next, with confirmed rebalance changes announced after the market close on Wednesday, December 2 - meaning the actual results of the review could differ from these indicative changes.
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COMPANIES - MAIN MARKET AND AIM
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Roadside rescue provider AA said it has received a 35p-per-share firm offer from a consortium of TowerBrook funds and Warburg Pincus funds. On Monday, AA confirmed it had received a non-binding takeover offer from TowerBrook Capital Partners and Warburg Pincus International. The consortium made a 35p cash approach and had until 1700 GMT on Tuesday to either announce a firm intention to make an offer, or walk away. AA then secured an extension, giving the consortium until 1700 GMT on Wednesday to make a firm offer. The deal values AA at GBP219 million, and the purchase price represents a premium of 40% to AA's closing price on August 3, the last day before the offer period began. "Having carefully considered the range of options available to the AA including the terms of the proposed acquisition by the consortium, the AA board has concluded that the acquisition, which offers certain cash value to the AA's shareholders as well as a significant equity injection to reduce indebtedness, is in the best interests of the AA, its shareholders and wider stakeholders, and as such is unanimously recommending the acquisition to shareholders," said AA Chair John Leach.
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Wednesday's Shareholder Meetings
Red Emperor Resources NL - AGM
Berkeley Energia Ltd - AGM
London Finance & Investment Group PLC - AGM
ScS Group PLC - AGM
Brand Architekts Group PLC - AGM
Gulf Marine Services PLC - GM re appointing Seafox chair to board
Thor Mining PLC - AGM
Fulham Shore PLC - AGM
JPEL Private Equity Ltd - AGM
Xeros Technology Group PLC - GM re share organisation
Attis Oil & gas Ltd - EGM re amalgamation, share cancellation
Alien Metals Ltd - AGM
Mears Group PLC - GM re disposal of TerraQuest Solutions Ltd
Genus PLC - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
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