EDR.L Share News (EDR)

LONDON (Alliance News) - AstraZeneca Tuesday again rejected Pfizer's "opportunistic" GBP63 million takeover approach, as UK politicians grilled executives of both companies about the potential deal and what it will mean for the UK's pharmaceutical industry.

Crucially, AstraZeneca Chief Executive Pascal Soriot left the door open for a higher Pfizer approach, saying "it's impossible to say we would not accept any offer".

Pfizer is planning to sweeten its approach to AstraZeneca for a second time, raising it modestly from the current GBP50-a-share approach, Bloomberg reported, citing people with knowledge of the matter. The US company will likely wait until after the UK government hearings, Bloomberg quoted the people as saying.

UK politicians have little say over the outcome of the potential takeover unless they change the law, as the UK is governed by EU takeover laws which leave decisions to company shareholders and anti-trust regulators. However, Pfizer may not proceed with a formal deal if it meets with heavy opposition from the UK government.

In a statement, AstraZeneca said Pfizer was "making an opportunistic attempt to acquire a transformed AstraZeneca, without reflecting the value of its exciting pipeline." That came after Pfizer reiterated its eagerness to continue discussions with the British drugs giant, warning that it faced challenges if it remained independent.

The US company reiterated its commitment to having at least 20% of the combined company's total research and development workforce in the UK, with Chief Executive Ian Read telling UK politicians on the House of Commons' Committee for Business, Innovation and Skills that "I'm a man of my word".

Separately Tuesday, AstraZeneca put out positive results from a drugs trial, the second day in a row that it has put out positive data. One of the company's arguments for staying independent is that it has a much improved pipeline of potential new drugs.

It said a phase III study of combination treatment saxagliptin and dapagliflozin for the treatment of type 2 diabetes showed that patients treated with the combination in addition to metaformin, saw a significant reduction in glycated haemoglobin, a key indicator in the control of diabetes.

The drugs pipeline news wasn't so positive for GlaxoSmithKline, the biggest of the UK's pharmaceuticals companies. It said its phase III study for darapladib in the treatment of acute coronary syndrome failed to meet its primary endpoint of reducing major coronary events compared to a placebo when added to standard care.

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FTSE 100: up 0.1% at 6,856.86
FTSE 250: up 0.2% at 16,016.74
AIM ALL-SHARE: up 0.1% at 809.50
GBP-USD: down at 1.6852
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GOLD: up at USD1,296.56 an ounce
OIL (Brent): up at USD108.73 a barrel
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Key UK Corporate News

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FTSE 100: London Stock Exchange Group says it is evaluating the merits of a potential acquisition of Frank Russell Co, the asset management and investment services arm of The Northwestern Mutual Life Insurance Company which also owns Russel Global Indexes. It's facing tough competition if it decides to make an offer, according to reports. TUI Travel said it narrowed its pretax loss in the first half of its financial year, despite the later timing of the key Easter trading period, boosted by strong trading in the UK and Germany and demand for its all-inclusive packages, as well as cost reductions as it reined in losses from its French business. easyJet's pretax loss also narrowed in the six months to the end of March as revenue rose and the mild winter reduced the need for costly de-icing of its planes and reduced disruption. Old Mutual's majority-owned South African banking subsidiary, Nedbank Group Ltd, has reported growth in net interest income and non-interest revenue in the first quarter. Melrose Industries is confident it will meet full-year expectations, after it saw order intake rise 3% in the year to date.

FTSE 250: Taylor Wimpey has set itself challenging new financial targets for the next three years, spurred on by the recovery in the UK housing market. It expects to deliver an operating margin increase of at least 300 basis points in 2014 and a return on net operating assets of at least 20%. In the following three years, it wants to achieve an average operating margin of 20% and a return on net operating assets of at least 20% a year, and an average increase in net assets of 15% a year. It hopes to convert at least 65% of operating profit into operating cashflow over the period. Enterprise Inns posted a first-half pretax profit of GBP47 million, up from GBP29 million the prior year, helped by lower exceptional property charges, and a return to like-for-like net income growth. Revenues for the period decreased slightly as a result of selling off pubs. Brewin Dolphin expects to take an "exceptional" pretax impairment charge of about GBP32.0 million in the second-half of the year after deciding against implementing the Figaro software system into its discretionary wealth management business. Interserve says it is trading in line with expectations in 2014, boosted by a number of contract wins from clients including the UK Department for Education, Christie NHS Foundation, and the Foreign & Commonwealth Office. National Express also says trading since the beginning of the year has been positive overall, and it's on track to deliver on its earnings expectations for the full-year thanks to growth in its UK bus and rail operations.

AIM All-Share: Crawshaw Group is doing well after it acquired East Yorkshire Beef Ltd, a single-site, high-end butcher, a move it says marks it entry into the premium meat market. It didn't give financial details, but WH Ireland understands that it cost about GBP220,000. Egdon Resources is up after it said it will pay for Alkane Energy's shale assets by issuing 40 million shares, and it confirmed a placing and open offer to raise up to GBP7 million to fund increased capital commitments. Hayward Tyler Group is another gainer after it said new orders for its financial year to the end of March were up 8% on the year, and it expects full-year results to meet market expectations. Red Rock Resources is up after it executed a binding letter of intent to sell its Colombian interests to Nicaragua Milling Company Ltd for up to USD5 million. Lombard Risk Management is doing well after it reported a 13% increase in full-year pretax profit, thanks to a jump in revenue driven by increased regulation on financial services firms that's pushing up demand for its software. The profit increase lagged its revenue rise as it hired experienced senior sales executives that it hopes will drive further growth. It's continuing to search for a new chief financial officer. Strategic Natural Resources has fallen sharply after it said it had secured an investment of GBP1.5 million in the company at a price per share below the market rate, secured a deal to pay off at least one creditor, and said it will appoint several new executives to run the company. The money it is raising will not be enough to pay off all the money it owes its current creditors, but the company said it was continuing talks about other funding options. It has signed a settlement deal with London Commodity Brokers. Totally is down after its pretax loss widened to GBP731,000 in 2013, from GBP679,000 in 2012, as higher costs offset a revenue rise. However, it expressed confidence for this year after cutting costs and overheads following a strategic review. Tangiers Petroleum is down after it said it plans to raise AUD5 million through a private share placing to help fund drilling of the TAO-1 well in Morocco.
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Top Economics And General
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UK retail sales surged in April from the prior year on Easter spending, data from the British Retail Consortium showed. Retail sales advanced 4.2% on a like-for-like basis in April from a year ago, when they had decreased 2.2%. On a total basis, sales were up 5.7%, compared to a 0.6% fall in April 2013. According to BRC, furniture and flooring was the best performing category, reporting its highest growth since Easter 2006.
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Germany's economic expectations worsened more-than-expected in May, a closely watched survey showed. The economic sentiment index fell to 33.1 in May from 43.2 in April, the Mannheim-based Centre for European Economic Research said. The score was forecast to fall to 40. "Already, there are indications that Germany will not be able to maintain this fast pace of growth," ZEW President Clemens Fuest said. "Nevertheless, one can assume a positive underlying trend for the economic development for the year 2014."
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China's industrial production growth eased unexpectedly in April, data showed. Retail sales also expanded at a slower pace in April. Industrial production grew 8.7% year-on-year in April, which was slightly slower than the 8.8% rise seen in March, the National Bureau of Statistics said. Production was forecast to rise by 8.9%. Retail sales advanced 11.9% in April from a year ago, while the growth was forecast to remain unchanged at 12.2%.
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The self-declared People's Republic of Donetsk on Monday asked to leave Ukraine and join the Russian Federation, a day after a hastily arranged secession referendum that has been declared illegal by Western governments. Denis Pushilin, a leader of the separatist movement in eastern Ukraine, declared the region's independence. His movement said that an overwhelming majority in the country's east voted in favour of secession.
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UN Secretary General Ban Ki-moon called for a special tribunal "with international involvement" to investigate atrocities committed in South Sudan after a UN report last week found that violence by all sides may constitute crimes against humanity. "I have requested the Security Council to consider to establish a hybrid or international tribunal," Ban said. "We have found crimes against humanity by both sides...Those perpetrators have to be held accountable, this is a fundamental principle of international human rights law."
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US Secretary of State John Kerry is to meet Palestinian President Mahmoud Abbas Thursday in London on the sidelines of the Syrian support group gathering. "While the door remains open to the peace process, the purpose of the meeting is to discuss our ongoing relationship with the Palestinians," State Department spokeswoman Jen Psaki said Monday. Earlier in the day, EU foreign ministers pledged they would support a new Palestinian government on condition it is committed to peace talks with Israel. Fatah, which controls the West Bank, and the radical Islamist Hamas movement, which dominates the Gaza Strip, agreed late last month to form a transitional unity government and hold elections by November.
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The European Court of Human Rights has ordered the Turkish government to pay EUR90 million in damages for human rights abuses over its occupation of northern Cyprus. The decision marks the largest sum ever awarded by the European Court of Human Rights in a case concerning Cypriot refugees and the 1974 invasion of the island.
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Syria has condemned what it said are moves by France and Germany to block its citizens from voting in upcoming presidential elections, the crisis-stricken country's foreign ministry said on Monday. Accusing the two countries of supporting terrorism, the ministry said in statements carried by the official SANA news agency that they "must know that Syria is an independent, sovereign state and its decisions emanate from the will of its people."
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Islamist extremist sect Boko Haram said it is willing to negotiate with Nigeria's government over the release of more than 200 schoolgirls it abducted four weeks ago. The group released a video Monday demanding the release of all imprisoned insurgents in Nigeria in exchange for the teenagers.
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Afternoon Watchlist (all times British Summer Time)

15:00 US Business Inventories

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Wednesday's Key UK Corporate Events

AstraZeneca Astra/Pfizer Executives Testify In UK Parliament
Premier Oil Interim Management Statement
Rathbone Brothers Interim Management Statement
UDG Full Year Results
British Land Co Full Year Results
ICAP Full Year Results
New World Resources Q1 Results
Informa Interim Management Statement
Admiral Group Interim Management Statement
Novae Group Interim Management Statement
Mondi Interim Management Statement
Renishaw Interim Management Statement
Galliford Try Interim Management Statement
London Mining Interim Management Statement
Catlin Group Interim Management Statement
Alpha UK Multi Property Trust Interim Management Statement
Compass Group Half Year Results
Hill & Smith Holdings Interim Management Statement
Hilton Food Group Interim Management Statement
ITV Interim Management Statement
Marshalls Interim Management Statement
John Wood Group Interim Management Statement
3i Group Full Year Results
Partnership Assurance Interim Management Statement

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Wednesday's Key Economic Events (all times British Summer Time)

00:50 Japan Domestic Corporate Goods Price Index
07:00 Germany Consumer Price Index
07:00 Japan Machine Tool Orders
07:45 France Consumer Price Index
09:30 UK ILO Unemployment Rate
10:00 EU Industrial Production
10:30 UK Bank of England Quarterly Inflation Report
12:00 US MBA Mortgage Applications
13:30 US Producer Price Index
15:30 US EIA Crude Oil Stocks change

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By Steve McGrath; steve.mcgrath@alliancenews.com; @stevemcgrath1

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