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(Alliance News) - The UK Competition & Markets Authority has referred sportswear retailer JD Sports Fashion's acquisition of smaller peer Footasylum for a Phase 2 investigation, both said on Tuesday.
JD Sports said it had informed the CMA that it does not consider there to be any appropriate remedies for competition concerns that the CMA had raised last month, triggering the CMA's referral to a Phase 2 probe on Tuesday.
The CMA issued an initial enforcement order on the GBP90 million deal in May and subsequently in July it commenced a probe into the deal. An initial enforcement order - also known as a "hold separate" order - stops firms from undertaking any integration of the two businesses.
JD said it would continue to co-operate fully with the CMA in a effort to find a solution but insisted it sees no evidence the acquisition would result in a substantial lessening of competition in the clothing and footwear retail markets in which the two companies operate.
"The CMA has referred their review of this acquisition to Phase 2 on the basis that it could be bad for competition and may have an impact on price. I strongly disagree with this. This transaction will not result in any price increases or a reduction in product ranges or service quality. The focus of all of our group businesses is to ensure we deliver a best in class, multichannel experience to our consumers by offering a compelling product proposition," said JD Chair Peter Cowgill.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: called up 0.3% at 7,433.10
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Hang Seng: up 0.5% at 26,092.27
Nikkei 225: closed up 0.6% at 21,885.24
DJIA: closed up 96.58 points, 0.4%, at 26,916.83
S&P 500: closed up 0.5% at 2,976.74
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GBP: down at USD1.2277 (USD1.2297)
EUR: down at USD1.0884 (USD1.0902)
Gold: down at USD1,462.42 per ounce (USD1,470.11)
Oil (Brent): down at USD59.51 a barrel (USD60.20)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Tuesday's Key Economic Events still to come
China National Day holiday. Financial markets closed in Hong Kong and Shanghai.
0930 BST UK CIPS-Markit manufacturing purchasing managers' index
0955 CEST Germany manufacturing PMI
1000 CEST EU eurozone manufacturing PMI
0945 EDT US manufacturing PMI
1000 EDT US construction spending
1600 EDT US domestic auto industry sales
1630 EDT US API weekly statistical bulletin
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Britain is to present the EU with a Brexit plan within days as moves to find a breakthrough on the issue of the Northern Ireland border backstop intensify. The UK will offer Brussels a revised Brexit deal by the end of the week as Prime Minister Boris Johnson ramps up efforts to strike an agreement. It is understood the legal text of a Brexit plan will be sent to Brussels after the Tory conference concludes on Wednesday. The move comes as Irish broadcaster RTE reported the UK had put forward the idea of custom clearance centres being set up five to ten miles either side of the Irish border.
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Irish manufacturing remained in contraction in September, for the fourth month running, as a "solid" decline in new orders saw output fall. The seasonally adjusted purchasing managers index increased slightly in September but remained below 50.0. Any reading below 50 represents contraction as opposed to expansion in the sector. The AIB manufacturing PMI read 48.7 in September, up marginally from 48.6 in August. AIB noted September's readout marks the fourth monthly deterioration in businesses conditions in the Irish manufacturing sector.
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Japan's manufacturing sector remained "under pressure" in September, with firms cutting production due to "weak demand" at home and abroad. The headline Jibun Bank Japan manufacturing purchasing managers index fell to 48.9 in September from 49.3 in August. September's reading is the lowest mark since February. Jibun Bank said it "signalled a modest but sharper deterioration in the health of Japan's manufacturing sector". A decline in output was seen, with "quicker" declines in new orders and purchasing activity.
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US President Donald Trump attacked the Democratic lawmaker spearheading the impeachment inquiry on Monday as congressional committees subpoenaed his personal lawyer, Rudy Giuliani, for documents related to his dealings with Ukraine. As Trump lashed out at Democratic congressman Adam Schiff, suggesting he should be arrested for "treason", Australia confirmed that the president asked for help with an inquiry into special counsel Robert Mueller's investigation of Russian meddling in the 2016 election. Trump also attacked the whistleblower whose complaint about his phone call with the leader of Ukraine led to the opening of the impeachment probe in the Democratic-led House of Representatives.
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Trump recently asked the Australian prime minister and other foreign leaders to help Attorney General William Barr with an investigation into the origins of the Russia probe that shadowed his administration for more than two years, the US Justice Department said. Justice spokeswoman Kerri Kupec said Trump made the calls on Barr's behalf. Trump was requesting help for US Attorney John Durham's investigation into the origins of special counsel Robert Mueller's probe into Russian interference in the 2016 election. The investigation outraged Trump, who cast it as a politically motivated "witch hunt". The revelation comes amid new scrutiny of Trump's dealings with foreign leaders amid the Ukraine impeachment proceedings.
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BROKER RATING CHANGES
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BARCLAYS CUTS RBS TO 'EQUAL WEIGHT' ('OVERWEIGHT') - TARGET 225 (250) PENCE
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BANK OF AMERICA REINITIATES IAG WITH 'BUY' - PRICE TARGET 660 PENCE
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BOFA INITIATES WIZZ AIR WITH 'BUY' - TARGET 4100 PENCE
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BOFA REINITIATES EASYJET WITH 'NEUTRAL' - PRICE TARGET 1200 PENCE
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COMPANIES - FTSE 100
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Ferguson reported what it called strong annual results for financial 2019 and said it is well placed for further progress in financial 2020. For the financial year that ended July 31, revenue rose 6.1% to USD22.01 billion from USD20.75 billion the year before, and pretax profit grew 11% to USD1.32 billion from USD1.19 billion last year. In the US, revenue rose 10% to USD18.36 billion from USD16.67 billion last year, while in the UK revenue decline 6.0% to USD2.22 billion from USD2.47 billion. Ferguson raised its total dividend by 10% to 208.2 US cents from 189.3 cents the year before. Last month, Ferguson said it was planning to demerge its Wolseley UK operations and consider a new listing structure for its businesses following a review. "We recently proposed the demerger of our UK operations and work on this is progressing well. We have also announced that as part of our orderly succession plans [US chief] Kevin Murphy will succeed me as group chief executive in November. We are assessing the most appropriate listing structure for the group going forward, and we will continue to consult with shareholders," said Martin.
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Ad agency WPP said it has appointed John Rogers as its new chief financial officer, and he will join in early 2020. Rogers will succeed Finance Director Paul Richardson, who is retiring. Rogers joins WPP from supermarket chain J Sainsbury, where he is CEO of its catalogue retail business Argos. He will depart Sainsbury's on October 31.
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COMPANIES - FTSE 250
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Bakery chain Greggs reported positive third-quarter trading results and highlighted that it saw very strong sales growth during the period. For the 13 weeks to September 28, total sales were up 12% and company-managed shop like-for-like sales were up 7.4%. Greggs said sales growth moderated in the third quarter as expected but is still strong. "Operational cost control has been good, and we are progressing selective investments in the strategic initiatives that we expect to deliver an even stronger customer proposition and further growth in the years ahead. We continue to expect that year-on-year sales growth in the balance of the year will reflect the strengthening comparatives seen in 2018, and our expectations for the full year outturn remain unchanged," the company said.
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Tuesday's Shareholder Meetings
Hardy Oil & Gas (re sale of exploration unit)
Fuller, Smith & Turner (re return of capital to shareholders)
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By Tom Waite; thomaslwaite@alliancenews.com
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