Last checked at LONDON (Alliance News) - The following is a summary of top news stories Friday.
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COMPANIES
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J Sainsbury said it has agreed to acquire Home Retail Group, ending its long-running pursuit of the Argos owner. Sainsbury's will pay 55.00 pence per share in cash, plus 0.321 Sainsbury's shares to acquire Home Retail, valuing the company at GBP1.2 billion. Including the GBP200.0 million capital return Home Retail shareholders already stood to get from the sale of the Homebase DIY and garden centre business, the deal values Home Retail at GBP1.4 billion. The agreement ends Sainsbury's pursuit of Home Retail. The FTSE 100-listed grocer disclosed in January it had approached Home Retail in November about a possible cash and shares acquisition. The pair have been in talks since then and, in the interim, Home Retail sold its Homebase business to Australian group Wesfarmers. Sainsbury's faced competition from Steinhoff International Holdings, the South African group which made a higher, all-cash bid for Home Retail but pulled out ahead of the deadline for making a firm offer.
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Co-operative Bank said its pretax loss more than doubled in 2015 as it continues to work to restore itself to health. Co-operative Bank came close to collapsing in 2013 after toxic property loans opened up a GBP1.5 billion hole in its finances. Since then, the group has been working to restore the business to health, including disposing of higher-risk mortgages. Co-operative Bank said its loss before tax widened as expected in the year to the end of December to GBP610.6 million, compared to GBP264.2 million in 2014, as it works to clear its legacy issues.
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Life insurance and investment management group Standard Life said it has secured regulatory approval to increase its stake in its Indian joint venture. Standard Life has spent GBP179.0 million to increase its stake in HDFC Standard Life Insurance Co to 35% from 26% previously. The company is a joint venture with HDFC, the Indian financial group. "We are delighted that we have obtained the approvals necessary to increase our stake demonstrating our long-term commitment to India and the future success of HDFC Life," said Standard Life Chief Executive Keith Skeoch.
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RSA Insurance Group said it has completed the sale of its Colombian operations to Suramericana, the insurance subsidiary of Colombia's Grupo de Inversiones Suramericana. RSA agreed in September to sell all its Latin America businesses to Suramericana for GBP403 million, part of a wide-ranging restructuring by the FTSE 100 insurer to focus on its core operations. RSA expects to complete the sale of the remaining assets in Latin America, in Chile, Argentina, Mexico and Uruguay, in the next six months.
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Satellite communications provider Inmarsat said Ligado Networks has elected the 30 mega hertz option under the cooperation agreement between the two. Inmarsat said it remains in talks with Ligado around the details of the plan and a consequent change in payments under the agreement between the pair. Inmarsat entered into a cooperation agreement with Ligado, then called LightSquared, in 2007, as part of LightSquared's plans to develop a 4G network integrated with satellite coverage in the US.
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Drax Group said it expects to deliver 2016 earnings at the top end of market expectations as it revealed it has been awarded a new contract from London-listed power grid operator National Grid. Power generator Drax said earnings before interest, tax, depreciation and amortisation are now anticipated to be at the higher end of expectations in 2016 after it reviewed its revenue and cost estimates, as well as the recent weakness in commodity markets, it said. That suggests the company is progressing its commitment to have a "laser sharp" focus on cost control this year and to optimise its revenue. Drax said that, based on a range of current market forecasts, Ebitda will be toward the top end of the GBP132.0 million to GBP161.0 million range.
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Vedanta Resources said it has picked JP Morgan Securities to launch a buy-back programme on behalf of the company in order to repurchase some of its outstanding bonds. Vedanta said it will purchase up to USD148.6 million, or 20%, of the USD743.0 million outstanding balance on the 6.75% bonds that are due in 2016. The company will also repurchase up to USD200.0 million, or 34%, of the USD582.0 million outstanding balance on the 5.5% guaranteed convertible bonds that are also due in 2016 which are related to Vedanta Resources Jersey.
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Information and events group Euromoney Institutional Investor said it has agreed to sell its energy publishing businesses for USD18.0 million in cash. Euromoney has sold the businesses, Gulf Publishing Co in Houston and the Petroleum Economist in London, to a consortium led by John Royall, the chief executive of Gulf Publishing, and media investor Russell Denson. Euromoney expects the deal to close by the end of April and said it is actively seeking to sell non-core businesses.
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Irish banana and fresh produce company Fyffes said it has purchased Canadian mushroom producer Highline Produce Ltd for CAD145.0 million. Fyffes said the deal is to be funded through new and existing bank debt, and will result in a 13% increase in its current 2016 target adjusted earnings per share range on an annualised basis. Fyffes said Chief Executive Glenn Martin will continue to run the Leamington, Ontario-headquartered Highline business after integration.
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MARKETS
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UK stocks started the second quarter in the red, hit by weak business sentiment in Japan, with lacklustre manufacturing data from the UK doing little to improve sentiment. Focus now shifts to US nonfarm jobs figures at 1330 BST. Wall Street was pointed to a lower open.
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FTSE 100: down 0.9% at 6,117.55
FTSE 250: down 0.7% at 16,813.23
AIM ALL-SHARE: down 0.1% at 710.03
GBP: flat at USD1.4319 (USD1.4399)
EUR: up at USD1.1404 (USD1.1388)
GOLD: down at USD1,232.09 per ounce (USD1,236.00)
OIL (Brent): down at USD39.85 a barrel (USD40.73)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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British manufacturing growth improved less-than-expected in March, though slightly, survey figures from Markit Economic showed. The Markit/Chartered Institute of Procurement & Supply Purchasing Managers' Index for manufacturing rose to 51.0 in March from February's 34-month low of 50.8. Economists had expected the index to climb to 51.2. Any reading above 50 indicates expansion in the sector.
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Eurozone manufacturing growth improved more than initially estimated in March, final data from Markit showed. The factory Purchasing Managers' Index rose to 51.6 in March from 51.2 in February and above the flash score of 51.4. However, this still represented the second-weakest improvement in manufacturing conditions for just over a year, Markit noted.
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Millions of workers receive a pay rise on Friday when the new national living wage comes into force in the UK. Unions welcomed the GBP7.20 hourly rate for adults - increasing by 50 pence from GBP6.70 - but said it was not fair that younger workers were missing out, while business groups warned that firms' paybills will "ratchet up". The government's aim is to increase the rate to GBP9.00 an hour by 2020, which would affect an estimated nine million workers. The government said the new rate will mean a GBP900 cash increase for a full-time worker on the current national minimum wage. Chancellor George Osborne said: "The national living wage will play a central role in moving Britain to a higher wage, lower tax, lower welfare economy. It will also mark the end of the gender pay gap for some of our lowest paid and hardest working people."
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UK Business Secretary Sajid Javid will meet steelworkers in Port Talbot to insist the government is "on their side" following intense criticism of his response to the crisis in the industry. The Cabinet minister cut short an official visit to Sydney to return to the UK following the shock decision by Indian conglomerate Tata to sell its UK assets, including the giant plant in South Wales. Javid, who faced calls to consider his position after it emerged he had taken his daughter on the Australian trip, insisted the government was "working hard" to find a long-term solution for Port Talbot and the wider steel industry. The government promised that all possible ministerial, official and diplomatic influence will be exerted to secure the industry's future, but Prime Minister David Cameron has insisted nationalisation is not the right answer.
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UK house price growth accelerated more than expected in March, data from the Nationwide Building Society showed. House prices climbed 5.7% year-on-year in March, faster than February's 4.8% growth and the expected rise of 5.1%. This was the fastest growth since January 2015, when prices climbed 6.8%. On a monthly basis, house price growth doubled to 0.8% from 0.4% in February. Economists had forecast the increase to remain unchanged at 0.4%.
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China's manufacturing sector continued to contract in March, but at the slowest pace in thirteen months, survey results published by Caixin and Markit Economics showed. The manufacturing Purchasing Managers' Index rose to 49.7 in March from 48.0 in February. Economists had expected the index to climb to 48.3. However, any reading below 50 suggests contraction in the sector. Nonetheless, it was the highest index reading in 13 months and signaled only a fractional deterioration in the health of the sector. Both manufacturing output and new business expanded slightly In March. At the same, firms lowered their staffing levels further.
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Japanese companies were losing confidence amid slumping domestic spending and slow growth in emerging economies, the Bank of Japan's Tankan survey showed. The closely watched index fell by 6 points since December to plus 6, but remained in positive territory indicating that optimists outnumber pessimists. It is the first time the index in the quarterly survey has fallen to below 10 since June 2013. Large manufacturers expect the index to fall to plus 3 in the next quarter, the survey showed. The index for large non-manufacturers also declined to plus 22 from plus 25, according to the survey.
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Rescue teams worked overnight and into Friday to find survivors trapped beneath a collapsed flyover in the eastern Indian city of Kolkata as the death toll in the accident rose to 24, officials said. Police launched an investigation into the construction firm building the flyover, the local government said, and had reportedly sealed its offices. Hundreds of personnel from National Disaster Response Force (NDRF) used drilling machines, concrete-cutters and sniffer dogs to reach people stuck under the rubble, assisted by army soldiers and policemen. Construction of the 2 kilometre-long flyover had started in 2008 but missed several deadlines for completion because the firm carrying out the work, IVRCL, was in financial trouble, media reports said.
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By Arvind Bhunjun; arvindbhunjun@alliancenews.com; @ArvindBhunjun
Copyright 2016 Alliance News Limited. All Rights Reserved.
27 May 2021 16:05
