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(Alliance News) - The UK Competition & Markets Authority on Friday confirmed it has cleared NortonLifeLock's acquisition of its London-listed cybersecurity peer, following an in-depth merger investigation.
Tempe, Arizona-based NortonLifeLock had agreed, back in August 2021, to buy Prague-based Avast in a cash-and-shares deal worth USD8.6 billion at the time. Avast currently has a market capitalisation of GBP7.44 billion, about USD8.61 billion. The stock was up 0.9% at 713.20 pence early Friday.
In March 2022, the UK's CMA referred the merger to a phase 2 investigation, after identifying competition concerns during an initial phase 1 investigation. Both companies offer cyber safety software to consumers under a variety of different brands. Products include antivirus software, privacy software and identity protection software.
In early August, the the CMA said it had provisionally cleared the deal, finding that the enlarged firm still faces stiff competition.
On Friday, the CMA confirmed this view and gave the deal the green light.
"The CMA's Phase 2 investigation has found that the supply of cyber safety software to consumers is rapidly evolving. Providers of paid-for and free services are continually developing and improving their products to meet different and changing customer needs," the watchdog said.
The enlarged firm still faces stiff competition, including its "main rival", San Jose, California-based McAfee, the CMA explained. In addition, Microsoft Corp's own in-house cybersecurity applications in the Window operating system are "increasingly important alternatives for consumers".
It added that, in recent years, Microsoft has improved its built-in, bundled security application so that it now offers protection which is "as good as" many of the products offered by specialist suppliers. This will strengthen Microsoft as a competitor going forward.
"Phase 2 investigations allow us to explore concerns identified in our initial review in more detail, as we gather further information from the companies involved and other industry players. After reviewing the evidence in an in-depth review, we are now satisfied that this deal won't worsen the options available to consumers," said Kirstin Baker, chair of the CMA inquiry group.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.3% at 7,167.53
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Hang Seng: down 0.6% at 19,484.35
Nikkei 225: closed marginally lower, down 10.63 points at 27,650.84
S&P/ASX 200: closed down 0.3% at 6,828.70
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DJIA: closed up 145.99 points, or 0.5%, at 31,656.42
S&P 500: closed up 11.85 points, or 0.3%, at 3,966.85
Nasdaq Composite: closed down 31.08 points, or 0.3%, at 11,785.13
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EUR: down at USD0.9977 (USD1.0044)
GBP: up at USD1.1550 (USD1.1534)
USD: up at JPY140.24 (JPY139.94)
Gold: up at USD1,703.21 per ounce (USD1,694.00)
Oil (Brent): up at USD93.86 a barrel (USD92.53)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Friday's key economic events still to come
1100 CEST eurozone producer price index
1100 BST Ireland balance of payments
1100 BST Ireland gross domestic product
0830 EDT US nonfarm payrolls
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Germany's trade surplus narrowed in July as exports fell, data from Destatis showed. The trade balance was EUR5.4 billion in July, down from EUR6.2 billion in June. Exports fell 2.1% month-on-month, outstripping an import decline of 1.5%. Annually, exports rose 14% while imports grew 29%. Destatis highlighted that exports to Russia fell by 15% month-on-month and imports fell by 17%.
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BROKER RATING CHANGES
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RBC raises Centrica price target to 140 (125) pence - 'outperform'
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Berenberg raises Hunting price target to 325 (275) pence - 'buy'
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COMPANIES - FTSE 100
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IKAV, a Germany-based energy asset manager, said it will buy Californian oil producer Aera Energy from Shell and Exxon Mobil. Aera is a joint venture which is 52% owned by Shell and 48% by Exxon. Both energy firms confirmed they will sell their Aera interest to IKAV. Shell is selling its 52% stake for USD2 billion in cash, with additional contingent payments based on future oil prices. Financial details of Exxon's share to Ikav were undisclosed. Both Shell and Exxon expect the sale to close in the fourth quarter of 2022. California-based Aera Energy produced 95,000 barrels of oil equivalent per day in 2021.
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COMPANIES - FTSE 250
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Emerging markets investment manager Ashmore said assets under management were hit by "widespread risk aversion" in the second half of its financial year. Assets under management fell to USD64.0 billion as at June 30 from USD94.4 billion a year before. This 32% decline was due to negative investment performance of USD16.6 billion and net outflows of USD13.5 billion. "The combination of geopolitical tension, high inflation figures and central banks tightening monetary policy, including the Fed in the second half of the year, with the consequent negative impact on market levels, meant that investor risk appetite was markedly lower as the period developed," it said, adding that mood was further soured by the war in Ukraine. Pretax profit tumbled to GBP118.4 million from GBP282.5 million, as management fees fell to GBP247.0 million from GBP276.4 million. "Second-half market weakness resulted in GBP49.9 million unrealised mark-to-market loss on seed capital investments," it said, leading to the drop in profit. Still, Ashmore maintained the year's dividend at 16.90 pence, having declared an unchanged final payout of 12.10p.
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COMPANIES - DUBLIN AND SMALL CAP
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Ryanair said passenger numbers in August were up 52% on a year before, rising to 16.9 million from 11.1 million. Load factor also showed a significant improvement, growing to 96% from 82%. August's traffic figure was slightly higher than the July number of 16.8 million.
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Upmarket fashion retailer Ted Baker cautioned over falling consumer confidence heading into its peak trading period, but it has seen recent revenue growth. Revenue in the 14 weeks to July 29 was up 3.4% on a year before, but down 28% on pre-pandemic levels. This was led by a stronger in-store performance, with stores revenue up 20% year-on-year and e-commerce down 13%. Online sales were "impacted by challenges following the launch of the new e-commerce platform alongside consumers returning to shop in stores." Ted Baker expects to see a drag on traffic and conversion rates until the e-commerce platform issues are resolved. "Work continues at pace to ensure that the system is fully functional and optimised ahead of peak trading, although risk remains that certain milestones may not be met in this period," it warned. Further, the retailer is "mindful" of the weaker economic backdrop, falling consumer confidence and supply chain challenges as it heads into the event-led peak trading season. Ted Baker gave the update ahead of a shareholder meeting later this month to vote on its GBP211 million takeover by Reebok-owner Authentic Brands Group. The Ted Baker board unanimously recommends shareholders back the deal.
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Alliance Pharma said it has appealed against the CMA's decision to seek a competition disqualification order against its chief executive, Peter Butterfield. The CMA is seeking the disqualifications against a total of seven directors from four companies, including Alliance's Butterfield, over allegations of anti-competitive agreements in relation to the sale of prescription prochlorperazine. "Whilst this action is in line with the CMA's stated policy to consider [competition disqualification orders] in all cases where the CMA has found an infringement, the company is very disappointed, in light of the facts, with the CMA's decision to take such action against Mr Butterfield," Alliance said. Alliance said it "fundamentally disagrees" with the CMA's actions and insisted that Butterfield did not participate in, or profit from, any market sharing arrangement. He retains the full confidence and support of the Alliance board, it added.
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COMPANIES - GLOBAL
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Deutsche Lufthansa has cancelled almost all of its scheduled flights for Friday as its pilots carry out industrial action. Around 130,000 passengers on more than 800 flights from the airline's hubs in Frankfurt and Munich have been affected. Passengers were asked not to travel to the airport, but to switch instead to the train or rebook flights on another day. Lufthansa subsidiaries such as Swiss, Austrian, Brussels and Eurowings are not affected by the strike and will be operating as scheduled, the company said. Lufthansa flights departing from outside Germany will also take place, provided the aircraft and crews are already abroad.
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Friday's shareholder meetings
Triple Point Income VCT PLC - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
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