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LONDON (Alliance News) - Merger and acquisition activity is providing the most interesting UK company news Friday as May draws to a close.
Among FTSE 250 companies, one deal looks set to go ahead, while another has hit a regulatory roadblock.
TeleCity Group said it agreed terms on a GBP2.35 billion cash and share takeover offer from US peer Equinix, and terminated its previous deal to acquire Dutch data centre company Interxion Holding.
Under the terms of the deal TeleCity shareholders will receive 572.5 pence in cash and 0.0327 shares in the new company per share, which values each TeleCity share at 1,145.0 pence. Following the completion of the takeover, TeleCity shareholders will hold around 10.1% of the combined company.
Meanwhile, Synergy Health and STERIS said they intend to contest the US Federal Trade Commission's attempt to block STERIS's proposed USD1.9 billion cash and share takeover of Synergy Health. The FTC has informed Synergy that it intends to seek to block the acquisition, which was agreed last October. STERIS is based in the US state of Ohio, while Synergy Health is UK based.
STERIS and Synergy said in a statement that they welcome "a full judicial review of the competitive effects of the combination".
The deal would be considered a so-called 'tax inversion', as the new company would be incorporated in the UK, and STERIS had said that this would reduce its effective tax rate to be about 25% starting in fiscal 2016.
The US Department of Treasury last September brought in new measures to curb tax inversion deals, which led to the collapse of AbbVie's GBP32 billion proposed takeover of Shire.
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Markets: Stocks in London are trading slightly higher at midday, recovering after taking a hit from disappointing data on eurozone private sector loans, while the situation in Greece also continues to restrain equity markets. Futures point to a flat open for US share prices, with the DJIA and S&5 500 both indicated flat and the Nasdaq 100 down 0.1%.
FTSE 100: up 0.3% at 7,058.43
FTSE 250: up 0.2% at 18,271.87
AIM ALL-SHARE: up 0.3% at 772.18
GBP: down at USD1.5249
EUR: flat at USD1.0958
GOLD: flat at USD1,188.43 an ounce
OIL (Brent): up at US63.16 a barrel
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Top Corporate News
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Life insurance and asset management group Old Mutual said it has agreed a deal to sell the Swiss arm of its Skandia business for an undisclosed amount. The Anglo-South African group said Skandia Leben, part of its Old Mutual Wealth division, has been sold to Life Invest Holding, a company formed by the German conglomerate Mutschler Group and Hannover Re, the German reinsurer.
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British Land said that it and its partner Oxford Properties have completed three lettings deals at the Leadenhall Building in the City of London. British Land said the lettings at the building, known as the Cheesegrater, have been made with insurer Brit, Spanish banking group Banco Sabadell and investment manager Kames Capital. The building is now 84% let. Banco Sabadell is in the process of buying TSB Banking Group.
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AstraZeneca said it is collaborating with Eli Lilly and Co for a phase I study of AstraZeneca's MEDI4736 in combination with Lilly's ramucirumab as a treatment for patients with advanced solid tumours. The phase I study is expected to establish the safety and recommended dosing regimen for a combination, with the potential to open up the combination for various tumours of interest, AstraZeneca said. The trial will be sponsored by Lilly.
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Glencore said it has signed and secured USD15.25 billion worth of revolving credit facilities from 60 different banks. The natural resource giant said the facilities will refinance the company's USD8.7 billion one-year revolving credit facilities signed in June 2014 and amend and extend the USD6.6 billion five-year revolving credit facility, which was also signed in June 2014. The new and amended facilities comprise a USD8.45 billion 12-month revolving credit facility with a 12-month term-out option and a 12-month extension option and a USD6.80 billion five-year revolving credit facility with 12-month extension options.
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The Royal Bank of Scotland Group is preparing for the UK government to start offloading shares in the lender by inviting investment banks to pitch for an enlarged corporate broking role, the Financial Times reported. RBS is inviting pitches from banks for an expanded corporate broking role which would include acting as privatisation advisers. Senior figures at the bank told the FT that the government could launch the share sale in the fourth quarter of 2015 after RBS closes a settlement with US regulators over the mis-selling of sub-prime mortgage securities. The UK government still owns about 80% of RBS after injecting it with GBP45 billion to prevent the bank from failing at the height of the financial crisis.
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Aer Lingus Group and International Consolidated Airlines Group late Thursday welcomed the decision by the Irish government - the Dáil - to approve the sale of its shareholding in Aer Lingus to IAG. The Irish government gave its backing to IAG's EUR1.4 billion offer for Aer Lingus on Tuesday. The other obstacle IAG still has to overcome is securing the support of Ryanair Holdings, the budget carrier which holds a 29.8% stake in Aer Lingus.
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Construction and support services company Carillion said it has acquired Canadian remote-site accommodation and services business Outland Group for up to GBP63 million in cash in order to boost its operations in Canada.
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Banco Sabadell and TSB Banking Group said they have extended the offer timetable on the Spanish bank's bid for the UK lender. Banco Sabadell agreed a deal in March to acquire TSB for GBP1.7 billion and has secured the backing of key shareholder Lloyds Banking Group. On Friday, Sabadell said the deal remain conditional on the Prudential Regulation Authority in the UK approving a change of control of TSB. Sabadell said the talks are progressing well but said it has agreed that, owing to the regulatory timetable, that the latest date the offer can be declared unconditional has been extended to July 7.
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AIM Movers
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Minco, up 50%. The company posted a profit in the first quarter of the year due to a foreign exchange gain. It said its profit for the first quarter was USD482,000, compared to a USD271,000 loss a year earlier, due to a USD665,000 foreign exchange gain it booked in the quarter. Minco restarted drilling work at the Buchans project in Central Newfoundland in April and is also making progress on the Woodstock manganese project in Canada.
Macromac, down 29%. The mobile services company posted a fall in pretax profit for 2014, despite seeing a rise in revenue, as a result of a step-up in costs. Sefton Resources, off 24%. The oil exploration and production company focused on California and Kansas in the US said it is moving closer to hiring a new chief executive, having now identified a preferred candidate for the role. However, Sefton also said it has learned that a complaint has been lodged with a US court by former Executive Chairman Jim Ellerton against the company, two directors and one former director, claiming damages related to Ellerton's resignation from the company's board, the termination of his consulting contract, and Sefton's deal with Hawker Energy. Immunodiagnostics Systems Holdings, down 12%. The company, which provides clinical laboratory diagnostic services, said it expects revenue to continue to fall in its current year, and revenue in its recently ended financial year to be in line with previous guidance. TomCo Energy, down 8%. The shale exploration and development company said it has made progress on the Holliday Block in Utah but said it has had to initiate a restructuring programme to cut costs after the developer of the technology needed for the project said last week the equipment would be delayed.
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Top Economics And General
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Eurozone money supply growth improved in April, but credit extended to the private sector remained flat, the European Central Bank reported. The broad monetary aggregate M3 grew 5.3% year-on-year in April, which was faster than the 4.6% expansion seen a month ago and exceeded the expected growth of 4.9%. During February to April, the three-month average of the annual growth rates of M3 increased to 4.7% from 4.2% in the January to March period. At the same time, the annual growth rate of credit extended to the private sector remained unchanged following a 0.2% fall in the prior quarter. Loans to households also showed nil growth, unchanged from the prior month. The annual growth rate of lending for house purchase, the most important component of household loans, came in at 0.1% in April, compared with 0.2% a quarter ago.
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An index measuring consumer confidence in the UK decreased in May, after a 12-year high in the previous month, as all five measures contributed negatively to the index, the latest survey from GfK showed on Friday. The consumer confidence index fell 3 points to +1 from +4. Economists had expected the index to remain at +4.
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A meeting of the world's leading financial officials in Dresden enters its final day on Friday with the Greek debt crisis set to again top the talks. The finance ministers and central bankers of the Group of Seven major industrial nations meeting in the eastern German city will also focus on steps to ease the debt burden facing Ukraine, as well as measures to head off the financing of terrorist groups. The move on terrorist groups comes in the wake of evidence that the Islamic State militants have managed to build up a big war chest of funds as part of their drive to forge a caliphate in Syria and Iraq. While not on the Dresden meeting's formal agenda, the Greek crisis is expected to form part of the discussions at Friday's working session.
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International Monetary Fund chief Christine Lagarde no longer rules out Greece exiting the eurozone. "Greece's exit is a possibility," Lagarde told Germany's daily Frankfurter Allgemeine Zeitung in an interview published on the newspaper's website on Thursday. The IMF chief says that such a move would not be easy but would "probably not mean the end of the euro." Lagarde added: "It is very unlikely that we will reach a comprehensive solution in the next few days."
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UK Prime Minister David Cameron set out his case for major EU reforms to his Polish counterpart Ewa Kopacz in Warsaw, hours before he was set to fly to Berlin in the hope of winning Chancellor Angela Merkel as an ally. Friday marks the second day of Cameron's tour of European capitals to gather support for changes he wants to push through before holding Britain's EU membership referendum. The British premier's calls for reform include restricting EU migrants' access to welfare payments, protecting London's privileges as a financial capital and exempting Britain from an EU drive for closer integration.
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Consumer prices in Japan increased at a slower rate in April compared to the previous month, the Ministry of Internal Affairs and Communications said. The consumer price index were up 0.6% on year in April, slower than the previous month's 2.3 growth. Core inflation, which strips out the volatile costs of food, advanced 0.3%, slower than the previous month's 2.2% increase.
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Japan's unemployment rate dropped unexpectedly to a 18-year low in April, the Ministry of Communications and Internal Affairs said. The jobless rate came in at a seasonally adjusted 3.3% in April, down slightly from 3.4% in the previous month. Economists had expected the rate to remain stable at 3.4%.
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FIFA president Joseph Blatter criticized the behaviour of individuals and said the world football governing body could not be held responsible for the corruption charges which have plagued governance of the sport. "We cannot let the reputation of FIFA get dragged through the mud," Blatter said in a speech to open the working session of the 65th FIFA congress in Zurich where he seeks re-election for a fifth term. "Individuals are responsible for this, not the entire organization. Individuals who have lost sight of a game based on fair play and a team sport. "We can't supervise everyone, there are 1.6 billion people touched directly or indirectly by our game. We are a very important entity but with popularity comes responsibility...Each (individual) and everyone is responsible." Later Friday, Blatter is seeking re-election for a fifth term as FIFA president after refusing to step down amid a cloud of corruption scandals.
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Afternoon Watchlist (all times in BST)
13:30 US Gross Domestic Product
13:30 US Personal Consumption Expenditures
13:30 Canada Gross Domestic Product
14:45 US Chicago Purchasing Managers' Index
15:00 US Reuters/Michigan Consumer Sentiment Index
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Monday's UK Corporate Events
SVG Capital - Interim Management Statement
Scottish Investment Trust - Half Year Results
Camco Clean Energy - Full Year Results
NextEnergy Solar Fund - Full Year Results
Circle Oil - Full Year Results
Capital Gearing Trust - Full Year Results
Xcite Energy - Q1 Results
Dolphin Capital Investors - Full Year Results
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Monday's Key Economic Events (all times in BST)
Ireland June Holiday
00:50 Japan Capital Spending
02:00 China NBS Manufacturing PMI and Non-manufacturing PMI
02:35 Japan Nomura/JMMA Manufacturing PMI
02:45 China HSBC Manufacturing PMI
06:00 Japan Vehicle Sales (YoY)
08:30 Switzerland SVME - Purchasing Managers' Index
08:45 Italy Markit Manufacturing PMI
08:50 France Markit Manufacturing PMI
08:55 Germany Markit Manufacturing PMI
09:00 EU Markit Manufacturing PMI
09:30 UK Markit Manufacturing PMI
13:00 Germany Consumer Price Index
13:30 US Personal Income, Spending and Consumption Expenditures
14:05 US Fed Boston President Rosengren Speech
14:30 Canada RBC Manufacturing PMI
14:45 US Markit Manufacturing PMI
15:00 US ISM Manufacturing PMI and Prices Paid
15:00 US Construction Spending
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By Tom Waite; thomaslwaite@alliancenews.com; @thomaslwaite
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