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(Alliance News) - The following is a summary of top news stories Monday.
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COMPANIES
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Tesco said it plans to return GBP4.99 billion to shareholders through a special dividend after disposing of its shareholding in Tesco Stores (Thailand) and Tesco Stores (Malaysia). Supermarket chain Tesco received GBP7.8 billion of net funds from the disposals and made a GBP2.5 billion pension contribution to its pension scheme. A further GBP4.99 billion is to be paid as a special dividend, amounting to 50.93 pence per share, subject to shareholder approval and a share consolidation on the basis of 15 new shares for every 19 existing shares. This consolidation will reduce the number of existing ordinary share in issue by around the same proportion of market capitalisation returned through the special dividend, keeping the market price of Tesco shares at a broadly similar level once the dividend payment and share consolidation are complete.
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Online fashion retailer boohoo Group said it is has acquired all of the intellectual property assets of department store Debenhams Retail for GBP55 million in cash. The company will only be acquiring brands and associated intellectual property rights. The deal does not include Debenhams retail stores, stock, or any financial services. "The transaction represents a fantastic opportunity to grow the group's target addressable market and increase the share of wallet opportunity through a new capital light and low risk operating model that is complementary to the group's highly successful direct-to-consumer multi-brand platform," said boohoo. The administrators of Debenhams, FRP Advisory, confirmed the boohoo deal, adding: "The closing down sale will continue in stores for several weeks until the stock liquidation is completed and the value of this stock will be retained for creditors. Regrettably, all the UK stores will then be permanently closed."
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Online retailer ASOS confirmed it is in exclusive discussions with Arcadia's administrators over the acquisition of the Topshop, Topman, Miss Selfridge and HIIT brands. "The board believes this would represent a compelling opportunity to acquire strong brands that resonate well with its customer base. However, at this stage, there can be no certainty of a transaction and ASOS will keep shareholders updated as appropriate," the company said. Over the weekend, Sky News had reported that ASOS was the frontrunner to buy Topshop out of administration but won't buy any high street stores, being an online-only retailer. Arcadia, which employed around 13,000 people and has 444 UK stores, collapsed at the start of December due to the impact of the coronavirus pandemic, years of under-investment, and a failure to keep up with shifts to online shopping.
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UK energy regulator Ofgem said it recommends the creation of an independent body and full separation of the running of the electricity system from National Grid. Ofgem said the separation would "help lead the path to net zero at the lowest cost to consumers". The body would be fully separated from National Grid, which has managed the UK energy system since it was privatised. Ofgem said the independent body would help charge electric vehicles and allow for "a huge increase in renewable power while maintaining secure energy supplies." In December, the UK government committed to consult on reviewing energy system management and acknowledged that any further responsibilities might necessitate further independence from National Grid. Ofgem estimated that the independent body could save customers GBP400 million to GBP4.8 billion between 2022 and 2050.
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MARKETS
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London stocks struggled at the start of the week as countries around the world bolstered their borders to stem the spread of new coronavirus variants originating from the UK, South Africa and Brazil. This dealt a blow to airline and travel stocks, with British Airways-owner International Consolidated Airlines the biggest faller in the FTSE 100 on Monday, down 7.5%. On AIM, boohoo shares were up 4.4%.
Wall Street futures are pointing towards a largely higher start in New York. The Dow Jones is called flat, the S&P 500 up 0.3% and the Nasdaq Composite up 0.9%.
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FTSE 100: down 0.2% at 6,679.76
FTSE 250: down 0.2% at 20,560.42
AIM ALL-SHARE: up 0.8% at 1,205.28
GBP: firm at USD1.3681 (USD1.3665)
EUR: lower at USD1.2153 (USD1.2175)
GOLD: higher at USD1,859.56 per ounce (USD1,853.00)
OIL (Brent): firm at USD55.80 a barrel (USD55.55)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Border restrictions were being tightened around the world Monday in the face of an unrelenting coronavirus threat, after a weekend in which anger at social distancing rules bubbled over into fiery clashes in the Netherlands. The US was set to join France, Israel and Sweden in pulling up the drawbridge to certain arrivals, with special concern about new strains of the pathogen that originated in Britain and South Africa. The stipulations came as Mexico's President Andres Manuel Lopez Obrador became the latest public figure to test positive for the disease, and New Zealand reported its first community case for more than two months. In Washington, President Joe Biden will on Monday reimpose a ban on most non-US citizens who have been in Britain, Brazil, Ireland and much on Europe, as well as adding South Africa to the list, a senior White House official said. Biden last week tightened mask-wearing rules and ordered quarantine for people flying into the country, which on Sunday topped 25 million cases.
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UK Health Secretary Matt Hancock has warned the government is a "long, long, long way" from being able to lift coronavirus lockdown restrictions in England. Hancock said there was evidence that restrictions in place were having an impact while the vaccination programme was making "brilliant progress". Three quarters of all those over 80 in the UK had now been vaccinated, with a similar number of those in care homes, he said. However, Hancock said that case numbers were "incredibly high" and the NHS remained under intense pressure. "There is early evidence that the lockdown is starting to bring cases down but we are a long, long, long way from being low enough because the case rate was incredibly high," he told Sky News's Sophy Ridge on Sunday programme.
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German business confidence weakened at the start of the year amid a resurgence in coronavirus cases, data from the Munich-based Ifo institute showed. The Ifo business climate index fell to 90.1 points in January from 92.2 in December, the lowest reading since July's 90.0. January's reading still remains far higher than the low of 75.5 hit in April during the first wave of the pandemic. The situation index fell to 89.2 in January from 91.3 in December, and the expectations index weakened to 91.1 from 93.0. "The second wave of coronavirus has brought the recovery of the German economy to a halt for now," the Ifo commented.
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Senior aides to US President Joe Biden have started talks with Republicans and Democrats over a USD1.9 trillion coronavirus relief package. It comes as Biden, inaugurated last week, faces increasing problems in his effort to win bipartisan backing for the initial legislative effort of his presidency. Politicians on the right question the wisdom of racking up bigger deficits while those on the left are urging Biden not to spend too much time on bipartisanship when the pandemic is killing thousands of Americans each day. At least a dozen senators met virtually for more than an hour with White House National Economic Council director Brian Deese and other senior White House officials on Sunday. Many hope to approve a relief package before former president Donald Trump's trial, which is set to begin in two weeks, overtakes Washington's attention.
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