(Alliance News) - As investors await the outcome of last-minute talks for a post-Brexit trade deal between the UK and EU, Monday brought the distraction of a flurry of merger and acquisition activity.
Elementis, Countrywide, IMImobile, and Telit Communications all were on the receiving end of takeover offers, while Frasers made a last-ditch effort to buy department store Debenhams out of administration.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.2% at 6,564.89
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Hang Seng: down 1.3% at 26,500.98
Nikkei 225: closed down 0.8% at 26,547.44
DJIA: closed up 248.74 points, 0.8%, at 30,218.26
S&P 500: closed up 0.9% at 3,699.12
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GBP: down at USD1.3377 (USD1.3470)
EUR: soft at USD1.2123 (USD1.2140)
Gold: up at USD1,838.40 ounce (USD1,832.24)
Oil (Brent): flat at USD49.06 a barrel (USD49.08)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Monday's Key Economic Events still to come
0830 GMT UK Halifax house price index
1100 GMT Ireland industrial production and turnover
1500 EST US consumer credit
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UK Prime Minister Boris Johnson and European Commission President Ursula von der Leyen will assess whether a post-Brexit trade deal can be salvaged following a weekend of tense negotiations. The two leaders will speak on Monday evening – their second call in a little over 48 hours – after their top negotiators spent Sunday locked in detailed talks. David Frost and his EU counterpart Michel Barnier were ordered back to the negotiating table in a final push to see if they could break the stalemate. However Irish premier Micheal Martin, who has been closely following the talks process, warned that they remained on a "knife edge". He said there appeared to be a "very challenging issue" still to be resolved over the so-called "level playing field" rules on fair competition. "Things are on a knife edge and it is serious. My gut instinct is that it is 50-50 right now. I don't think one can be overly optimistic about a resolution emerging," he told RTE. The talks were due to continue in Brussels on Monday after Barnier has briefed a breakfast meeting of ambassadors from the 27 EU member states on the state of play.
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People over 80 in the UK should not be worried if they are not called for the Covid-19 vaccine this month as the vast majority will have to wait until the new year to receive the jab, a health official has said. Vaccinations will be administered at dozens of hospital hubs from Tuesday – reportedly dubbed "V-Day" by UK Health Secretary Matt Hancock – with people aged 80 and older, care home workers and NHS workers who are at higher risk at the front of the queue. Croydon University Hospital in south London was one of the first hospitals to take delivery of the vaccine over the weekend, with similar scenes unfolding around the country ahead of the rollout. Stephen Powis, National Health Service national medical director, said the distribution of the vaccine in the UK would be a "marathon not a sprint", while Chris Hopson, chief executive of NHS Providers, said people need to "hang fire" and be assured they have not been forgotten if they have not received a letter or a phone call about the jab.
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China's exports grew 21% year-on-year in November while imports rose 4.5%, as the Asian economy has largely recovered after the coronavirus crisis, customs data showed. Altogether, China's foreign trade rose 17% in November, with the trade surplus jumping 103% to USD75.4 billion. Chinese factories are humming along as Beijing has managed to contain the virus outbreak, which is still ravaging other parts of the world. After reopening for business in March, Chinese manufacturers have benefited from loans to help cope with the pandemic. China is also exporting a lot of the masks and medical equipment needed around the world, as well as consumer electronics sought by families who are isolating in their homes. In the first 11 months of the year, China's exports rose 2.5%, while imports dropped 1.6%.
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US President-elect Joe Biden will nominate California Attorney General Xavier Becerra for the key post of health secretary in his upcoming administration, US media reported. The choice of Becerra, a former congressman, as a nominee for the post came as a surprise according to the New York Times, which first broke the news. Becerra, 62, in 2017 became the first Latino person to be sworn in as California attorney general. According to US media he had been more closely associated with the post of US attorney general. As California's attorney general he led legal efforts to protect the Obama-era Affordable Care Act, which greatly expanded health care access and protections, from Republican challenges during the Trump administration.
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BROKER RATING CHANGES
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MORGAN STANLEY RAISES ASTRAZENECA TO 'OVERWEIGHT' (EQUAL WEIGHT) - PRICE TARGET 9,900 (9,400) PENCE
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GOLDMAN SACHS RAISES MICRO FOCUS TO 'BUY' ('NEUTRAL') - TARGET 650 (335) PENCE
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JPMORGAN CUTS ROTORK TO 'NEUTRAL' ('OVERWEIGHT') - TARGET 310 PENCE
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COMPANIES - FTSE 100
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Kingfisher said it will return in full the UK and Republic of Ireland business rates relief that the B&Q store chain owner received as a result of the Covid-19 crisis. Earlier this year, Kingfisher repaid in full the GBP23 million received under the UK government's Job Retention Scheme. Kingfisher, which had to close its stores earlier in the year due to the coronavirus pandemic, said it benefited from financial support measures it received from the UK and Irish governments which, helped protect jobs and cushion the blow from Covid-19, in the face of "significant uncertainty". Since reopening its stores in late April and early May, Kingfisher said its sales performance has been strong, supported by higher demand for home improvement across its markets. As such, Kingfisher has decided to return the UK and Republic of Ireland business rates relief. Kingfisher's total annual business rates bill eligible for this relief is around GBP130 million, of which GBP110 million falls in financial 2021 and the remainder in financial 2022. It now anticipates that financial adjusted profit before tax will include GBP85 million of non-recurring cost savings, compared to previous guidance of GBP175 million.
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Land Securities Group said it has acquired a 10 storey, office-led building located at 55 Old Broad Street in the City of London from PGIM Real Estate for a headline price of GBP87 million and a net initial yield of 4.1%. LansSec said the deal has exchanged on an unconditional basis and is expected to complete in January. Nick de Mestre, head of investment at Landsec, said: "55 Old Broad Street is a well-located asset in the heart of London. The development potential of this asset, combined with the potential for Dashwood, offers Landsec the opportunity to deliver a compelling, best-in-class destination over the medium term. This acquisition demonstrates our commitment to optimising our central London portfolio through the reinvestment of capital, as set out in our strategy."
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AstraZeneca reported ACE-LY-004 phase II trial results, showing efficacy and safety profile of Calquence in mantle cell lymphoma. The Cambridge, England-based biopharmaceutical company said patients with relapsed or refractory mantle cell lymphoma remained progression free for a median of 22 months, with median overall survival not yet reached at three years of follow-up. The safety and tolerability profile remained consistent.
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COMPANIES - FTSE 250
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Frasers Group confirmed that it is in negotiations with the administrators of department store chain Debenhams' UK business regarding a potential rescue transaction for Debenhams' UK operations. Frasers Group said that while it hopes that a rescue package can be put in place, "time is short" and the situation is "further complicated" by the recent administration of the TopShop owner Arcadia Group, which is Debenhams' biggest concession holder. Frasers added that there is no certainty that any transaction will take place, particularly if discussions cannot be concluded swiftly.
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COMPANIES - MAIN MARKET AND AIM
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Estate agent Connells made an improved offer for peer Countrywide. Connells offered 325 pence per share in cash, saying it raised its offer by 30% following discussions with Countrywide's major shareholders. The stock closed at 255.00p on Friday. Countrywide had rejected a 250 pence per share takeover offer from Connells last week. Connells believes that its offer is significantly more attractive to Countrywide shareholders than the alternative proposal by Alchemy Partners, which it said would "Countrywide with high levels of debt and significantly less capital". Further, Connells said the offer is not conditional on clearance from the UK Competition & Markets Authority, saying it believes the combination will not give rise to any competition concerns on any markets in which Connells and Countrywide operate. In response, Countrywide said it will evaluate the merits of the Connells offer but urged shareholders to take no action in the meantime.
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Elementis said that it received a revised conditional proposal from Minerals Technologies late Friday for a possible cash offer for Elementis at 130 pence per share. The stock closed at 126.80p on Friday. The board of Elementis rejected the offer, saying it was significantly short of a value that would merit engagement and access to the company's non-public information, despite the "continued opportunistic bidding tactics of Minerals Technologies". "We have a clear strategy to capture this growth and profitability and we are confident that this will deliver significant value for our shareholders. It is the quality of these businesses that has attracted Minerals Technologies. As a board, we are fully aware of our responsibility to create and capture value for our shareholders, but this 'best offer' falls well short of that threshold for us to engage," said Chair Andrew Duff.
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IMImobile accepted a 595p per share cash takeover offer from US networking equipment maker Cisco Systems, valuing the AIM listing at GBP543 million.
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Telit Communications said an offer by DBAY Advisors at the mooted GBP1.948 per share would undervalue the company, but it sees logic in a combination with u-blox Holding and will continue talks with both DBAY and u-blox about a possible takeover.
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Monday's Shareholder Meetings
Gore Street Energy Storage Fund PLC - GM re placing programme
Renalytix AI PLC - AGM
Inspecs Group PLC - GM re share placing
Gabelli Value Plus+ Trust PLC - GM re continuation resolution
McCarthy & Stone PLC - GM re acquisition by Bidco
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By Tom Waite; thomaslwaite@alliancenews.com
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