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(Alliance News) - Stocks in London are set to continue moving higher on Wednesday, following a big rally on Wall Street amid relief that US President Donald Trump has agreed to cooperate with Joe Biden's transition team.
In early UK company news, Future has agreed to buy price comparison site GoCo in a deal worth GBP594 million, AA has agreed to be taken over in a GBP219 million buyout, and Melrose Industries said it is trading at the top end of its expectations for 2020.
IG says futures indicate the FTSE 100 index of large-caps to open 20.53 points higher, or 0.3%, at 6,452.70 on Wednesday. The FTSE 100 closed up 1.6%, or 98.33 points, at 6,432.17 on Tuesday.
In the US on Tuesday, the Dow Jones Industrial Average added 1.5% to 30,046.24, the S&P 500 rose 1.6%, and the Nasdaq Composite climbed 1.3%.
"The Dow Jones closed above 30,000 for the first time and the Russell 2000 also set another record close. Dealers have been buying up stocks on the basis that Trump won't throw a tantrum about departing from the top job," said David Madden, market analyst at CMC Markets.
Trump came his closest yet to admitting election defeat Monday after the government agency meant to ease Joe Biden's transition into the White House said it was finally lifting its unprecedented block on assistance. Trump acknowledged it was time for the General Services Administration to "do what needs to be done".
Madden noted: "Stock markets in Asia received a boost from the broader bullish move. The Hang Seng traded above 27,000 – for the time since March, and the Nikkei 225 hit its highest level since the early 1990's."
In Tokyo on Wednesday, the Nikkei 225 index closed up 0.5%. In China, the Shanghai Composite ended down 1.2%, while the Hang Seng index in Hong Kong is up 0.1% at 26,617.76.
In early UK company news, Future said it has agreed to takeover price comparison site GoCo in a deal worth GBP594 million.
Under the combination, GoCo shareholders will be entitled to receive 0.052497 new shares in magazine publisher Future and 33 pence in cash, valuing each GoCo share at 136p each. This represents a premium of 24% to Tuesday's closing price, when GoCo shares closed at 110p.
GoCo shareholders will own around 19% of the combined group.
GoCo directors intend to recommend shareholders vote in favour of the deal, as do Future's directors. Future expects the transition to be "immediately" earnings per share accretive.
"We believe that the combination is a unique strategic opportunity to create a leading global specialist media and intent platform, capitalising on the growing consumer demand for informed and value driven purchasing decisions enabled by intent driven content, which will deliver strong returns for all shareholders," said Future Chair Richard Huntingford.
Separately on Wednesday, Future published its full-year results. Revenue surged 53% to GBP339.6 million in the financial year to September 30, and pretax profit rallied four-fold to GBP52.0 million from GBP12.7 million.
Future said the revenue growth was driven by a combination of organic growth and acquisitions, underpinned by a 56% rise in total online users.
Future recommended a final dividend of 1.6p.
Roadside rescue provider AA, meanwhile, said it has received a 35p-per-share firm offer from a consortium of TowerBrook funds and Warburg Pincus funds.
On Monday, AA confirmed it had received a non-binding takeover offer from TowerBrook Capital Partners and Warburg Pincus International. The consortium made a 35p cash approach and had until 1700 GMT on Tuesday to either announce a firm intention to make an offer, or walk away. AA then secured an extension, giving the consortium until 1700 GMT on Wednesday to make a firm offer.
The deal values AA at GBP219 million, and the purchase price represents a premium of 40% to AA's closing price on August 3, the last day before the offer period began.
"Having carefully considered the range of options available to the AA including the terms of the proposed acquisition by the consortium, the AA board has concluded that the acquisition, which offers certain cash value to the AA's shareholders as well as a significant equity injection to reduce indebtedness, is in the best interests of the AA, its shareholders and wider stakeholders, and as such is unanimously recommending the acquisition to shareholders," said AA Chair John Leach.
In further M&A news, DIY retailer Kingfisher said it has bought NeedHelp, one of Europe's leading home improvement services marketplaces, for EUR10 million.
Guillaume de Kergariou, who founded NeedHelp in 2014, has reinvested proceeds from the sale to buy back a 20% stake in the business, resulting in Kingfisher holding an 80% stake. He will continue as CEO.
Industrial turnaround specialist Melrose Industries said it is currently trading at the top end of board expectations for 2020.
"The performance of the group in the period reflected the faster than expected recovery in automotive markets, first seen over the summer, the continued strong performance in Nortek Air Management, and the more challenging, although currently stable, market conditions in Aerospace," said Melrose.
While the firm is "encouraged" by its robust trading, Melrose added that caution is needed on any predictions for next year given global uncertainty.
The Aerospace division is expected to be broadly breakeven for the year, with restructuring and cost savings offsetting a challenging trading backdrop. For Automotive & Powder Metallurgy, both businesses saw an improvement in trading in the four months to October 31.
Nortek Air Management has continued to trade well in the period, with "impressive" revenue growth of 13% year-on-year.
United Utilities registered profit growth for its half-year and lifted its payout.
Revenue in the six months to September 30 fell 4.4% to GBP894.4 million from GBP935.5 million year-on-year, though pretax profit rose 3.1% to GBP201.1 million from GBP195.1 million. Finance expense fell 47% to GBP132.0 million from GBP193.9 million.
The water and water waste utility declared an interim dividend of 14.41p, up from 14.20p a year before.
"Despite the pandemic, our operational performance in this first year of the new regulatory period is on track. We are accelerating our capital expenditure to bring forward benefits and help support 17,700 jobs in the supply chain. We recognise the role that we can play in a successful society, economy and a thriving natural environment and are confident in our ability to deliver our AMP7 plans to achieve this," said Chief Executive Steve Mogford.
Sterling was quoted at USD1.3366 early Wednesday, firm on USD1.3357 at the London equities close on Tuesday.
In the UK, focus on Wednesday is on UK Chancellor Rishi Sunak's spending review.
In his Commons statement on Wednesday, the Chancellor will announce the launch of a three-year 'restart' programme, worth GBP2.9 billion, which will help more than a million unemployed people get back into work in the wake of the pandemic.
Unusually, because of the economic uncertainty caused by the virus, most UK government departments will receive only a one-year spending allocation rather than the usual multi-year settlement.
Other commitments are expected to include GBP3 billion more to support the NHS, including GBP1 billion to address the treatment backlogs built up while it was dealing with the Covid-19 crisis.
Sunak's review comes a week after figures showed the UK's debt-to-gross domestic product ratio reached 100.8% - levels not seen since the early 1960s. Total public sector net debt, excluding public sector banks, rose by GBP276.3 billion in the first seven months of the financial year to reach GBP2.076 trillion at the end of October, or around 100.8% of UK GDP.
In the afternoon, initial jobless claims data from the US is released at 1330 GMT, a day earlier than usual due to the Thanksgiving holiday on Thursday.
The euro traded at USD1.1902 early Wednesday, up against USD1.1882 late Tuesday. Against the yen, the dollar eased to JPY104.52 from JPY104.62.
Gold was quoted at USD1,805.93 an ounce early Wednesday, flat on USD1,805.23 on Tuesday. Brent oil was trading at USD48.18 a barrel, higher than USD47.68 late Tuesday.
By Lucy Heming; lucyheming@alliancenews.com
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