LONDON (Alliance News) - Shares have started firmly in London Wednesday, with company M&A news at the forefront on a slow day for economic data.
Imperial Tobacco Group shares lead FTSE 100 gainers, up 2.0%, after the US Federal Trade Commission approved the acquisition of Lorillard by Reynolds American. As part of that US merger, Imperial Tobacco previously had agreed to acquire from the pair a portfolio of US cigarette brands, e-cigarette brand blu, and Lorillard's cigarette factory and national sales force.
International Consolidated Airlines is the second top gainer, up 1.3%, after the Irish government gave its support to the British Airways owner's acquisition of Aer Lingus.
Away from the market, police have arrested FIFA officials in Switzerland for extradition to the US where they are to face corruption charges.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.4% at 6,979.77
FTSE 250: up 0.2% at 18,130.64
AIM ALL-SHARE: up 0.1% at 765.77
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Hang Seng: down 0.8% at 28,037.28
Nikkei 225: closed up 0.2% at 20,472.58
DJIA: closed down 1.0% at 18,041.54
S&P 500: closed down 1.0% at 2,104.20
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GBP: up at USD1.5402
EUR: up at USD1.0912
GOLD: up at USD1,189.97 per ounce
OIL (Brent): up at USD64.28 a barrel
(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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Wednesday's Key Economic Events still to come
(all times in BST)
11:00 EU EU Financial Stability Review
12:00 US MBA Mortgage Applications
15:00 Canada BOC Interest Rate Decision and Statement
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German consumer sentiment is set to improve to its highest level since October 2001, survey data from market research group GfK showed. The forward-looking consumer sentiment rose to 10.2 in June from 10.1 in May. This was the highest score since October 2001.
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The members of the Bank of Japan's monetary policy committee were satisfied that the current monetary policy stance remained appropriate, minutes from the bank's April 30 meeting revealed. The underlying inflation trend was improving steadily, the minutes showed, although there was some debate about achieving the target goal of 2%.
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The inflation target of 2% is expected to be achieved around the first half of fiscal 2016, Bank of Japan Deputy Governor Kikuo Iwata said. "This timing is somewhat delayed from the previous projection," he told business leaders in Sapporo. He noted that the underlying trend in inflation itself has been rising steadily with the mechanism of quantitative and qualitative easing as envisaged.
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Iraqi security forces have rebel-held Ramadi hemmed in on three sides in an offensive to recapture the capital of western Anbar province, nine days after the city fell to Islamic State jihadists. "The legions of our armed forces...with the support of the Popular Mobilization and the tribesmen are now beginning the operation to free Anbar from the Islamic State gangs," Defence Minister Khalid al-Obeidi wrote on his Facebook page. The Iraqi Army and police were taking part in operations alongside mainly Shiite volunteers from across the country and local tribes from the Sunni province, Captain Ahmad Ibrahim of the Anbar police command told dpa.
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UN-sponsored peace talks on Yemen planned for Thursday have been postponed at the request of the Yemeni government and other stakeholders, UN spokesman Stephane Dujarric said. The UN-backed talks to be held in Geneva aim to bring together key stakeholders in the Yemen conflict to reinvigorate the political peace process that stalled when Houthi rebels overran parts of the country. UN Secretary General Ban Ki-moon is working to convene the talks "at the earliest possible time."
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Police arrested FIFA officials in Switzerland for extradition to the US where they are to face corruption charges. Local police did not want to go into details, speaking only of "various measures," according to the SDA news agency. The New York Times said the arrests were carried out as officials from football's world governing body were gathered at the Baur au Lac hotel ahead of their annual congress Friday when the authorities raided the premises. The charges they face include racketeering and money laundering in connection with alleged corruption in FIFA including World Cup bids and broadcasting deals, the report quoted law enforcement officials as saying. Those detained included Eduardo Li, president of the Costa Rican football federation, the New York Times said.
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BROKER RATING CHANGES
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GOLDMAN CUTS TAYLOR WIMPEY TO 'BUY' ('CONVICTION BUY LIST') - TARGET 204 PENCE
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JPMORGAN RAISES BEAZLEY TO 'OVERWEIGHT' ('NEUTRAL') - TARGET 308 (255) PENCE
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JPMORGAN RAISES HISCOX TO 'OVERWEIGHT' ('NEUTRAL') - TARGET 950 (801) PENCE
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COMPANIES - FTSE 100
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Irish flag carrier Aer Lingus Group late Tuesday said it has moved a step closer to being taken over by British Airways owner International Consolidated Airlines Group in a EUR1.4 billion deal, after the Irish government gave its backing to the deal. The offer remains conditional on securing the approval of both the Irish government and budget carrier Ryanair Holdings, both of which hold substantial stakes in Aer Lingus, along with it securing regulatory approval in Europe and the UK. The Irish government, however, said it supports the takeover bid from IAG after it was confirmed that Aer Lingus would keep its existing slots at Heathrow airport. The Irish Parliament, the Dáil, still has to vote on the approval.
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Rolls-Royce Holdings said it has secured a contract from US aerospace and defence company General Dynamics' European Land Systems unit for 589 MTU Seris 199 diesel engines. The order is worth around EUR80 million and the engines are to be used in the SCOUT Specialist Vehicle General Dynamics has built for the British Army. It will be the first time MTU engines have been used by the British Army.
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Royal Bank of Scotland Group late Tuesday said it has agreed to sell a loan portfolio to Cerberus Capital Management at a loss, with the sale being the last "material" transaction for the part of the group running down bad or unwanted assets in Northern Ireland. In a statement, RBS said it will receive GBP205 million at current exchange rates for the sale, with the deal expected to complete in June, as RBS Capital Resolution continues to sell billions of pounds in assets with high capital intensity or risks. RBS said the sale of the loan portfolios was in addition to the disposal of a portfolio of Irish real estate loans to Cerberus in December.
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CRH late Tuesday said Lafarge and Holcim have accepted its offer to buy assets from them for EUR6.5 billion including debt and are now legally bound to the terms of the acquisition. "The acquisition remains conditional upon successful completion of the merger of Lafarge and Holcim as well as the completion of local asset reorganisations. The acquisition is expected to complete in the second half of 2015," CRH said in a statement.
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COMPANIES - FTSE 250
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Brewin Dolphin's chief executive said the wealth manager is entering the final stages of the transformation programme launched in 2012, as the company reported higher first-half pretax profit and discretionary funds under management. In a statement, Brewin Dolphin said its discretionary funds under management amounted to GBP26.2 billion at the end of March, up from GBP24.0 billion at the end of its last financial year and from GBP22.7 billion at the end of the first half of that year. The wealth manager's GBP37.9 million pretax profit in the first half ended March 31 was higher than the GBP22.0 million recorded in the corresponding period of the prior year.
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De La Rue reported a drop in pretax profit in its recently completed financial year, as margins were squeezed by pricing pressure and the company achieved lowers levels of new business than expected in its identity systems and security products. Weakness in the euro has put further pressure on its profitability in the new financial year, the company said. The banknote printer and security paper maker said it made a GBP38.9 million pretax profit in the year ended March 28, compared with GBP59.8 million in the prior year. Revenue was down to GBP472.1 million from GBP513.3 million. De La Rue cut its dividend for the year to 25.0 pence per share from 42.3p, saying it will aim to maintain dividends at the 2014/15 level as it is "mindful" of how important the dividend is to shareholders.
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AG Barr said its sales declined in the first 15 weeks of its financial year, in line with its expectations, as sales stabilise following a strong first half performance a year earlier. The soft drinks company said it remains on track to meet market forecasts for the year. FTSE 250-listed AG Barr said total group sales in the fifteen weeks from January 26 to May 9 were down by 1.1% year-on-year. It said the sales decline reflects a return to a more normal sales performance following a strong first half a year earlier, related to marketing and promotional activity around the Glasgow 2014 Commonwealth Games.
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Greeting cards and gifts retailer Card Factory affirmed its expectations for the full year to the end of January 2016 as it said like-for-like sales growth in the first quarter of its financial year was in line with targets. FTSE 250-listed Card Factory said revenue in the first three months of its financial year to the end of April rose by 7.5%, slightly weaker than the 8.5% growth in the first quarter of its 2015 financial year, but flat on the growth seen in the second half of that financial year.
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Hansteen Holdings said it has exchanged contracts on 13 multi-let and single-let industrial properties in Germany for EUR21.7 million. FTSE 250-listed Hansteen has acquired the properties from Benelux Industrial Partners and expects the deal to complete in June.
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Workspace Group said it has exchange contracts on the acquisition of the 25 and 28 Easton Street properties in the Clerkenwell neighbourhood of London for GBP16.6 million. The property is a converted warehouse-style office with a net internal area of around 21,000 square feet. It is being acquired from existing owner and occupier Amnesty International, the human rights organisation, and will be reconfigured and let as a business centre following a short two-year leaseback to Amnesty.
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COMPANIES - LONDON MAIN MARKET AND AIM
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Tool and equipment hire company HSS Hire Group said trading in the first quarter was in line with its expectations, with solid volume growth in its core and specialist businesses. Revenue in its core business was up by 12% to GBP62.7 million in the 13 weeks to March 28, up from GBP55.8 million a year earlier, while specialist revenue increased by 36% to GBP9.8 million from GBP7.2 million. HSS also improved its utilisation rates in both divisions, with core utilisation improving to 47%, up one percentage point, and specialist utilisation up by three percentage points to 72%.
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Isle of Man-based telecommunications company Manx Telecom said it has promoted Finance Director Gary Lamb to Chief Executive. Lamb will take over from Mike Dee as CEO of the company from July 1. The recruitment of a replacement for Lamb has started, it said.
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COMPANIES - INTERNATIONAL
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General Electric said that it is in advanced talks to sell assets in the USD9 billion vehicle fleet-management business to Element Financial, Bloomberg reported citing people familiar with the matter. Quoting the people, the report said that no deal has been reached yet with Toronto-based Element, and the discussions may still fall apart. GE hopes to come to terms on a sale of the operations by the end of the quarter.
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Reynolds American and Lorillard announced that the US Federal Trade Commission has voted to accept a proposed consent agreement, authorizing Reynolds to close its proposed acquisition of Lorillard. The FTC clearance is subject to certain conditions, most of which the companies had previously agreed to as part of the related divestiture transactions announced in July 2014. Reynolds agreed to acquire smaller rival Lorillard and its popular Newport menthol brand in a cash and stock deal valued at USD27.4 billion.
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Dutch supermarket chain Koninklijke Ahold said its first-quarter attributable net income surged to EUR213 million from EUR50 million reported last year. Sales climbed 14.9% to EUR11.289 billion from last year's EUR9.821 billion, driven by currency. The sales growth was 1.4% at constant exchange rates. Sales excluding gas was up 3.1% in constant currency.
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Wednesday's Scheduled AGMs/EGMs
Bango
Plus500
Polypipe
AG Barr
Card Factory
NAHL Group
Cluff Natural Resources
Cambridge Cognition Holdings
Dunedin Income Growth Investment Trust
Enquest
Standard Life Investments Property Income Trust
Parity Group
Jimmy Choo
F&C Private Equity Trust
SQS Software Quality Systems
Acencia Debt Strategies
Alliance Pharma
Escher Group
Judges Scientific
LXB Retail Properties
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By Tom Waite; thomaslwaite@alliancenews.com; @thomaslwaite
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