LONDON (Alliance News) - Imperial Tobacco Group leads the FTSE 100 gainers Friday after the company confirmed that it is in talks with US tobacco firms Reynolds American and Lorillard to potentially buy some of their assets, part of a bigger that would see Reynolds acquire Lorillard.
Reynolds is nearing a deal to acquire its smaller rival with the approval of British American Tobacco, which owns 42% of Reynolds, Bloomberg reported Thursday, citing people with knowledge of the matter. A deal may reportedly be announced as early as next week, although the talks could still fall apart, the Financial Times reported.
A ten-year standstill agreement between British American and Reynolds is set to expire next month, when British American can make an unsolicited offer for the Reynolds shares it does not already own.
In order to assuage any anti-trust concerns that the US government may have, London-based Imperial Tobacco will buy some brands from Reynolds and Lorillard, and is lining up about USD7 billion for the purpose, Bloomberg reported.
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MARKETS: The main UK and European stock indices are modestly higher Friday as investors look to pick up bargains in the aftermath of Thursday's banking sector-driven sell-off. Potential merger and acquisition activity in the tobacco sector is helping the FTSE 100 outperform the smaller-cap indices in London, and record its first gains of the week.
US stock futures are currently indicating that Wall Street will open higher, with the DJIA and the S&P 500 pointed 0.1% to 0.2% higher.
FTSE 100: up 0.1% at 6,680.57
FTSE 250: up 0.2% at 15,471.69
AIM ALL-SHARE: down 0.1% at 770.62
GBP-USD: flat at 1.7133
EUR-USD: down at 1.3603
GOLD: up at USD1,336.53 an ounce
OIL (Brent): down at USD108.17 a barrel
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Other Top UK Corporate News
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Insurer Friends Life Group said it has sold high-end wealth manager Lombard to funds managed by investment and advisory firm Blackstone for up to GBP356 million, and intends to return GBP261 million of the proceeds to shareholders through a share buyback. The deal means the company is more focused on its main life insurance business, Friends Provident. In a statement, Friends Life said it will get GBP317 million initially for Lombard International Assurance SA and Insurance Development Holdings AG, including GBP254 million in cash up front, about GBP7 million interest equivalent, and a GBP56 million deferred payment in the form of a vendor loan note.
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Experian said its revenue grew 4% in its fiscal first quarter as growth in UK, North America and the rest of the world offset a slowdown in Latin America as customers there took time out to watch the football World Cup. The information services provider, which provides services like credit checking and financial risk analysis, had previously warned that it expected a slowdown in Latin America due to the football World Cup being held in Brazil and also due to a brand strengthening plan it is conducting in its North America consumer services business.
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Moneysupermarket.com Group said revenue and operating profit for the first half of 2014 rose by about 9% compared with the year-earlier period, as it had expected. In a short trading statement, the price comparison website said revenue in the six months to June 30 is expected to be about GBP122 million, while adjusted earnings before interest, tax, depreciation and amortisation is also expected to be up 9% on the year. Trading growth was a little stronger in the second quarter than the first quarter, it said.
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Rockhopper Exploration said Premier Oil, which operates the Sea Lion Field in the North Falkland basin, has awarded an engineering and design contract to AMEC. Rockhopper, which has a 40% interest in the Sea Lion field, said the award of the tension leg platform front end engineering and design contract to AMEC was made as part of ongoing pre-development activities at the site.
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ClearStar was untraded after its initial public offering on the AIM market, while Mota-Engil Africa NV became the fourth company so far in 2014 to blame adverse market conditions for pulling an IPO. Mota-Engil Africa specifically blamed the performance of equity markets in the last 48 hours, saying the fall in the market had hit the scale of orders for its shares in the planned IPO. It had been due to list Friday, having priced its IPO at between 920 pence and 1,160 pence, which would have given it an initial market capitalisation of up to GBP1.3 billion.
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AIM MOVERS
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Alba Mineral Resources has seen its share price more than double, while Regency Mines is up 11%, after the companies signed deals to each acquire a 5% stake in Horse Hill Developments Ltd, which operates in the UK Weald Basin south of London, for GBP300,000 in cash each. Ilika is up after it won a proof-of-concept contract with an existing, undisclosed original equipment manufacturer to provide solid state batteries in wireless sensor network applications. Tertiary Mineralit is also up after the company raised GBP420,000 by placing of 7.3 million shares at 5.75 pence with institutional investors. At the other end of the market, Leyshon Resources shares slid after it said its shares listed on the Australian Securities Exchange would likely be suspended from July 14 because it hadn't yet found a new operating business in which to invest or been able to activate its current main asset. CSF Group is trading lower after it appointed Michael Leong as acting chief executive and delayed the announcement of its full-year results to September. Greatland Golit is also down after it raised GBP500,000 by placing 153.8 million shares at 0.325 pence each, money it will use for additional working capital. Greatland's shares are currently quoted at 0.40 pence. Thalassa Holdings is another faller, even though it said it has seen good trading in the year so far and that it expects a "satisfactory" performance in 2014.
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Top Economics And General
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UK construction output declined in May, defying consensus estimates for an increase, a report from the Office for National Statistics showed. Construction sector output fell 1.1% month-on-month in May, in contrast to economists' expectations for a 0.9% increase, driven by a decline in new work. In April, construction output had risen 1.2%. New orders declined 1.1% in May, with the 3.6% decline in private commercial new work contributing most to the overall decrease in output. Repair and maintenance also fell 1.1% in May. However, new housing output grew, by 1.1%, for the third consecutive month in May. The growth was mainly driven by the public housing component.
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German inflation accelerated as estimated in June, while wholesale prices declined for the twelfth consecutive month, reports from Destatis showed. Inflation, based on harmonized consumer prices, rose to 1% in June on a yearly basis, final data from revealed. The rate came in line with flash estimate published on June 27 and follows a 0.6% rise in May. Month-on-month, the harmonized consumer price index gained 0.4% in June, unchanged from the preliminary estimate. At the same time, consumer price inflation increased to 1% in June from 0.9% in May. On a monthly basis, consumer prices gained 0.3%, reversing the 0.1% fall seen in May. CPI figures also matched preliminary estimate.
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Another report showed that German wholesale prices fell 0.8% year-on-year in June, after easing 0.9% a month ago. This was the twelfth consecutive fall in wholesale prices. On a monthly basis, prices slid 0.1% each in June and May.
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The French current account deficit widened in May, figures from Bank of France showed. The current account gap increased notably to EUR 3.1 billion from EUR 2.3 billion in April. The deficit on trade in goods rose to EUR 3.5 billion from EUR 3.2 billion a month ago. At the same time, the surplus on services fell to EUR 1.4 billion from EUR 1.9 billion.
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Shares in Portugal's largest private bank Banco Espirito Santo plunged Thursday before trading was halted as its parent company said it had missed some debt payments. The bank's largest shareholder ESFG (Espirito Santo Financial Group) asked that the share sales be suspended. Espirito Santo International is the biggest shareholder of Espirito Santo Financial Group, which in turn owns 25% of BES. There is also power struggle within the bank's founding family over who should succeed longtime bank head Ricardo Salgado. Shareholders are to select a new bank head on July 31. The turmoil within the bank has created concerns in Portugal's capital markets and government bonds remain under stress.
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Germany called on Washington to end its spying on Europe's biggest economy after relations behind the two nations plunged to a new low in the wake of allegations of US espionage in the nation. Berlin expelled the US top intelligence officer in Germany on Thursday amid claims that two German officials - one working for the domestic secret service (BND) and the other for the Defence Ministry - had handed over sensitive material to Washington. "Above all, we need a binding guarantee from Washington that the practice is once and for all finished," Justice Minister Heiko Maas told the daily Passauer Neuen Presse.
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Afghan President Hamid Karzai met with the US Secretary of State John Kerry in Kabul to discuss an impasse over the presidential election. "The president said that any solution taken through legal means and is agreed by the candidates is acceptable," Karzai's office said. Kerry came to Afghanistan after the losing candidate of the second round of the elections, Abdullah Abdullah, rejected the results of the elections and warned that he would form a parallel government. Karzai also insisted that the new president would be sworn in on August 2 as scheduled, his office said.
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The US offered Thursday to mediate in escalating hostilities between missile-firing Gaza Strip militants Israel and the Israeli military, which has been waging an air offensive this week in the Palestinian enclave. Telephoning late Thursday with Israeli Prime Minister Benjamin Netanyahu, US President Barack Obama warned against "further escalation and emphasized the need for all sides to do everything they can to protect the lives of civilians and restore calm," the White House said in a statement.
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As the number of Palestinian dead from airstrikes in the Gaza Strip approaches 100, Israel has moved three infantry brigades to the borders of the Gaza Strip in preparation for a possible ground offense. The buildup is to be strengthened by one or two further brigades in the coming days, said Israel military spokesman Peter Lerner. According to Palestinian sources, Israeli attacks by air have so far left 98 people dead in the Gaza Strip.
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Afternoon Watchlist (all times British Summer Time)
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19:00 US Monthly Budget Statement
19:45 US Fed's Lockhart speech
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Monday's Key UK Corporate Events
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SThree Half Year Results
Aveva Group Interim Management Statement
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Monday's Key Economic Events (all times British Summer Time)
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All Day France Bastille Day
05:30 Japan Capacity Utilization
05:30 Japan Industrial Production
10:00 EU Industrial Production
16:30 US 3-Month Bill Auction
16:30 US 6-Month Bill Auction
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26 Aug 2014 10:58
