LONDON (Alliance News) - The summer rumour mill has got into full flow, with the best- and worst-performing stocks in the FTSE 100 Monday all driven by weekend news reports, particularly about potential merger and acquisition activity.
Shares in Diageo have risen sharply after reports in the press late Friday suggested that Brazil's richest man, Jorge Paulo Lemann, is weighing up a takeover bid for the drinks company. The Times, The Telegraph and Bloomberg all cited a report from columnist Lauro Jardim of Brazilian publication Veja that Lemann, who founded private equity firm 3G Capital, is in the early stages of preparing a potential offer for Diageo.
Analysts are skeptical about an approach, pointing out that 3G Capital would have to raise tens of billions of pounds, more than any equity component of a leveraged buyout in history.
Meanwhile, Shire is understood to be preparing a GBP12 billion offer for Swiss peer Actelion, The Sunday Times reported citing market sources who said Actelion was an "obvious target" for the British drugs specialist. However, Shire could have a battle on its hands, The Times said, as Actelion is understood to have rebuffed an informal approach a few weeks ago. Shire may have to offer a sizeable premium.
Shire shares are down 2%.
BT Group is up after The Telegraph reported that it could become a takeover target for Germany's Deutsche Telekom. Deutsche Telekom is reportedly in talks to merge its American arm, T-Mobile US, with satellite pay TV operator Dish Networks. It a deal is struck, the likelihood of a potential takeover of BT will rise as this could be a route for Deutsche Telekom to exit the American market and redeploy funds in Europe, the paper said quoting senior industry executives and city analysts.
Aerospace engineer GKN is down after the Sunday Times said Airbus is considering throwing open GKN’s multimillion pound contract to supply parts for the A320 aircraft in a row over cost-cuts.
The European aerospace giant is believed to be considering inviting other suppliers to pitch for GKN’s work on the short-haul workhorse as it attempts to transform the meagre profit margins it makes on planes by demanding cost-cuts from suppliers, The Times said without saying where it got the information.
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Markets: London share prices are slightly lower, with Diageo leading FTSE 100 gainers and Shire and GKN amongst its biggest losers.
Futures point to a lower open for US stock indices, with the DJIA, S&P 500 and Nasdaq all currently indicated down 0.1%.
FTSE 100: down 0.1% at 6,798.96
FTSE 250: down 0.1% at 17,912.36
AIM ALL-SHARE: down 0.1% at 775.25
GBP: down at USD1.5237
EUR: up at USD1.1135
GOLD: up at USD1,174.30 an ounce
OIL (Brent): down at USD62.93 a barrel
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Other Top Corporate News
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Wm Morrison Supermarkets announced price reductions to a further 200 'everyday' items, as it continues with plans to slash prices in response to changing UK shopping habits and the challenge presented by discount grocers amidst a price war with its competitors in the supermarket sector. The grocer said it will cut prices of items such as bread, milk and butter by up to a third, the first set of price cuts made under the instruction of new Chief Executive David Potts.
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London law firm Leigh Day is attempting to launch a class action against Foxtons on behalf of private landlords, alleging the estate agent group has been overcharging landlords when it let or managed their properties, The Guardian reported Sunday. The law firm, which is taking the case on a no-win-no-fee basis, is attempting to sign up landlords to its claim, according to the newspaper.
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Drax Group said trading conditions have "remained challenging" in 2015 as weak gas markets continue to cause lower power prices, but said its expectations for the full year remain unchanged. The FTSE 250-listed UK power generator said although conditions remain difficult, it continues to benefit from a strong contracted position and good operational performance of its generating units. As at June 1, Drax has 23.8 terawatt hours of power sales secured for 2015, which is up from 20.4 terawatt hours at the end of February.
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Sigma Capital Group said it has entered an exclusivity agreement with the Sheffield Housing Company for the provision of new private rented sector homes in Sheffield. Under the terms of the deal, Sigma and SHC will work together over the next three years to deliver two, three and four bedroom homes for private rent. The agreement is for an initial three year period extendable by agreement between the parties.
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AIM Movers
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Armadale Capital's shares have more than doubled after it said it has signed a heads of terms agreement with the African Mining Contracting Services group to fund, develop, construct and operate the Mpokoto gold project in the Democratic Republic of Congo. Range Resources has rocketed after the company resumed trading after it received the first tranche of funds from the financing deal agreed with Beijing Sibo Management LP on Friday. Trap Oil Group shares are up by more than half after it said operations have started on the Niobe exploration prospect in the UK North Sea, providing some positive news after the company said back in April it was at risk of becoming insolvent. Beowulf Mining is doing well after it said it has produced "super high grade" concentrates from the Kallak North prospect in northern Sweden that will benefit from higher prices. Minera IRL shares are up by a quarter after it agreed a USD70 million secured finance facility, in what is expected to be the first step toward securing a USD240 million senior project credit finance facility. Renewable Energy Holdings has lost almost a quarter of its value after it said its pretax loss was flat in 2014 and its financial position is "dependent" on its application for planning permission for its Welsh wind farm being approved. Cyan Holdings is another big faller after it raised GBP4.1 million through a placing and subscription of 2.06 billion shares at 0.20 pence each, money it will use to fund staffing costs for projects it has won in India and for further product development work. Grafenia is another faller after reported a pretax profit for the year ending March 31 of GBP0.86 million, up 13.2% from the GBP0.76 million it made the prior year, despite revenue falling 13% to GBP17.0 million from GBP19.4 million. Atlantic Coal is down after its pretax loss widened in 2014 as revenue fell and its margin was squeezed, adding it was disappointed not to make a profit after it reached record levels of production at higher coal prices. Sound Oil is also down after it further work on the second appraisal well at the Nervesa discovery in Italy showed it is gas bearing but has low permeability and Sound is now deciding whether to initiate a well test directly or to utilize stimulation techniques. It has also entered into a farm-in agreement with the Moroccan Oil and Gas Investment Fund on the onshore Tendrara license to operate and acquire up to a 55% stake by funding exploration costs. Enables IT Group is down after it reported a narrowed pretax loss for the first half of its financial year, but warned it is taking longer than expected to secure solid growth and whilst it has taken steps it hopes will lead to an improved performance it is "too early" to predict the outcome for the second half.
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Top Economics And General
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Greek Finance Minister Yanis Varoufakis met Monday in Berlin with his most resolute opponent, German Finance Minister Wolfgang Schaeuble, but made no comment to reporters as he arrived. German aides had said earlier the two ministers would neither be posing for photos nor giving a news conference after the meeting. Varoufakis was also set to present his arguments for more leeway on debt to a public audience in Berlin later in the day.
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European Commission President Jean-Claude Juncker rejected a phone call Saturday from Greek Prime Minister Alexis Tsipras asking for a new round of talks on Athens' deepening debt crisis, but that does not mean the matter won't weigh on an upcoming summit of the world's major economies in Bavaria. Juncker turned down Tsipras' request, saying that there had been no new developments in the crisis, which threatens to result in cash-strapped Greece defaulting, according to dpa information. The commission president is attending the summit of Group of Seven leading industrial states at luxury Alpine retreat Schloss Elmau, where Greece's faltering talks with its creditors - the European Central Bank, the International Monetary Fund and Athens' eurozone partners - are now set to form part of the G7 leaders' talks.
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Western sanctions against Russia should remain in place until the Ukraine ceasefire agreement is fully implemented, US President Barack Obama and German Chancellor Angela Merkel agreed Sunday. The two leaders met privately before the start of the two-day G7 summit in southern Germany, the White House said. The Group of Eight became the Group of Seven after Russia was expelled last year by the other powers over its actions in Ukraine. Merkel and Obama agreed that the "duration of sanctions should be clearly linked to Russia's full implementation of the Minsk agreements and respect for Ukraine's sovereignty," a White House statement said.
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The Confederation of British Industry downgraded its UK growth projections citing weaker-than-expected growth in the first quarter. In a report released Monday, the business group said the economy will grow 2.4% this year compared to a 2.7% rise expected in February. For 2016, growth is expected to be at 2.5% instead of 2.6%.
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The growth in the Irish construction sector expanded for the third straight month in May, reaching the highest level since November last year, as activity, new orders and employment rose at sharper rates, the results of a survey by Markit Economics and Ulster Bank showed Monday. The Ulster Bank Construction Purchasing Managers' Index rose to 63.3 in May from 57.2 in the previous month. Any reading above 50 indicates expansion in the sector.
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Germany's industrial production grew more than expected in April, data from Destatis revealed. Industrial production expanded 0.9% month-on-month in April, reversing a revised 0.4% fall in March. It was larger than an expected 0.5% increase and also the biggest growth seen so far this year. Excluding energy and construction, industrial output advanced 0.7% in April.
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Germany's exports climbed for the third straight month in April, defying economists' expectations for a decline, preliminary figures from Destatis showed. Exports rose a seasonally and calender-adjusted 1.9% month-on-month in April, faster than previous month's 1.3% increase. Economists had forecast a 0.4% drop for the month. Meanwhile, imports fell 1.3% in April from the prior month, in contrast to economists' expectations for a 0.5% rise. It was the first decrease in three months.
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The French economy is expected to sustain its growth momentum in the second quarter as industrial production and services activity is set to continue expansion in June, survey data from the Bank of France showed. The bank retained its growth projection for the second quarter at 0.3%. In the first quarter, the economy had expanded 0.4%.
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China's foreign trade surplus increased by more than expected in May, as imports fell faster than exports, figures from the Customs Office showed. The trade surplus of the country came in at USD59.49 billion in May, more than the USD44.8 billion expected by economists. Exports fell 2.5% year-over-year in May, while they were expected to decline by 4.4%. Imports plunged 17.6%, much more than a 10.0% fall expected by economists.
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Japan's gross domestic product expanded 3.9% on year in the first quarter of 2015, the Cabinet Office said in the revised report released on Monday. This was well above of forecasts for 2.8% growth and up from the February 15 preliminary reading of a 2.4% rise. GDP growth for the fourth quarter of 2014 was 1.2%.
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Japan's current account surplus declined in April compared to the previous month and came below economists expectations, data from the Ministry of Finance showed Monday. A reversal in the balance of trade to a deficit from a surplus impacted the current account balance. Current account surplus fell to JPY1.326 trillion in April from JPY2.795 trillion in the previous month. Economists had expected a surplus of JPY1.687 tillion. In April 2014, the current account surplus was JPY220.8 billion.
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Turkey's ruling party failed to secure majority in the parliamentary election, leaving President Recep Tayyip Erdogan with the daunting task of forming a government. With counting almost complete, AK party has won 40.86% of the votes and will get 258 deputies, as per proportional representation system, Turkey's state-run Anadolu news agency reported. That means AK is 18 seats short of a majority. The Republican People's Party (CHP) won 24.96% of the votes and 132 deputies, which makes it the second largest party.
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A Saudi-led coalition bombed the office of Ahmed Ali Saleh, the son of former Yemeni president Ali Abdullah Saleh, in the capital Sana'a, eyewitnesses said. Ambulance crews were seen taking injured guards for treatment. There was no immediate information as to the numbers hurt. The former president and his son are both thought to be in Sana'a, but their precise whereabouts are not known.
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Afternoon Watchlist (all times in BST)
15:00 US Labor Market Conditions Index
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Tuesday's UK Corporate Events
RPC Group - Full Year Results
Carclo - Full Year Results
Energy Assets Group - Full Year Results
Oxford Instruments - Full Year Results
Picton Property Icome - Full Year Results
Park Group - Full Year Results
Gooch & Housego - Half Year Results
Custodian REIT - Full Year Results
OMG - Full Year Results
CML Microsystems - Full Year Results
Iomart Group - Full Year Results
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Tuesday's Key Economic Events (all times in BST)
00:01 UK BRC Retail Sales Monitor
02:30 China Consumer Price Index
02:30 China Producer Price Index
06:00 Japan Consumer Confidence Index
07:45 France Budget
09:30 UK Total Trade Balance
10:00 UK Inflation Report Hearings
10:00 EU Gross Domestic Product
13:55 US Redbook index
14:00 US NFIB Business Optimism Index
15:00 US JOLTS Job Openings
15:00 US Wholesale Inventories
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