LONDON (Alliance News) - Stocks in the UK opened mostly higher Wednesday, after three losing sessions, as Hikma Pharmaceuticals and ARM Holdings were the worst performers in the FTSE 100.
Hikma traded down 13% as it said it agreed a lower price for its acquisition of Roxane Laboratories and Boehringer Ingelheim Roxane from German pharmaceutical company Boehringer Ingelheim.
This is as a result of new information having been received from Hikma in relation to the financial performance of Roxane in 2015, following the publication of Hikma's prospectus regarding the acquisition in January.
As a result of this information the two companies have agreed to reduce the purchase price, and Hikma will now pay USD647 million in cash instead of the USD1.18 billion it had originally agreed, although it will still additional issue 40 million shares to Boehringer as part of the consideration at a price of 2,350 pence per share. Hikma shares traded at 1,781.00p.
However, Hikma said that, following further due diligence, it now expects Roxane's revenue for 2015 to come in lower than it had previously anticipated, which it attributed to higher-than-expected rebates.
It now expects Roxane's revenue for 2015 to only be slightly higher than 2014, and for 2016 to be lower than in 2015. As a result, Hikma now expects the acquisition to be slightly dilutive to its adjusted earnings per share in 2016.
Meanwhile, ARM Holdings traded down 5.5% despite reporting a rise in pretax profit in 2015, as it saw a strong performance in its fourth quarter with revenue up 19%.
ARM reported a pretax profit of GBP414.8 million for 2015, up from GBP316.5 million in 2014, as revenue rose to GBP968.3 million from GBP795.2 million, more than offsetting increases in research and development costs. On a dollar basis, as ARM generates a majority of its revenue in dollars, revenue rose to USD1.49 billion from USD1.29 billion.
Looking ahead, ARM said it enters 2016 with a "robust opportunity pipeline", helped by the introduction of new technologies and its expanding market opportunities.
ARM cautioned that whilst economic uncertainty "may influence consumer and enterprise spending, potentially impacting semiconductor revenues and industry confidence", based on current conditions in the semiconductor market, it expects 2016 dollar revenues "broadly in line" with market expectations.
The FTSE 100 index traded up 0.2% at 5,643.88, and the FTSE 250 was up 0.5% at 15,389.37, while the AIM All-Share was down 0.1% at 670.71.
In Europe, the French CAC 40 traded up 0.2% and the German DAX 30 was up 0.4%.
The Nikkei 225 in Tokyo continued its decline after its 5.4% loss on Tuesday. The index ended down 2.3% on Wednesday. The Chinese market remained closed for Lunar New Year, though the Hong Kong market will re-open again on Thursday.
Elsewhere in London, Tullow Oil was one of the worst performers in the FTSE 250, down 2.7%. The oil producer reported a narrower pretax loss in 2015 despite reporting a steep drop in revenue due to the fall in oil prices, as the company said it remains focused on reducing costs and getting the TEN development in Ghana producing.
Tullow had already guided last month that its earnings would be considerably lower year-on-year after lower oil prices hampered results, as a fall in net production from Europe offset a rise from its flagship operations in West Africa.
The oil company, which operates in 22 countries with the majority of its oil production coming from assets in West Africa, reported a USD1.29 billion pretax loss from continuing activities in 2015 compared to a USD2.04 billion loss in 2014.
That result came despite a steep drop in revenue to USD1.60 billion from USD2.21 billion, yielding a gross profit of USD591.3 million compared to USD1.09 billion last year - in line with Tullow's guidance last month.
Sophos Group continued as the worst performer in the FTSE 250, down 9.9%, after falling 15% on Tuesday, even though the security software and hardware developer reported a rise in billings in the third quarter of its financial year as revenue also rose.
In the economic calendar for Wednesday, UK industrial and manufacturing data are at 0930 GMT, just before the European Commission's economic growth forecasts at 1000 GMT. At 1200 GMT are US mortgage applications. The National Institute of Economic and Social Research UK GDP forecast is at 1500 GMT and the US Energy Information Administration's crude oil stock at 1530 GMT.
Markets will particularly be looking ahead to Federal Reserve Chair Janet Yellen's testimony to the Committee on Financial Services in the US House of Representatives at 1500 GMT.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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