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LONDON (Alliance News) - The following is a summary of top news stories Friday.
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COMPANIES
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GlaxoSmithKline said it has signed an agreement with a subsidiary of Swiss peer Novartis to sell its rights to ofatumumab for auto-immune indications, including multiple sclerosis. Under the terms of Glaxo's divestment, it will get USD300 million upon closing of the transaction, USD200 million once a phase 3 study starts into using ofatumumab for relapsing remitting multiple sclerosis, plus further contingent payments of up to USD534 million, payable upon other development milestones being reached. Novartis Pharma will also pay Glaxo royalties of up to 12% on any future net sales of ofatumumab in auto-immune indications.
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Zurich Insurance has brought in Evercore Partners to work on a bid for insurer RSA Insurance Group alongside Morgan Stanley, according to a Financial Times report. The newspaper, which cited people with knowledge of the situation, said that investment bank advisers for the two sides remain "far apart" on price. Takeover rules require Zurich to state whether it wants to make a firm offer or walk away by 1700 BST Tuesday next week, according to stock exchange documents.
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Spire Healthcare Group cut its revenue guidance for 2015 due to short-term challenges it expects to face in National Health Service activity in the second half, as it reported a rise in pretax profit and revenue for the first half. Spire now expects flat revenue in the second half of 2015, compared to previous guidance of low single-digit growth, due to a slowdown in the flow of cases from the NHS to the independent sector in recent weeks. The cut to the revenue guidance means the group now expects its revenue and earnings before interest, taxation, depreciation and amortisation growth to be 4% to 6% for the full year.
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3i Infrastructure said it is taking a 50% holdings in the West of Duddon Sands Offshore Transmission Owner from Dong Energy and Scottish Power Renewables, with the remaining equity in the project to be acquired by Macquarie Capital. 3i Infrastructure is investing GBP23 million in the project.
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HellermannTyton Group said its pretax profit and revenue both increased in the first half, buoyed both by a strong performance in the majority of its markets and by the effect of the weak euro, the currency in which it reports. The company, which makes wires and cables and which recently agreed to be acquired by UK-based automotive parts manufacturer Delphi Automotive for GBP1.07 billion, said its pretax profit for the six months to the end of June was EUR42.5 million, up from EUR34.6 million a year earlier. The company said it will pay an interim dividend of 3.09 euro cents per share, up from 2.82 cents a year earlier.
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MARKETS
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Stocks in London have recovered slightly from their heavy fall at the open, but still trade deeply in the red with disappointing Chinese manufacturing data offsetting subsequent upbeat purchasing managers' index readings from Europe.
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FTSE 100: down 0.5% at 6,336.26
FTSE 250: down 0.5% at 17,158.55
AIM ALL-SHARE: down 1.0% at 736.29
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GBP: flat at USD1.5687
EUR: up at USD1.1260
GOLD: down at USD1149.48 per ounce
OIL (Brent): up at USD46.29 a barrel
(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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The UK logged its first July budget surplus since 2012, the Office for National Statistics showed. Public sector net borrowing excluding public sector banks decreased by GBP1.4 billion to a surplus of GBP1.3 billion or equivalent to -0.1% of gross domestic product in July. This was the first reported July surplus since 2012. Economists had forecast a surplus of GBP1.1 billion.
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The manufacturing sector in China continued to struggle in August as the contraction accelerated, a preliminary survey from Caixin showed, with a Performance of Manufacturing Index score of 47.1. That's down from 47.8 in July, and it represents a 77-month low. It also moves further beneath the line of 50 that separates expansion from contraction. "The Caixin Flash China General Manufacturing PMI for August has fallen further from July's two-year low, indicating that the economy is still in the process of bottoming out. But overall, the likelihood of a systemic risk remains under control and the structure of the economy is still improving," said He Fan, chief economist at Caixin Insight Group.
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Some 25 hard-left Syriza lawmakers want to break away from the ruling party and form their own parliamentary faction ahead of snap elections on September 20, Greek media reported. The rebels, who refused party leader Alexis Tsipras their support in a vote on further austerity and reforms last week, will call their party National Unity (LAE). It will be the third-largest bloc in parliament after Syriza, which has 124 members, and the conservative Greek opposition party New Democracy (ND), with 76. Tsipras resigned as Greek prime minister on Thursday, hours after the debt-stricken country received the first payment from its third bailout in five years. He said he needed a strong mandate going into talks about further reforms to the Greek economy.
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The head of the conservative Greek opposition party Nea Dimokratia will have a chance to form a new government following the surprise resignation of Tsipras, according to an email from the president's office. According to the Greek constitution, the head of the next-largest party gets a chance to form a government after the sitting premier resigns. However, observers say it is unlikely that ND head Evangelos Meimarakis will be able to pull together a government, which would leave Greece on track for its second round of elections this year. Meimarkis is expected to meet with President Prokopis Pavlopoulos around midday to discuss the options after the president's office sent him an email early Friday giving him the mandate to form a new government.
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British households perceive that the value of their home increased in August, a survey from Knight Frank and Markit Economic showed. The house price sentiment index rose to 59.5 in August from 58.6 in the previous month. This marked the twenty-ninth successive month of the index remaining above 50. A reading above 50 signals a rise in house prices, while a figure below 50 indicates a decline. "The strength of the UK economy, rising wages and an undersupply of housing stock on the market are combining to underpin UK house prices. This has resulted in the first rise in the House Price Sentiment Index in August, usually a quieter summer period, seen since 2009, " Grainne Gilmore, head of UK residential research at Knight Frank, said.
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Eurozone private sector activity growth improved in August largely reflecting an acceleration in Germany, preliminary data from Markit Economics showed. At 54.1, the flash Purchasing Managers' Index ticked higher from July's final reading of 53.9 and remained at an expansionary level for the twenty-sixth successive month. The pace of increase was one of the fastest seen over the past four years and stayed above the expected level of 53.7.
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Germany's consumer sentiment is set to drop in September, survey data from market research group GfK showed. The consumer sentiment index fell to 9.9 in September from 10.1 points in August. Economists had forecast it to remain unchanged at 10.1. The economy and income expectations as well as the willingness to buy have suffered losses. The downward trend in economic expectations continued in August. The economic expectations index dropped 1.8 points to 16.6.
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By Arvind Bhunjun; arvindbhunjun@alliancenews.com; @ArvindBhunjun
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