(Alliance News) - Merger and acquisition activity provided an early focus for the London market on Monday, with BHP, Ultra Electronics, and Future all taking part, while Meggitt provided an update on its own rival bids.
Ultra Electronics said it has agreed to a takeover offer from former London-listing Cobham.
Cobham will pay GBP35.00 per share in cash for Ultra, valuing the London-based aerospace and defence engineering company at about GBP2.57 billion, which includes a 16.2 pence interim dividend declared earlier by Ultra.
Ultra closed at GBP31.52 each in London on Friday. The shares were up 6.1% to GBP33.56 early Monday.
The deal follows a number of earlier proposals, Ultra said, the first of which was made on June 29 at a price of GBP28.00 per share.
Cobham had said on June 25 that it was considering a combination with Ultra. Later that day, Ultra confirmed it had held early talks but said it had terminated discussions. On July 23, it confirmed it had received the GBP35.00 per share offer the board has now accepted.
On Monday, Ultra said Cobham will give commitments to the UK government to win approval for the deal.
"Cobham recognises the specific importance of Ultra's contribution to the UK's economy and national security and therefore Cobham and Cobham Group Holdings have agreed with Ultra in the cooperation agreement that they will offer legally binding and enforceable commitments to HM government in respect of the Ultra group."
Aerospace contractor Cobham was a FTSE 250 company before it was bought by private equity firm Advent International in January 2020.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.7% at 7,168.42
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Hang Seng: down 1.0% at 26,119.64
Nikkei 225: closed down 1.6% at 27,523.19
DJIA: closed marginally higher, up 15.53 points at 35,515.38
S&P 500: closed up 0.2% at 4,468.00
Nasdaq Composite: closed marginally higher, up 6.64 points at 14,822.90
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EUR: down at USD1.1783 (USD1.1795)
GBP: down at USD1.3841 (USD1.3859)
USD: down at JPY109.36 (JPY109.76)
GOLD: down at USD1,773.60 per ounce (USD1,775.40)
OIL (Brent): down at USD69.64 a barrel (USD70.94)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Monday's Key Economic Events still to come
1100 BST Ireland goods exports and imports
0830 EDT US Empire State manufacturing survey
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US officials say they are taking steps to secure Kabul's international airport to enable the safe departure of thousands of US and allied personnel from Afghanistan on civilian and military flights. Afghanistan's embattled president left the country earlier on Sunday joining his fellow citizens and foreigners in a stampede fleeing the advancing Taliban and signalling the end of a 20-year Western experiment aimed at remaking Afghanistan. In a joint statement on Sunday night, the State Department and the Pentagon say the US security presence will have expanded to nearly 6,000 troops over the next two days. Those forces will take over air traffic control and focus on civilian and military departures. A State Department official told The Associated Press that almost all US Embassy personnel have relocated to a facility at the Hamid Karzai International Airport.
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President Joe Biden and other top US officials were stunned by the pace of the Taliban's nearly complete takeover of Afghanistan, as the planned withdrawal of American forces urgently became a mission to ensure a safe evacuation. The speed of the Afghan government's collapse and the ensuing chaos posed the most serious test of Biden as commander in chief, and he was the subject of withering criticism from Republicans who said that he had failed. Biden campaigned as a seasoned expert in international relations and has spent months downplaying the prospect of an ascendant Taliban while arguing that Americans of all political persuasions have tired of a 20-year war,
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Growth in China's retail sales and industrial production slowed in July, with a rebound of Covid-19 dragging on demand while recent floods disrupted businesses. Retail sales rose 8.5% year-on-year in July, the National Bureau of Statistics said, below a Bloomberg consensus forecast of analysts. This figure was also below 12% growth in June, likely reflecting the virus resurgence in dozens of places last month, according to analysts. "The spread of domestic outbreaks and natural disasters have affected the economy of some regions, and economic recovery remains unstable and uneven," NBS spokesman Fu Linghui told a press briefing. But he added that "the national economy continues to stabilise and recover" overall. Industrial production rose 6.4% in July, easing as well from the month prior, the NBS said. China's urban unemployment rate, meanwhile, ticked up to 5.1%. Iris Pang, ING's chief economist for Greater China, told AFP industrial output was weak "because of the semiconductor chip shortage that has affected production".
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Japan's economy grew 0.3% in the three months to June, slightly more than expected despite a surge in virus cases and new restrictions. The growth came after a contraction in the world's third-largest economy in the previous quarter, driven by a slowdown in consumption after the government introduced stay-at-home requests as infections surged. Economists surveyed by Bloomberg had forecast just 0.1% quarter-on-quarter growth. The data released by the cabinet office also showed a slight upwards revision for the first quarter, when the economy shrank 0.9%, compared to a previous estimate of 1.0%. Japan recorded growth in the two quarters to December, but that came to a halt with a resurgence in coronavirus cases over winter that led to the imposition of states of emergency.
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BROKER RATING CHANGES
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HSBC CUTS BIG YELLOW GROUP TO 'HOLD' ('BUY') - TARGET 1,533 (1,150) PENCE
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PEEL HUNT RAISES PROVIDENT FINANCIAL TO 'HOLD' ('REDUCE') - PRICE TARGET 324 (200) PENCE
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COMPANIES - FTSE 100
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BHP Group and Woodside Petroleum both confirmed that they are in talks with regarding the possible acquisition by Woodside of BHP's petroleum business. "BHP confirms that we have initiated a strategic review of our Petroleum business to re-assess its position and long-term strategic fit in the BHP portfolio. A number of options are being evaluated. One option is a potential merger of the Petroleum business with Woodside Petroleum and a distribution of Woodside shares to BHP shareholders," BHP said. The division is worth about USD14.7 billion, according to Bloomberg. Perth-based Woodside, for its part, said it "continuously reviews the composition of its asset portfolio and opportunities to create and deliver value for shareholders". "Woodside is engaged in discussions with BHP regarding a potential merger involving BHP's entire petroleum business through a distribution of Woodside shares to BHP shareholders," Woodside said.
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Lloyds Banking's new chief executive, Charlie Nunn starts on Monday, the bank confirmed, meaning interim CEO William Chalmers reverts to chief financial officer.
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COMPANIES - FTSE 250
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Meggitt said it continues to recommend the takeover approach from Parker-Hannifin. A court and general meeting date has been set for September 21 to approve the 800 pence per share Parker-Hannifin offer, which was made on August 2 and is worth about GBP6.3 billion. Meggitt made clear that its directors continued to "recommend unanimously" to shareholders the offer. Regarding the rival approach from TransDigm, for 900p per share, a date will be set by the UK Takeover Panel for the Cleveland, Ohio-headquartered aerospace manufacturer to clarify its intentions, Meggitt noted.
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Future PLC has acquired consumer media subscriptions business Dennis for about GBP300 million. The media company said Dennis will be "materially earnings enhancing" and the deal will be funded from existing debt facilities. As part of the acquisition, Future is acquiring the The Week, MoneyWeek, Kiplinger, Science & Nature, IT Pro, Computer Active, PC Pro, Minecraft World, and Coach. Whilst the current owners, Exponent Private Equity, will retain Viz, Fortean Times, Cyclist and Expert Reviews. Dennis generated revenue of GBP104.8 million in 2020, a 12% rise on 2019. Future Chief Executive Zillah Byng-Thorne said: "The materially earnings enhancing acquisition is highly complementary to our longstanding 'US first' mindset and provides an attractive opportunity to scale our recently created 'Wealth' vertical, whilst diversifying our presence in our 'Knowledge' and 'B2B Pro Technology' verticals." The announcement confirmed a report by Sky News on Saturday.
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Monday's Shareholder Meetings
no events scheduled
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By Tom Waite; thomaslwaite@alliancenews.com
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