(Alliance News) - The following is a summary of top news stories Thursday.
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COMPANIES
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Philip Morris International's controversial takeover of Vectura is now unconditional in all respects after holders of 75% of Vectura shares accepted the deal before the Wednesday deadline, the tobacco company said. Philip Morris needed 50% support from shareholders of Vectura, including the 29% stake it bought through on-market purchases after announcing the offer. Having already received all necessary regulatory approvals, the deal is now ready to go ahead. Chippenham, Witshire-based Vectura makes inhalers for drug-makers to use in products such as asthma medication. The GBP1.02 billion takeover by Philip Morris caused controversy, with charities saying the cigarette maker would profit from illnesses it caused. Philip Morris said the deal is part of its "evolution into a broader healthcare and wellness company."
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Oxford Nanopore Technologies confirmed its intention to float on the London Main Market and said it has agreed a strategic partnership with Oracle, which will be a cornerstone investor. Oxford Nanopore makes sensors that perform precise molecular analyses, such as DNA and RNA sequencing. It plans to raise GBP300 million in the initial public offering, and expects to list on the main market in early October. The IPO will be made up of new and existing shares. Oxford Nanopore is looking to build on the GBP2.48 billion valuation it achieved in a funding round in May, Reuters reported earlier this month. The flotation is a win for IP Group, a founding investor in Oxford Nanopore with a 14% stake.
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Equipment rental firm Ashtead Group posted a first-quarter earnings hike and upped its annual outlook. Ashtead tipped its full-year results to be ahead of earlier expectations after a "strong quarter with clear momentum". In the financial first quarter ended July 31, revenue rose 21% to USD1.85 billion from USD1.51 billion a year earlier. In comparison, during the first quarter of 2019 the company reported revenue of GBP1.28 billion - or around USD1.77 billion at current exchange rates. Pretax profit, meanwhile, surged to USD415.8 million, up 74% from USD240.6 million the year before. The company reported profit before tax of GBP304.7 million - or around USD421.5 million - during the same period in 2019, prior to the pandemic. "The group delivered a strong quarter with rental revenue up 22% over the prior year, but more importantly up 12% when compared with the first quarter of 2019-20, both at constant currency. This reflects continued market outperformance across the business," said Chief Executive Brendan Horgan.
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Ryanair is targetting annual traffic of 225 million passengers by March 2026, up from its previous target of 220 million and the 149 million it carried before the Covid-19 pandemic. It has lifted its five-year traffic growth forecast to 50% from 33% previously. Ryanair also plans to take delivery of 210 Boeing 737 "gamechanger" aircraft over the next five years. "These aircraft will deliver industry lowest costs, reduced emissions, and will enable Ryanair accelerate its post-Covid growth, as opportunities open up at primary and secondary airports all over Europe, particularly where legacy carriers have failed or reduced fleet sizes as a result of Covid and state aid," the company added. Ryanair's annual general meeting will be held on Thursday. It said that, based on proxy votes it has received, all resolutions have been passed.
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THG said it will spin-out and list its beauty unit, as it announced a wider first-half loss and left full-year guidance unchanged. THG Beauty, the company's biggest unit by revenue and which includes brands such as ESPA and retailer Lookfantastic, will go public in the first half of 2022. It's the latest move in a wider corporate restructuring announced in May in which all key trading divisions will be separated in some form. Following the Beauty IPO, SoftBank will exercise an option to buy a 20% stake in e-commerce technology division Ingenuity for USD1.6 billion. THG will then explore an IPO or another structural option for that unit, "with the objective to maximise value for all shareholders". THG's other main divisions are Nutrition, which makes supplements, and OnDemand, a marketing and sales service. THG stands for The Hut Group.
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John Lewis Partnership trimmed its loss despite booking GBP54 million in redundancy costs as the UK retailer was forced to make "difficult but necessary decisions". In the six months to July 31, the eponymous department store and operator of the Waitrose grocery chain reported a narrowed pretax loss of GBP29 million from GBP635 million a year earlier. Two years earlier, it posted a GBP192 million profit, aided by a GBP249.0 million gain from the closure of a defined-benefit pension scheme. Before exceptional items and its partnership bonus, John Lewis swung to a pretax profit of GBP69 million from a GBP55 million loss a year earlier. The period also represented an improvement from the GBP52 million loss in the six months ended July 2019. Exceptional costs during the half year totalled GBP98 million, including GBP54 million in restructuring expenses. Revenue rose 4.8% to GBP5.15 billion from GBP4.92 billion and was up 7.6% from pre-virus levels.
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Co-op warned of food price increases and pressure on its annual profits from the mounting supply chain crisis as it swung to a half-year loss. The group's chief executive, Steve Murrells, told the PA news agency that supermarket price rises are "coming" as retailers across the UK battle with the lorry driver shortage, increased shipping costs and global commodity price rises. He said the company will look to offset the cost pressures "as best we can", but said "some of that will filter down" to customers. The member-owned group, which also provides funeral and other services, reported underlying pretax operating losses of GBP15 million for the six months to July 3, compared with profits of GBP56 million a year ago, as it was hit by product availability issues and the continuing impact of the pandemic.
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Goldman Sachs on Wednesday said it has agreed to acquire Nasdaq-listed home improvement consumer loan fintech platform GreenSky Inc through an all-stock deal valued at USD2.24 billion. Under the agreement, each GreenSky stockholder will receive 0.03 shares of common stock of Goldman Sachs for each GreenSky share held. Based on Goldman Sachs' closing price on Tuesday at UD403.85, this reflects a price of USD12.11 per GreenSky share. The boards of both companies have approved the deal, which is now conditional on approval from GreenSky stockholders and regulators. The deal is expected to close in the fourth quarter of 2021 or first quarter of 2022. The acquisition is expected to boost Goldman Sachs' ability to provide a consumer banking platform.
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Canadian Pacific Railway said it has reached an agreement to buy US freight company Kansas City Southern Railway, bringing to an end a bidding war with competitor Canadian National Railway. Canadian Pacific said in a statement that it plans to buy KCS for approximately USD27 billion and take on its USD3.8 billion debt. The boards of directors of both companies have agreed to the deal. The two Canadian companies were locked in a battle to be the first North American rail company to connect the ports and factories of Mexico, the US and Canada by rail.
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MARKETS
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European stock markets were higher near midday on Thursday, following a strong US close on Wednesday and ignoring a negative session in Asia. However, Wall Street was pointed for a lower open.
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CAC 40: up 1.1% at 6,656.26
DAX 30: up 0.6% at 15,711.81
FTSE 100: up 0.5% at 7,053.81
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Hang Seng: closed down 1.5% at 24,667.85
Nikkei 225: closed down 0.6% at 30,323.34
S&P/ASX 200: closed up 0.6% at 7,460.20
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DJIA: called down 0.1%
S&P 500: called down 0.1%
Nasdaq Composite: called down 0.2%
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EUR: down at USD1.1775 (USD1.1817)
GBP: down at USD1.3823 (USD1.3840)
USD: flat at JPY109.39 (JPY109.38)
Gold: down at USD1,783.93 per ounce (USD1,792.85)
Oil (Brent): down at USD75.60 a barrel (USD75.75)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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The trade surplus in the euro area narrowed slightly in July when compared to the prior year, figures from Eurostat showed. The euro area recorded a EUR20.7 billion surplus in trade in goods with the rest of the world in July versus EUR26.8 billion a year ago. The first estimate for euro area exports of goods to the rest of the world in July was EUR206.0 billion, an increase of 11% compared with July 2020. Imports from the rest of the world stood at EUR185.3 billion, a rise of 17% year-on-year. Trade within euro area members rose to EUR179.7 billion in July, also up 17% compared with July 2020.
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Japan's trade balance was in deficit in August as imports surged more than exports from a year before, the Ministry of Finance reported. Japan's trade deficit stood at JPY635.36 billion - about USD5.8 billion - in August, compared to a JPY227.98 billion surplus recorded for the same month a year ago. The country's exports rose by 26% to JPY6.606 trillion in August from JPY5.233 trillion a year before. Imports jumped by even more though, by 45%, to JPY7.241 trillion from JPY5.005 trillion year-on-year.
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Australia's unemployment rate edged down in August, the tenth successive monthly fall. Data from the Australian Bureau of Statistics showed the country's unemployment rate fell by 0.1 of a percentage point to 4.5% in August when compared to July. The August figure outperformed market estimates; consensus cited by FXStreet forecast the unemployment rate to increase to 4.9% in August. "The fall in the unemployment rate reflects a large fall in participation during the recent lockdowns, rather than a strengthening in labour market conditions," said Bjorn Jarvis, head of labour statistics at the ABS. The national participation rate fell by 0.8 percentage points to 65.2% in August, following a 0.2 percentage point fall in July.
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A major contract between Australia and a French developer to build a fleet of 12 submarines was scrapped after Canberra joined a trilateral partnership with London and Washington. Australian Prime Minister Scott Morrison, US President Joe Biden and UK Prime Minister Boris Johnson on Thursday announced a new partnership, known by its acronym Aukus, which will allow the countries to share technology covering cyber security, artificial intelligence, underwater systems and long-range strike capabilities. The first initiative part of the landmark security pact will see a trilateral effort of 18 months to "identify the optimal pathway" to get Australia nuclear-powered submarines, the leaders said. The plan will see a controversial contract to build 12 French-designed submarines scrapped. According to Australian media the deal was worth some AUD90 billion, about USD66 million. Naval Group, a majority French state-owned defence and energy contractor, previously known as DCNS, was awarded the contract in 2016 to design the submarines for the Australian navy.
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UK Prime Minister Boris Johnson is expected to continue his ministerial shake-up as he reshapes the junior ranks following an overhaul of some of the Cabinet's top positions. The prime minister shuffled his front bench late into Wednesday evening in a day that saw Liz Truss appointed the first woman Conservative foreign secretary, Dominic Raab demoted, and Gavin Williamson sacked. Despite wielding the axe over a number of key Cabinet roles, Johnson continued the firing as he reshaped his junior ministerial set-up, with longstanding schools minister Nick Gibb the most prominent figure to be shown the door. Cabinet changes mean that two of the great offices of state are now held by women after Truss was promoted from international trade secretary and Priti Patel kept her role of Home Secretary despite speculation she would be sacked. Rishi Sunak, who occupies the other most esteemed office, continues as chancellor. Raab was demoted to Justice Secretary but handed the consolation prize of Deputy Prime Minister, formalising a role he undertook when Johnson was in hospital with Covid-19 last year. The change meant former Lord Chancellor Robert Buckland was also sacked, along with Robert Jenrick, who was replaced as Housing Secretary by Michael Gove. Gove has been handed powers well-beyond those enjoyed by his predecessor after he was entrusted by the prime minister with the added responsibility for driving his 'levelling up' reform agenda while maintaining his role in protecting the Union.
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By Tom Waite; thomaslwaite@alliancenews.com
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