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(Alliance News) - Tesco on Monday confirmed it is to sell its businesses in Thailand and Malaysia to CP Group for USD10.6 billion.
The supermarket chain expects the sale to complete in the second half of 2020. The company said after the sale it intends to return GBP5.0 billion to shareholders via a special dividend with associated share consolidation.
"Following inbound interest and a detailed strategic review of all options, we are announcing today the proposed sale of Tesco Thailand and Tesco Malaysia. This sale releases material value and allows us to further simplify and focus the business, as well as to return significant value to shareholders. I would like to thank all of our Tesco Thailand and Tesco Malaysia colleagues for their dedication, professionalism and service to our customers, which has resulted in the creation of such a strong business. I am confident that the agreement we have reached with CP Group presents an exciting opportunity for their continued success," said Tesco Chief Executive Dave Lewis.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: called down 9.8% at 5,857.10
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Hang Seng: down 4.4% at 24,988.85
Nikkei 225: closed down 5.07% at 19,698.76
DJIA: closed down 0.9%, at 25,864.78
S&P 500: closed down 1.7% at 2,972.37
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GBP: up at USD1.3190 (USD1.3020)
EUR: up at USD1.1472 (USD1.1325)
Gold: up at USD1,681.24 per ounce (USD1,665.00)
Oil (Brent): down at USD33.67 a barrel (USD46.00)
(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
0815 EST Canada Housing starts
0830 EDT Canada Building permits
1000 EDT US Employment trends index
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UK retail footfall slumped sharply, numbers on Monday showed, with shoppers shunning the high streets in February due to heavy rainfall and windy weather. Storms Ciara, Dennis and Jorge swept the UK, leading to a spate of flood warnings during the country's wettest February on record. Retail destinations in the UK were yet to feel the bite from the coronavirus during the month of February, however. Data from Springboard Footfall Monitor & Insights showed footfall was down 4.9% annually in February. Data from January showed a 0.5% year-on-year slip in total retail footfall, with footfall in shopping centres up 0.2%, the first rise since March 2017. There was no such good fortune for UK shopping centres in February however, footfall was down 2.5% year-on-year. Promisingly however, helped by the January uptick, average footfall in shopping centres over the first two months of the year was down 1.1%, compared to 2.5% in the same period in 2019. Springboard said this may indicate that "shopping centres are on the cusp of achieving some stability in terms of footfall". High streets were unsurprisingly the worst hit in February, with footfall down 7.8%, down sharply from the 1.8% fall in January. In retail parks, footfall was down by 1.1%, slightly worse than the 0.5% fall in January. Springboard Marketing & Insights Director Diane Wehrle said: "A disparity of 6.7% between the monthly result for high streets and retail parks clearly demonstrates the exposure to extreme conditions that high streets have to contend with. In contrast, retail parks are much more sheltered from many of the vagaries that derail high streets." Turning to covid-19, Wehrle noted that its impact was not noticeable in February. Had it been a factor, footfall across all three retail destination types in the UK would have been impacted "more equally".
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Germany's trade surplus fell in January amid a rise in both exports and imports, according to the country's Federal Statistical Office. Destatis showed that Germany exported goods to the value of EUR106.5 billion and imported goods to the value of EUR92.7 billion, giving a trade surplus of EUR13.9 billion in January, down from EUR15.2 billion in December. Based on provisional data, exports declined by 2.1% and imports by 1.8% in January year-on-year. Compared with December, exports were flat and imports were up 0.5% after calendar and seasonal adjustments. Elsewhere, Destatis reported that Germany's industrial production in January was up by 3.0% on the previous month on a price, seasonal and calendar-adjusted basis. Year-on-year, January's production was down 1.3%. December's figure was revised to a 2.2% decrease in production from the prior months from an initial reported fall of 3.5%.
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The number of cases from the new coronavirus topped 100,000 worldwide as official data Saturday showed a significant hit to Chinese exports after the deadly outbreak brought much of the country to a halt. The World Health Organization called the spread of the virus "deeply concerning" as a wave of countries reported their first cases of the disease – which has now killed nearly 3,500 people and infected more than 100,000 across 92 nations and territories. The US was battling to contain an outbreak on a cruise ship where 21 people have tested positive for the virus The Grand Princess has been stranded off San Francisco since Wednesday – when it was supposed to dock – after it emerged that two people who had been on the ship during its previous voyage had contracted the virus. One later died. In China, where the outbreak began in December, the virus has wreaked havoc on the world's second-largest economy, shutting down businesses and disrupting global supply chains. The negative impact was shown in official data Saturday, with China's exports plunging 17.2% in the first two months of the year. Slovakia, Serbia, the Vatican, Peru, Cameroon and Togo have all reported their first cases while the Netherlands recorded its first death on Friday. Cameroon is the first central African country to register a case of the deadly virus. Stock markets and oil prices have collapsed as investors panic over the expected devastating damage of the coronavirus to global economic growth.
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The number of US coronavirus cases soared past 500 Sunday, including two further deaths, as California braced for the arrival of infected cruise ship passengers and saw a major tennis event canceled. The surge came as President Donald Trump defended his administration's "perfectly coordinated" response to the epidemic, after heavy criticism over health cuts and strategic blunders that have failed to stem its rapid spread. Some 30 US states have been hit by the novel coronavirus, with Oregon the latest to declare an emergency, and 60 million people in California and New York are under crisis measures. Two more deaths linked to a virus-hit care home near Seattle were reported Sunday, bringing the nationwide toll to at least 21. A Johns Hopkins tally put the number of confirmed US cases at 554 by Sunday evening, with newly diagnosed patients in states including Pennsylvania, Illinois, Massachusetts, Connecticut and New Jersey. Medical officers headed for a virus-hit cruise ship stranded off San Francisco to begin screening passengers for an "unprecedented and difficult" landing operation. The Grand Princess, with 21 confirmed coronavirus infections among 3,500 people on board, is due to dock in nearby Oakland Monday. The operation to move passengers ashore will take two to three days, said Governor Gavin Newsom.
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Saudi Arabia launched an all-out oil war Sunday with the biggest cut in its prices in the last 20 years, Bloomberg News reported, after a failure by cartel OPEC and its allies to clinch a deal to cut production. A meeting of main producers was expected to agree to deeper cuts to counter the impact of the new coronavirus – but Moscow refused to tighten supply. In response, the Gulf powerhouse cut its price for April delivery by USD4-6 a barrel to Asia and USD7 to the US, with Aramco selling its Arabian Light at an unprecedented USD10.25 a barrel less than Brent to Europe, Bloomberg said.
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BROKER RATING CHANGES
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DEUTSCHE BANK CUTS INFORMA TO 'HOLD' ('BUY') - TARGET 715 (1050) PENCE
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RBC CUTS ANGLO AMERICAN TO 'OUTPERFORM' ('TOP PICK') - TARGET 2300 (3000) PENCE
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RBC CUTS ANGLO AMERICAN TO 'OUTPERFORM' (TOP PICK) - PRICE TARGET 2300 (3000) PENCE
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JPMORGAN RAISES ADMIRAL GROUP TO 'NEUTRAL' ('UNDERWEIGHT') - TARGET 2125(1925)P
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COMPANIES - FTSE 100
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Insurer Phoenix Group said it delivered strong results for 2019 and that its ReAssure acquisition remained on track to complete by mid-2020. For 2019, the company's reported net income came in at GBP29.16 billion compared to a net loss of GBP6.73 billion in 2018, while gross written premiums were up sharply to GBP4.04 billion from GBP2.65 billion. Pretax profit was up to GBP351 million in 2019 from GBP259 million the year before and the company reported that cash generation was up to GBP707 million from GBP664 million. The company said its five-year cash generation target increased by GBP0.1 billion to GBP3.9 billion for new business written during 2019. Its long-term cash generation guidance remains at GBP12 billion after 2019 cash remittance of GBP707 million. Phoenix declared a final dividend of 23.4 pence, bringing the total dividend to 46.8p from 46.0p the year before.
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The European Commission late Friday cleared the merger of Vodafone's Italian tower portfolio with INWIT, the towers unit of Telecom Italia. The deal was signed in December, in which Vodafone and Telecom Italia will retain joint control but will consider cutting their respective ownership levels to a minimum of 25% from 37.5%. The combined entity will remain listed on the Milan Stock Exchange. In talks with the Commission, both companies offered commitments, under which INWIT will make space available to third parties on 4,000 of its towers in more urbanised areas while committing to preserving existing tenancies. Vodafone will receive proceeds of EUR2.14 billion from the merger, which is set to be completed by May 19.
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COMPANIES - FTSE 250
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FirstGroup shareholder Coast Capital said it intends to seek an extraordinary general meting to de-merge the transport company's North American operations. The New York-based hedge fund, which holds a 10% stake in FirstGroup, wants to separate First Student and First Transit from the company's UK operations to create value for shareholders. FirstGroup announced a strategic review of its operations three months ago, but since then "shareholders have heard nothing from the company or its board, and the share price has declined by 20%," Coast Capital said. Coast Capital said: "Coast Capital believes that in the absence of a full divestment notably above book value, the company must pursue a listing of these businesses on a North American exchange and the LSE. "This will allow UK investors to realize value from their investment in the company, and enable new North American investors, public or private, to buy into the North American operations. Furthermore, the management teams, employees, and clients of North American operations can only benefit from a reinvigorated investor base which will invest in and help grow the operations."
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Cineworld said one of its shareholders Global City Theatres has agreed to sell 108 million shares in the company, representing a 7.9% stake for around GBP116 million. Following the sale, GCT will hold 275 million ordinary shares in Cineworld. Shares in both GCT and its parent company Global City Holdings are held in trusts for the benefit of the children of Cineworld Chief Executive Moshe Greidinger and Deputy CEO Israel Greidinger. Cineworld added that GCT remains a "committed long-term holder" of the company. "As part of a refinancing of GCT's financial arrangements, the aggregate proceeds of the share sale will be used to restructure the margin loan facility provided to GCT by Barclays Bank and HSBC Bank into a new secured corporate loan facility, with no margining provisions or connection to the price of Cineworld ordinary shares," the company said.
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COMPANIES - INTERNATIONAL
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German wind turbine manufacturer Nordex said its 2019 performance was in line with expectations, with growth in earnings and sales for the period. For the year, Nordex reported a 22% increase in earnings before interest, taxes, depreciation and amortisation at EUR123.8 million from EUR101.7 million, on consolidated sales that grew by 33% to EUR3.28 billion from EUR2.46 billion. Order intake rose by 31% to 6.21 gigawatts from 4.75 gigawatts the prior year, with 51% accounted for in Europe, and 28% in North America.
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German property firm LEG Immobilien said Monday it expects to report growth in 2020 following a strong performance in 2019. As at December 31, LEG reported net asset value per share rose by 13% to EUR105.39 from EUR93.40 at the same date the year before, driven by an 8.3% increase in the property portfolio value to EUR923.4 million. Funds from operations - which LEG considers a key performance indicator - increased by 7.1% year-on-year to EUR341.3 million from EUR318.6 million, as efficiency enhancement measures more than offset cost increases for craftsmen services. In-place like-for-like rent rose by 2.1% to EUR5.82 per square metre, while the vacancy rate was down at 3.0% from 3.1% in 2018. LEG Immobilien declared a dividend of EUR3.60 per share, up 2.0% from EUR3.53 the prior year. Looking ahead, the group expects funds from operations to increase in 2020 to between EUR370 and EUR380 million, reflecting an 8.4% to 11% rise from the figure in 2019.
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Monday's Shareholder Meetings
Ecofin Global Utilites & Infrastructure Trust
Global Resources Investment Trust
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By Tapan Panchal; tapanpanchal@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.
