LONDON BRIEFING: LSE And Deutsche Boerse Agree All-Share Merger

LONDON (Alliance News) - With a big day ahead for markets Wednesday, London shares made a firm start to trading. The UK Budget will be presented at 1230 GMT, while the outcome of the US Federal Reserves policy-setting meeting will be announced after the London close.

As expected, London Stock Exchange Group and Deutsche Boerse announced they have reached an agreement to merge, having entered into talks last month.

Xavier Rolet, the chief executive of LSE who will stand down when the deal is completed, said he was "very pleased" to finally announce the proposed merger between the two firms, and said he "100% supports the merger" and believes it is "absolutely the right time" to conduct the deal.

The merger will be carried out through the creation of a new UK holding company which will acquire LSE Group via a scheme of arrangement. LSE Group shareholders will get 0.4421 of a share in the newly-combined company for each LSE share they currently own, meaning they will own 45.6% of the group, with Deutsche Boerse shareholders have 54.4%.

The pair said the combined group will maintain headquarters in London and Frankfurt, and the board will have equal representation from both companies.

On a call with journalists Wednesday morning, both LSE and Deutsche said they will have be having a "successful transaction" regardless of the outcome on the British referendum on European Union membership in June.

Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.5% at 6,169.28
FTSE 250: up 0.3% at 16,678.57
AIM ALL-SHARE: up 0.1% at 711.53
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Hang Seng: closed down 0.2% at 20,257.70
Nikkei 225: closed down 0.8% at 16,974.45
DJIA: closed up 0.1% at 17,251.53
S&P 500: closed down 0.2% at 2,015.93
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GBP: down at USD1.4107 (USD1.4159)
EUR: down at USD1.1079 (USD1.1106)

GOLD: down at USD1,230.18 per ounce (USD1,231.40)
OIL (Brent): up at USD38.97 a barrel (USD38.53)

(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Wednesday's Key Economic Events still to come
(all times in GMT)

09:30 UK ILO unemployment rate and average earnings
11:00 US MBA mortgage applications
12:30 US housing starts and building permits
12:30 US consumer price index
12:30 UK Budget Report
12:30 Canada manufacturing shipments
13:15 US industrial production and capacity utilization
13:30 UK Conference Board Leading Economic Index
14:30 US EIA Crude Oil Stocks
18:00 US Fed Interest Rate Decision
18:00 US FOMC Economic Projections
18:30 US Fed Monetary Policy Statement and press conference
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The UK Serious Fraud Office said it has closed its investigation into allegations of price-rigging in the foreign exchange market. The SFO said it had conducted a "thorough and independent" investigation into the market in the past 18 months and concluded there is "insufficient evidence for a realistic prospect of conviction". It said that, while reasonable grounds exist to suspect serious or complex fraud had been committed, the evidence found would not be enough to secure a criminal conviction in the UK. The SFO said it will continue to liaise with the US Department of Justice on its ongoing investigation into the foreign exchange market.
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China is set to achieve its economic growth targets despite global headwinds and the nation will push ahead with reforms, Premier Li Keqiang told reporters after the 12th National People's Congress meeting in Beijing. Lawmakers approved the economic plan for the 2016-2020 period. China aims to achieve an average growth of above 6.5% in the next five years. The government has lowered its growth target for 2016 to a range of 6.5%-7% and loosened its fiscal stance to lessen the reliance of the economy on exports. The economy had expanded at the slowest pace in 25 years in 2015, when GDP climbed 6.9% compared to the government's full-year target of about 7%.
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The Bank of Japan has scope to lower rates further, In reply to a question from a lawmaker, Governor Haruhiko Kuroda said it was theoretically possible to cut the benchmark rate to as low as minus 0.5%. The Bank of Japan left its stimulus measures and negative interest rates unchanged after its policy session on Tuesday.
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Republican front-runner Donald Trump knocked out rival presidential candidate Marco Rubio, but he was denied a sweep in the five states that held primaries Tuesday by John Kasich, who won his home state of Ohio. On the Democratic side, former secretary of state Hillary Clinton booked her own easy victories in Florida, North Carolina and Ohio.
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A suspect armed with a Kalashnikov rifle was killed during a police raid in Brussels, prosecutors said in a statement, adding that the person has not yet been identified. "The investigation is actively continuing, day and night, and it is not possible to currently give further clarifications, so as not to harm the investigation," the statement said.
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Russia's decision to pull out some of its troops from Syria has raised hopes that it could help move the peace talks in Geneva forward. Moscow began moving out military equipment and personnel on Tuesday but said it planned to keep 800 soldiers in the country for reconnaissance and to protect its military bases in Syria. With Russia's decision to remove "half its forces immediately" from Syria, along with the beginning of peace talks, US Secretary of State John Kerry said that "this is a moment to seize, not waste." Kerry plans to travel to Moscow next week to meet with Russian President Vladimir Putin and Foreign Minister Sergei Lavrov and to discuss how to move the political process on Syria forward.
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Turkey and the EU must still resolve a "catalogue of issues" on a migration deal being hashed out ahead of a summit this week, EU President Tusk says following talks in Ankara with Turkish Prime Minister Ahmet Davutoglu. Brussels and Ankara had hoped to reach agreement by Friday on a proposal first outlined eight days ago, aimed at stemming migration flows from Turkey to Europe. But the plan has run into legal hurdles and objections out of several EU capitals.
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BROKER RATING CHANGES
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TRADERS: CREDIT SUISSE RAISES CAIRN ENERGY TO 'NEUTRAL' ('UNDERPERFORM')
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TRADERS: CANACCORD CUTS CAIRN ENERGY TO 'HOLD' ('BUY')
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BERENBERG RAISES GREGGS TO 'HOLD' ('SELL') - TARGET 1020 (925) PENCE
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TRADERS: CITIGROUP CUTS LONMIN TO 'SELL' ('NEUTRAL')
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TRADERS: CITIGROUP CUTS ANGLO AMERICAN TO 'SELL' ('NEUTRAL')
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GOLDMAN INITIATES MEDICLINIC INTERNATIONAL WITH 'SELL'
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COMPANIES - FTSE 100
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Engineer Smiths Group said pretax profit rose in the first half thanks to better operating margins, though its John Crane business continues to suffer amid the tough oil and gas markets. The diversified engineer, which will be demoted from the FTSE 100 next week, said pretax profit for the six months to the end of July was GBP168.0 million, up from GBP131.0 million a year earlier. Revenue fell to GBP1.37 billion from GBP1.42 billion, but the group's operating margin improved to 13.3% from 11.6%. Smiths said it will pay an interim dividend of 13.25 pence per share, up from 13.00p a year earlier.
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Hikma Pharmaceuticals, which also will be demoted to the FTSE 250 next week, reported a fall in pretax profit in 2015, but forecast a significant rise in revenue for the year ahead, helped by its recent acquisition of the Roxane Laboratories, despite lowering its guidance for the Roxane business last month. The company reported a pretax profit of USD318 million, down from USD362 million in 2014, as revenue slipped to USD1.44 billion from USD1.49 billion the year before. Hikma proposed a final dividend of 21 cents per share, taking its total dividend to 32 cents for the year, in line with what it paid in 2014.
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COMPANIES - FTSE 250
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Moneysupermarket.com Group founder Simon Nixon has completed the sale of his entire remaining stake in the company, according to sole bookrunner Credit Suisse. Credit Suisse Securities placed 37.8 million shares on behalf of Nixon at 328.00 pence per share, raising a total of GBP124.0 million. The shares sold represent around 6.9% of the company's issued share capital. Moneysupermarket shares closed at 343.6p on Tuesday and were down 4.4% at 328.50p early Wednesday. The intended sale was announced soon after the market close Tuesday.
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Tullow Oil said it has encountered "good oil shows" across an interval of over 700 metres in the Cheptuket-1 well in Block12A in northern Kenya. The well is the first one to test the Kerio Valley Basin and was drilled by the PR Marriott Rig-46 to a final depth of 3,083 metres.
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Investment company Allied Minds said Allied-Bristol Life Sciences, its joint venture with US drugs company Bristol-Myers Squibb, has signed a collaboration with New York University. Allied-Bristol has launched iβeCa Therapeutics to licence proprietary compounds from the NYU School of Medicine which will target the Wnt pathway. The Wnt pathway plays a key role in the development and progression of a number of cancers.
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COMPANIES - LONDON MAIN MARKET AND AIM
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Paysafe Group posted a big drop in pretax profit due to costs related to the acquisition of Skrill, but revenue surged higher ahead of Paysafe's ascent to the FTSE 250. The payments company said its pretax profit fell to USD11.8 million in the year to the end of December, from USD59.0 million a year earlier. The decline was due to costs related to the purchase of Skrill, which the group acquired through a reverse takeover in 2015 while still called Optimal Payments.
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Inkjet printing technology company Xaar posted lower pretax profit and revenue for 2015, taking a hit from the ceramic tile market as it outlined its 2020 strategic plans. Xaar's pretax profit for the year to the end of December fell to GBP13.6 million from GBP23.1 million a year earlier, as revenue declined to GBP93.5 million from GBP109.2 million. Xaar will pay a final dividend of 6.3 pence, taking its total dividend for 2015 to 9.45p, up from 9.00p in 2014.
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COMPANIES - INTERNATIONAL
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French outsourcing and catering group Sodexo announced it has been awarded a ten-year contract with mining company Rio Tinto, estimated at AUD2.5 billion over the ten years, to deliver integrated facilities management services in the company's extensive operations in Australia's Pilbara region. This is the largest contract of its kind for Sodexo and, it said, exemplifies the group's ability to deliver on major contracts in the Energy & Resources sector.
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Business software giant Oracle reported a drop in profit for the third quarter, as revenues declined reflecting strong dollar. Nevertheless, earnings for the quarter trumped Wall Street estimates, while revenues fell short of expectations, sending shares up by about 4% in the after-hours trading. Redwood Shores, California-based Oracle's third-quarter profit dropped to USD2.14 billion from USD2.50 billion a year before. Revenue for the quarter dropped 3% to USD9.01 billion from USD9.33 billion a year before.
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The Federal Communications Commission Chairman Tom Wheeler is likely to circulate a draft order as soon as this week approving Charter Communications's deal to buy Time Warner Cable with certain conditions, the Wall Street Journal reported citing people familiar with the matter. The report indicated that the order would impose a number of conditions on the transaction, many of them aimed at boosting online video as a competitor to cable.
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CBS Chief Executive Officer Leslie Moonves said at an investor presentation that the company will explore strategic options for radio division as part of plans to "hone" its asset portfolio. All options are on the table, including a spinoff, split and sale. CBS Radio operates 117 radio stations in 26 US markets, including WFAN in New York. Cumulus Media could be a potential buyer, the Wall Street Journal reported.
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Wednesday's Scheduled AGMs/EGMs

Chenavari Capital Solutions
Savannah Resources
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By Tom Waite; thomaslwaite@alliancenews.com; @thomaslwaite

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