LONDON (Alliance News) - The posturing between the world's two biggest brewers appeared to reach a conclusion early Tuesday, as Anheuser-Busch InBev and SABMiller said they have agreed a GBP71.28 billion deal for AB InBev to buy SABMiller to create a global beer giant.
AB InBev lifted its offer to GBP44 per share, and its smaller rival said it will be willing to recommend a bid at that price to its shareholders. SABMiller shares were up 9.1% at 3,950.00 pence early Tuesday.
Meanwhile, the UK government said it has exited completely from ownership of Royal Mail, selling a 13% stake for around GBP591.0 million under an accelerated bookbuilding process that was announced late Monday and planning to give away its remaining 1% to UK employees of Royal Mail. The government said it sold 130.0 million shares at a price of 455.0 pence per share. The stock was down 4.4% at 451.37 pence at the open Tuesday.
Worldpay shares started conditional dealings Tuesday, after it priced its GBP4.80 billion Main Market IPO, the biggest in London this year.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.2% at 6,356.08
FTSE 250: down 0.3% at 16,944.65
AIM ALL-SHARE: up 0.1% at 735.15
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Hang Seng: down 0.5% at 22,627.48
Nikkei 225: closed down 1.1% at 18,234.74
DJIA: closed up 0.3% at 17,131.86
S&P 500: closed up 0.1% at 2,017.46
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GBP: up at USD1.5372 (USD1.5343)
EUR: flat at USD1.1372 (USD1.1362)
GOLD: down at USD1,156.59 per ounce (USD1,161.16)
OIL (Brent): down at USD50.37 a barrel (USD51.77)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Tuesday's Key Economic Events still to come
(all times in BST)
09:30 UK Consumer, Retail and Producer Price indices
09:30 UK DCLG House Price Index
09:30 UK BOE Credit Conditions Survey
10:00 Germany ZEW Survey
10:00 EU ZEW Survey - Economic Sentiment
11:00 US NFIB Business Optimism Index
13:00 US Fed's Bullard speech
13:55 US Redbook index (MoM)
19:00 US Monthly Budget Statement
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Like-for-like sales in the UK advanced 2.6% on year in September, the British Retail Consortium said. That beat forecasts for an increase of 1.5% following the 1.0% decline in August. Overall sales were up an annual 3.9%, while non-food sales climbed 3.1%. Food sales were flat on month and up 0.2% over the last three months.
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China's exports declined at a moderate pace in September as the devaluation of yuan helped it from falling sharply amid weak global demand. At the same time, imports plunged due to a drop in commodity prices and subdued domestic demand. Exports slid 3.7% in September from a year ago, the General Administration of Customs reported. Economists had forecast it to drop at a faster pace of 6% following August's 5.5% decrease. Meanwhile, imports logged a sharp 20.4% contraction after falling 13.8% a month ago. This was the eleventh straight annual decline in imports. Imports were expected to decline 16%. The trade surplus totalled USD60.34 billion, bigger than a USD48.2 billion surplus expected by economists. In yuan terms, exports fell 1.1% and imports declined 17.7% on a yearly basis. The trade surplus came in at CNY376.2 billion.
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For the second time in three weeks, EU leaders will come together on Thursday to discuss how to stem the tide of refugees making their way to Europe, amid fears that the worsening conflict in Syria will drive another wave of people towards their continent. By Monday afternoon, more than 590,000 migrants and refugees had reached Europe via the Mediterranean Sea this year, while some 3,100 had lost their lives trying to do so, according to the International Organization for Migration. The recent start of Russian airstrikes in the country has complicated the situation even further and raised the spectre of many more Syrians leaving to seek protection elsewhere.
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Okinawa Governor Takeshi Onaga said the prefectural government has decided to cancel the approval for landfill work for the construction of a US military base on the south-western Japanese island. The central government is expected to take legal action to suspend the governor's decision as it plans to start building military facilities this autumn, which could take over the functions of US Marine Corps Air Station in Futenma, which is surrounded by residential areas in central Okinawa.
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BROKER RATING CHANGES
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TRADERS: UBS RAISES SMITHS GROUP TO 'NEUTRAL' ('SELL')
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TRADERS: CITIGROUP CUTS AB FOODS TO 'NEUTRAL' ('BUY')
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TRADERS: JPMORGAN RAISES GLAXOSMITHKLINE TO 'NEUTRAL' ('UNDERWEIGHT')
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TRADERS: UBS CUTS IMI TO 'NEUTRAL' ('BUY')
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TRADERS: CITIGROUP RAISES LADBROKES TO 'NEUTRAL' ('SELL')
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TRADERS: UBS CUTS FENNER TO 'SELL' ('NEUTRAL')
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COMPANIES - FTSE 100
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Anheuser-Busch InBev and SABMiller said they have agreed a GBP71.28 billion deal over a possible merger set to create a global beer giant. AB InBev lifted its offer to GBP44 per share, and its smaller rival said it will be willing to recommend a bid at that price to its shareholders. The previous offer valued SABMiller at GBP43.50 per share. In the event of an offer, AB InBev would agree to a "best efforts" commitment to secure regulatory approvals required for the deal to go through. A USD3 billion break fee would be paid to SABMiller in the event that an agreed deal fell through due to a failure to obtain regulatory clearances or the approval of AB InBev shareholders.
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The UK government said it has sold the majority of its 14% stake in Royal Mail for around GBP591.0 million under an accelerated bookbuilding process that was announced on Monday. The government said it has sold a 13% stake in Royal Mail, comprised of around 130.0 million shares, at a placing price of 455.0 pence per share, generating proceeds of GBP591.1 million. The government owned a 14% stake in Royal Mail, leaving it with a 1% shareholding after the placing. That remaining 1% stake, comprised of around 10.0 million shares, will be "gifted" to Royal Mail employees in the UK, marking the government's final disposal of shares.
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Barclays plans to name former JPMorgan investment banker Jes Staley as its new chief executive, The Financial Times reported. Citing two people familiar with the matter, and noting that Barclays declined to comment, the FT said Staley's appointment is set to be announced in the next two weeks. The report said the appointment requires approval from regulators. The FT article followed a Sky News report which said a successor to the ousted Antony Jenkins could be made within weeks. Chairman John McFarlane, who has been acting in an executive capacity since removing Jenkins in July, told some of the bank's most senior executives last week that he was close to appointing a new chief executive, the Sky News report said, citing insiders.
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Royal Dutch Shell is selling two assets in the North Sea, The Times reported. The assets are being sold as the Anglo-Dutch group and other big energy companies take action on high production costs and low crude prices. Citing industry sources, the newspaper said that Shell's stake in the Gannet field is being marketed to potential buyers. Shell owns 50% of the field. In addition, Shell wants to sell its 26% stake in Triton, a floating production, storage and offloading vessel, the report said.
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Chipmaker ARM Holdings is offering free pre-commercialization use of ARM Cortex-M0 processor IP and low-cost FPGA prototyping. This makes it far easier to design, prototype and produce system-on-a-chip or SoC components.
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COMPANIES - FTSE 250
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Bellway said it should be able to grow volumes by up to 10% in its current financial year, as the housebuilder reported a 44% jump in pretax profit in its most recent financial year and raised its dividend. In a statement, Bellway said pretax profit amounted to GBP354.2 million in the year ended July 31, compared with GBP246.0 million in the prior year, as revenue swelled to GBP1.77 billion from GBP1.48 billion. The housebuilder lifted its full-year dividend per share by 48% to 77.0 pence from 52.0p.
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Recruitment consultancy Michael Page International said Non-Executive Chairman Robin Buchanan plans to step down, as it reiterated its expectations for its full year. The company said its gross profit in the third quarter of 2015 rose 4.8% to GBP139.2 million from GBP132.9 million in the previous year. This growth was hit by volatility in foreign exchange rates, and at constant currency gross profit would have risen 10.2%.
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Vehicle distributor and retailer Inchcape said Finance Director John McConnell has resigned in order to return to Australia. He will leave the company in March 2016. The company has begun the process of identifying McConnell's successor, it said.
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COMPANIES - LONDON MAIN MARKET AND AIM
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Worldpay has been valued at GBP4.80 billion in its initial public offering, making the payments processor the biggest company to come to market in London so far in 2015. Worldpay's value by market capitalisation was based on an offer price of 240 pence per share. The company is to receive about GBP947.8 million from the offer. There were 900 million shares on offer in total. Advent International and Bain Capital, the company's private equity owners, sold 505.1 million shares, receiving GBP1.21 billion and being left with a 48.7% stake between them. Worldpay will have 2.0 billion shares in issue and a free float of 45%.
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Immunodiagnostic Systems Holdings said that near-term trading remains "challenging", as it forecast revenue in the second half of its current year to be slightly below the first half. However, the company said it has a "clear path" to growth, and expects to have "the first tangible results" from this path "before the end of the current financial year". Immunodiagnostic provides testing services and medical diagnostic products. For its first half to end-September, the company expects revenue of around GBP19 million, down from the GBP22.1 million it reported the year before.
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Circle Oil said the Ksiri West-A exploration well on the Sebou permit in Morocco has been tested and flowed at a maximum rate of 8.0 million standard cubic feet per day and will now be tied back to a pipeline to begin contributing production. The oil and gas company said the well was drilled to a total depth of 1,890 metres in September when it logged prospective gas zones prior to testing. The primary Main Hoot target interval was perforated from 1,817 to 1,826 metres measured depth and flowed gas at 8.0 million standard cubic feet per day on a 24/64 inch choke. "The flow rates achieved during the well test are at the upper end of our range of expectations, and the well will now be tied in to our existing infrastructure and put into production as soon as possible," said Chief Executive Mitch Flegg.
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COMPANIES - INTERNATIONAL
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The US Department of Justice is satisfied that tech giant Apple has put in place meaningful reforms to comply with antitrust laws despite the company having fought with a monitor appointed to oversee its sale of electronic books, Bloomberg reported. The Justice Department has reportedly recommended that the monitoring need not be extended as Apple has implemented meaningful antitrust policies, procedures and training programs that were lacking before.
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Tuesday's Scheduled AGMs/EGMs
Leeds Group
FinnAust Mining
Myanmar Investments
Premaitha Health
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By Tom Waite; thomaslwaite@alliancenews.com; @thomaslwaite
Copyright 2015 Alliance News Limited. All Rights Reserved.
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