LONDON MARKET CLOSE: Stocks mixed; Vectura surges on takeover

(Alliance News) - Stocks in London ended mixed on Wednesday with the FTSE 100 tentatively lower, while the FTSE 250 was lifted by M&A activity.

The FTSE 100 index closed down 2.86 points at 7,026.93. The mid-cap FTSE 250 index ended up 201.18 points, or 0.9%, at 22,640.08. The AIM All-Share index closed up 3.43 points, or 0.3%, at 1,252.52.

The Cboe UK 100 index closed down 0.1% at 700.30. The Cboe 250 ended 0.9% higher at 20,394.80. The Cboe Small Companies gained 0.1% at 14,888.20.

In Paris the CAC 40 ended flat, while the DAX 30 in Frankfurt ended down 0.1%.

"Yet another quiet session has seen the FTSE 100 hover between gains and losses, while US markets have erred on the cautiously positive side," said IG Group's Chris Beauchamp.

In the FTSE 100, Croda International closed up 2.6% after Goldman Sachs raised the speciality chemicals firm to Buy from Sell on a more upbeat view of its Consumer Care and Life Sciences units.

At the other end of the large-caps, Intertek ended the worst performer, down 5.0%. The quality assurance provider reported a fall in revenue for the first four months of 2021.

In the four months to April 30, revenue fell 3.0% year-on-year to GBP855.4 million from GBP881.6 million. On a constant currency, like-for-like basis, revenue was 2.7% higher year-on-year.

British Land closed down 3.7% after the property company reported a steep fall in portfolio value during a virus-hit financial year, though the property company has taken heart from a recent easing of lockdown measures in the UK.

British Land reported a narrowed loss, though it lost over GBP1 billion for the second year in-a-row.

EPRA net tangible assets per share fell 16% to 648 pence at March 31 from 773p a year earlier, while portfolio value fell 11% to GBP9.13 billion from GBP11.16 billion. British Land's NAV came in above company-compiled consensus forecasts of 644p.

British Land's pretax loss for the year was GBP1.05 billion, narrowed slightly from GBP1.12 billion. Meanwhile, underlying profit for the year fell 34% to GBP201 million from GBP306 million, though this topped consensus estimates of GBP198 million. Revenue was down 24% to GBP468 million from GBP613 million.

Rival Land Securities ended 0.8% lower.

In the FTSE 250, Vectura Group ended as the star performer, up 34% at 163.20p, after the pharmaceutical company said it has agreed to be taken over by Murano Bidco, a company controlled by funds managed by Carlyle Europe Partners V, in a deal worth GBP958 million.

Vectura is based in Chippenham, England and focused on the development of inhaled products. Murano has offered 155 pence per Vectura share, comprising 136p in cash and a 19p Vectura dividend.

In other M&A news from the sector, Spire Healthcare closed up 27% at 245p, after the private healthcare operator agreed to a cash takeover offer from Ramsay Health Care.

The offer of 240 pence per share is 24% above Spire's closing price on Tuesday of 193.00p. The offer values Spire's entire share capital at GBP999.6 million and gives the hospital operator an enterprise value, including debt, of GBP2.06 billion.

Mediclinic International, a 29.9% shareholder, said it has agreed to the takeover offer for its holding. The offer values this at GBP287.8 million, it noted. Mediclinic said it has provided Ramsay with an irrevocable undertaking to vote in favour of the offer. Mediclinic shares ended 6.8% higher in London and up 5.4% in Johannesburg.

Mediclinic reported strong annual results on Wednesday, saying that it adapted swiftly to the pandemic with a strong rebound in patient activity as Covid-19 restrictions eased, delivering a solid second-half financial performance.

For the year to March 31, the company reported a 3% fall in revenue to GBP3.00 billion, but said it swung to pretax profit of GBP104 million versus a GBP275 million loss posted the year before. This is after impairment of intangible assets reduced to GBP1 million from GBP482 million year-on-year.

The company declared no dividend after paying 3.20p per share the year before.

Going forward, Mediclinic said it is positioned for growth as restrictions ease and patient demand increases, but remained cautious given the ongoing pandemic.

Marks & Spencer closed up 8.5% after the high street stalwart swung to an annual loss, with its clothing and homewares arm continuing to be left behind by its more-success food business, but the retailer drew attention to progress on its revival plan and Ocado joint-venture.

Revenue in the financial year that ended April 3 fell 10% to GBP9.16 billion from GBP10.18 billion. The financial year had the benefit of an extra week, though its trading was severely hurt by the Covid-19 pandemic. M&S swung to a pretax loss of GBP209.4 million from a GBP67.2 million profit.

On a comparable 52-week basis, revenue in the UK Clothing & Home unit plunged 32% to GBP2.20 billion from GBP3.21 billion. The beleaguered division was a laggard even before the Covid-19 pandemic.

M&S said that Ocado Retail, its joint venture with online grocer Ocado Group, contributed GBP78.4 million in net profit during the year. Marks added that online revenue, minus Ocado Retail, stood at GBP1.5 billion. Ocado shares closed down 3.8%.

At the other end of the midcaps, C&C Group was the worst performer, down 11%, after the cider maker posted a swing to loss as revenue plunged during a virus-hit year, and announced plans for a GBP151 million fundraise, to secure vital cash as Covid-19 curbs ease.

The Dublin-based drinks manufacturer and distributor said it will raise the money through a rights issue. New shares will be offered at a price of 186 pence per share on the basis of 6 new shares for every 23 existing shares.

The Covid-19 pandemic meant bars and restaurants, important on-trade channels for the Magners and Bulmers maker, were forced to close.

As a result, C&C's revenue tumbled. In the financial year ended February 28, revenue dropped 56% to EUR736.9 million from EUR1.68 billion. The company swung to a pretax loss of EUR121.3 million from a EUR11.6 million profit.

C&C decided against an annual payout, after a 5.5 cents per share dividend a year earlier.

The dollar was rebounding against many of its counterparts on Wednesday as investors continued to monitor the tapering debate in the US.

US Federal Reserve Vice Chair Richard Clarida on Tuesday opened the door to talking about the central bank eventually considering pulling back support.

"It may well be...there will come a time in upcoming meetings we will be at the point where we can begin to discuss scaling back the pace of asset purchases," Clarida said on Yahoo Finance. "That was not the focus of the April meeting. It is going to depend on the flow of data."

The pound was quoted at USD1.4125 at the London equities close, marginally lower from USD1.4128 at the close Tuesday.

The euro stood at USD1.2214 at the European equities close, down from USD1.2236 late Tuesday. Against the yen, the dollar was trading at JPY109.01, up from JPY108.96 late Tuesday.

"The message from Fed in terms of tapering their asset purchases continue to resonate as per the latest minutes. Yesterday, Clarida re-iterated such message by being quoted for saying that tapering of asset purchases may happen 'in upcoming meetings'. For markets, such tapering would likely be tied to the pricing of interest rate hikes and depending on the timing and tone it would also limit upside risks to global inflation outcomes; supporting the dollar," analysts at Danske Bank said.

Stocks in New York were higher at the London equities close as market participants weighed updates on the US infrastructure debate.

The DJIA was up 0.2%, the S&P 500 index up 0.2% and the Nasdaq Composite up 0.5%.

Investors greeted reports that Senate Republicans plan to lift their infrastructure package to USD1 trillion, bringing them somewhat closer to US President Joe Biden's latest offer costing USD1.7 trillion.

Passage of an infrastructure package would add to momentum behind the reopening US economy. On the downside, investors are monitoring signs of rising inflation amid fears higher prices could prompt a sudden shift in Federal Reserve policy.

On the corporate front, Amazon was up 0.8% after the e-commerce powerhouse announced the acquisition of Metro-Goldwyn-Mayer film studios, famous for its lion mascot, for USD8.45 billion.

"MGM has nearly a century of filmmaking history and complements the work of Amazon Studios, which has primarily focused on producing TV show programming," the Seattle-based technology company said.

MGM has a catalogue with more than 4,000 films, including classics such as James Bond, Poltergeist and Rocky.

Brent oil was quoted at USD68.64 a barrel at the equities close, lower from USD68.71 at the close Tuesday.

Gold was quoted at USD1,904.70 an ounce at the London equities close, higher against USD1,892.55 late Tuesday.

The economic events calendar on Thursday has US personal consumption expenditure figures at 1330 BST - the core reading is the Federal Reserve's preferred gauge of inflation.

The UK corporate on Thursday has annual results from United Utilities, speciality chemicals firm Johnson Matthey and fashion retailer Ted Baker.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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