LONDON (Alliance News) - UK shares opened lower, weighed down by weak economic data from China, while SABMiller led the gainers in London after it agreed to GBP71.28 billion takeover by brewing rival Anheuser-Busch InBev.
AB InBev lifted its offer to GBP44.00 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 said it 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.
In addition, SABMiller shareholders will be entitled to any dividends declared or paid in the period to September 30 or March 31 ahead of completion of a possible deal. Dividends could amount to a maximum of USD1.22 per share over the two periods.
No formal offer has been made. AB InBev now has until 1700 BST on October 28 to decide whether to make an firm offer or walk away.
The FTSE 100 index was down 0.5% at 6,337.35, the FTSE 250 was down 0.5% at 16,902.43, and the AIM All-Share was down 0.1% at 734.29. In Europe, the French CAC 40 index and the German DAX 30 were down 1.1% and 0.6%, respectively.
Asian stocks also were mixed on Tuesday. The Japanese Nikkei 225 index ended down 1.1%, reopening after a holiday on Monday. In China, the Hang Seng index in Hong Kong was off 0.6%, but the Shanghai Composite closed up 0.2%, following weak economic data from the Asian giant.
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.
On a yearly basis, exports slid 1.1% in September, compared to a 5.5% decline seen in August, the General Administration of Customs reported Tuesday. Economists had forecast it to drop at a faster pace of 6.3%.
Meanwhile, imports logged a sharp 17.7% contraction after falling 13.8% a month ago. This was the eleventh straight annual decline in imports. Imports were expected to decline 15%.
The trade surplus totalled USD60.34 billion, bigger than a USD48.2 billion surplus expected by economists.
"The deterioration in recent Chinese trade data has reinforced concerns about the health of the Chinese economy as sliding commodity prices and weak consumer demand has seen both imports and exports slow much more than expected in the months since June," said CMC Markets chief market analyst Michael Hewson.
"The numbers also suggest that next week?s gross domestic product could well come in well below the 7% threshold targeted by Chinese officials as their GDP target," Hewson added.
Outside China, the German consumer price index came in line with economists expectations. Month-on-month, Germany's CPI fell 0.2%, matching an similar 0.2% decline seen in August. Meanwhile, on a yearly basis, inflation came in flat at 0%.
Still in the economic calendar, the ZEW surveys for Germany and the EU are due at 1000 BST. Meanwhile, the consumer, retail and producer price indices from the UK are expected at 0930 BST, while at the same time the Bank of England releases its credit conditions survey. In the US, the Redbook index is due at 1355 BST.
"Last month saw the [UK] headline CPI rate, which has fluctuated between 0.1% and -0.1% year-on-year since February, fall back by 0.1 percentage point to 0.0%, partly on the back of weaker petrol prices and a 0.2 percentage points drop in core inflation to 1.0%," said Jonathan Thomas, senior economist at Lloyds Bank.
"The initial impacts from a fall in trade-weighted sterling and pickup in oil prices since mid-August are set to be countered by a further dip in forecourt prices and cuts to domestic gas tariffs in September. Thus we expect both the headline and core rates to remain unchanged," Thomas added.
On the London Stock Exchange, Royal Mail was the top faller in the FTSE 100, down 4.5%, after the UK government said it has sold the majority of its 14% stake in the group for around GBP591.0 million under an accelerated bookbuilding process that was announced late Monday.
The government said it has sold a 13% stake in the company, 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.
Concerns about China's economy health were hitting London-listed mining stocks. Glencore was down 3.5%, Anglo American down 2.9% and BHP Billiton down 2.0%. Among mid-caps, KAZ Minerals was down 5.8% and Vedanta Resources was off 1.7%.
Going in the opposite direction was GlaxoSmithKline, up 1.0%, after JPMorgan upgraded the drugmaker to Neutral from Underweight.
In the FTSE 250, Bellway was the top performer, up 3.9%. The housebuilder said it should be able to grow volumes by up to 10% in its current financial year, as the group 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.
By Daniel Ruiz; danielruiz@alliancenews.com
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Anglo American (AAL)
Bellway (BWY)
Glaxosmithkline (GSK)
Glencore (GLEN)
