(Alliance News) - Stock prices in London are seen opening higher on Monday tracking gains in Asian equity markets and from Wall Street on Friday, as bargain-buyers moved in following a recent sell-off.
Gambling, drinking and smoking dominated early UK company news.
US casino operator Caesars Entertainment has made a possible offer for bookmaker William Hill that values the UK bookmaker at GBP2.9 billion. Distiler Diageo said it has made a positive start to financial 2021. Tobacco firm Imperial Brands said the sale of its cigar business is on track.
IG futures indicate the FTSE 100 index is to open 71.43 points higher at 5,914.10. The blue-chip index closed up 19.89 points, or 0.3%, at 5,842.67 on Friday.
Caesars Entertainment, the owner of Caesars Palace in Las Vegas, confirmed it is in advanced discussions concerning a possible cash offer for William Hill, its partner in a US joint venture.
The possible cash offer of 272 pence per share values William Hill at around GBP2.9 billion and is a 58% premium to William Hill's closing share price on September 1, the last business day before Caesars' first approach to William Hill.
Caesars said it has finalised its due diligence and a further announcement will be made as and when appropriate. It expects that a transaction would close in the second half of 2021.
On Friday, William Hill had confirmed it received separate cash proposals from New York-based alternative asset investment manager Apollo Management International and from hotel and casino operator Caesars Entertainment.
At present, twenty-two US states have legalised wagering since a US Supreme Court ruling in 2018 paved the way for states outside Nevada to allow sports betting.
According to Caesars, William Hill's board has indicated that the possible cash offer is at a price level that they would recommend to William Hill shareholders. Caesars intends to use an equity capital raise to help fund the offer.
Caesars also said that if Apollo instead acquires William Hill, Caesars would be entitled to terminate the mobile market access rights and rights to operate sportsbooks at Caesars premises that are granted to to the pair's US joint venture by Caesars.
Brewer and distiller Diageo said it has made a good start to financial 2021 with improvements in its performance across all regions following the gradual re-opening of the on-trade channels such as in bars and hotels in most markets. The company, which is holding its annual general meeting on Monday, said the pace of recovery from the Covid-19 pandemic and easing of government restrictions varies by market.
The Johnnie Walker scotch maker said its US business is performing strongly and ahead of expectations, reflecting resilient consumer demand. Spirits continuing to gain share within the total beverage alcohol market. Increased retailer confidence is resulting in some re-stocking in the off-trade channel, it noted.
Diageo said in Europe, off-trade demand - meaning retail outlets - remains robust and the on-trade channel - meaning bars and restaurants - has largely re-opened with the easing of lockdown measures in most countries. However, it noted the risk of additional restrictions remains where infection rates are worsening. In China, the on-trade channel continues to recover, although larger banqueting occasions are returning more slowly.
Looking ahead, Diageo said the outlook for the first half of 2021 has improved since the year-end, reflecting the good start to the year, particularly for the US business. The company continues to expect an improvement in organic net sales and operating profit compared to the second half of 2020. However, compared to the first half of 2020, it still expects lower organic net sales and margin dilution.
"I am pleased with the resilient performance of our business in the current challenging operating environment and encouraged by our progress. While the pace of recovery is uncertain, I am confident in our strategy, the long-term fundamentals of our business and Diageo's ability to emerge stronger," said Chief Executive Ivan Menezes.
Imperial Brands said the sale of its Premium Cigars business is expected to complete on October 29, which is delayed slightly it said due to the challenges caused by Covid-19.
In April, Imperial Brands agreed to sell its premium cigar business for more than EUR1 billion to two private buyers.
The tobacco firm said buyers Gemstone Investment Holding and Allied Cigar Corp have made a non-refundable down-payment of EUR91.7 million to Imperial. In addition, the purchasers have agreed to pay a further non-refundable down-payment of approximately EUR85 million to Imperial by October 7.
The Japanese Nikkei 225 index closed up 1.3% on Monday. In mainland China, the Shanghai Composite is up 0.1%, while the Hang Seng index in Hong Kong is up 0.8%.
In the US on Friday, Dow Jones Industrial Average closed up 1.3%, the S&P 500 up 1.6% and the Nasdaq Composite up 2.3%.
"Asian equity markets have opened higher this morning, following positive weekend data from China, and a strong rebound by New York equities on Friday...[global] stock index futures are also higher, helping the risk-on environment," said Oanda Markets analyst Jeffery Halley.
The pound was quoted at USD1.2775 early Monday, up from USD1.2700 at the London equities close Friday.
New local lockdowns, further restrictions and tough new fines for failing to self-isolate come into force across parts of the UK on Monday.
People across England will be legally required to self-isolate from this week if they test positive for coronavirus or are contacted by the test and trace service.
If they do not they risk being hit with new fines starting at GBP1,000 and increasing up to GBP10,000 for repeat offenders or serious breaches, the Department of Health & Social Care said. People who test positive for Covid-19 will also be fined if they knowingly provide false information about close contacts to the test and trace service.
The DHSC said that police will check compliance in the highest incidence areas and in high-risk groups based on "local intelligence".
UK Health Secretary Matt Hancock said the government will "not hesitate" to introduce further measures if case numbers continue to rise.
The euro was priced at USD1.1635, higher from USD1.1623 late Friday in London. Against the yen, the dollar was quoted at JPY105.31, down from JPY105.65.
Brent oil was trading at USD41.65 a barrel Monday morning, lower from USD41.76 late Friday. Gold was quoted at USD1,861.07 an ounce, soft from USD1,863.20.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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Diageo (DGE)
Imperial Brands (IMB)
