LONDON MARKET PRE-OPEN: Gains Seen As AB InBev Tables SABMiller Offer

LONDON (Alliance News) - London stocks are set to open slightly higher Wednesday, following a mixed close in the US on Tuesday, while Anheuser-Busch InBev said it has made a new "highly attractive" offer for SABMiller, having seen two other informal offers rejected.

The Belgian-American brewing giant said it has made a bid valuing SABMiller at 4,215 pence per share, valuing the London-listed brewer at GBP68.2 billion overall. AB InBev said it has had two informal offers for SABMiller, of 3,800p and 4,000p, rejected. It said it was "disappointed" SABMiller's board had rejected the two previous approaches "without any meaningful engagement".

SABMiller shares were valued Tuesday after the London close at 3,728.56p.

AB InBev said the revised proposal should be highly attractive to SABMiller shareholders, representing a 44% premium to SABMiller's share price on September 14, when the talks between the two were first revealed following press reports that the world's two largest brewers could merge.

AB InBev's confidence in the takeover offer was nearly immediately backed by Altria, the US tobacco company and a major shareholder in SABMiller. Altria said in a statement on Wednesday morning that it supports the current takeover bid and has called on the SABMiller board to "engage promptly and constructively with AB InBev" in order to agree terms on a recommended offer.

IG says futures indicate the FTSE 100 to open at 6,341.80 points Wednesday. The index closed up 0.4% at 6,326.16, boosted by supermarkets and oil-related stocks.

"Stocks in the US didn't fare as well with weakness in biotechnology shares dragging on the S&P 500," said CMC Markets analyst Jasper Lawler. "The essentially unchanged finish to the Dow Jones Industrial Average is in part responsible for what looks like a mixed start to European equities on Wednesday."

The Dow 30 index closed up 0.1%, but the S&P 500 ended down 0.4% and the Nasdaq Composite finished off 0.7%.

In Asia on Wednesday, the Japanese Nikkei 225 closed up 0.8%. The Hang Seng in Hong Kong is up 1.5%, while the Shanghai market is closed until Thursday.

The Bank of Japan refrained from adding more monetary stimulus on Wednesday, despite fears of looming recession as the slowdown in emerging economies hurts exports and production. The Policy Board of the BoJ governed by Haruhiko Kuroda decided by an 8-1 majority vote to maintain its target of raising the monetary base at an annual pace of about JPY80 trillion.

Meanwhile, the leading index for Japan, which measures the future economic activity, dropped by less than expected to the lowest level in 15 months in August, preliminary figures from the Cabinet Office showed Wednesday. The leading index dropped to 103.5 in August from 105.0 in the previous month. Economists had expected the index to fall to 103.4.

Germany's industrial production declined unexpectedly in August, data from Destatis revealed Wednesday. Production declined 1.2% month-on-month in August, offsetting the 1.2% rise seen in July. Economists had forecast the growth rate to ease to 0.2%. July's growth was revised up from 0.7%. Excluding energy and construction, production in industry decreased 1.1% in August.

UK manufacturing and industrial production data are set for 0930 BST. UK industrial production is estimated to have risen by 0.3% after a negative 0.4% in July, while manufacturing production is expected to have risen 0.3% having declined by 0.8% the previous month.

Also in the economic calendar Wednesday, UK NIESR gross domestic product estimates are due at 1500 BST. In the US, EIA crude oil stocks are expected at 1530 BST.

Also on the UK corporate front, Tesco said it made a profit in the first half of its financial year, having suffered a loss in what was a very tumultuous time for the business last year, but its sales still fell in a challenging UK grocery market.

The supermarket chain reported a GBP74 million pretax profit in the 26 weeks ended August 29, an improvement on the GBP19 million pretax loss a year before. Revenue, however, fell 1.9% to GBP23.94 billion from GBP24.27 billion.

Tesco said that sales were hit by weak European currencies against strong sterling, but that it is seeing year-on-year growth in the UK in transactions and volumes.

JPMorgan cut Marks & Spencer to Underweight from Neutral. Meanwhile, Morgan Stanley lifted its recommendations for several mining companies. It upgraded BHP Billiton and Rio Tinto to Overweight from Equal-Weight and raised Anglo American to Equal-Weight from Underweight.

By Daniel Ruiz; danielruiz@alliancenews.com

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