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LONDON MARKET PRE-OPEN: M&A activity at Sigma Capital and Sanne

Fri, 11th Jun 2021 07:50

(Alliance News) - Stocks in London are set to open slightly higher on Friday after Wall Street appeared to shrug off the strongest US annual inflation print since 2008, while the UK economy continued its fight back.

Data early Friday showed recovery gathered pace in April, with UK gross domestic product expanding 2.3% month-on-month. This was the fastest monthly growth since July 2020, as lockdown restrictions eased, and marks an uptick from a rise of 2.1% for March.

While UK GDP remains 3.7% below pre-pandemic levels, it is now 1.2% above the initial recovery peak in October 2020.

Sterling was quoted at USD1.4177 early Friday, firm on USD1.4174 at the London equities close on Thursday.

In early UK company news, there was M&A activity as Sanne succumbed to takeover talks with Cinven after a fifth approach, and Sigma Capital agreed to be taken over in a deal worth GBP188 million.

IG says futures indicate the FTSE 100 index of large-caps to open up 6.22 points, or 0.1% at 7,094.40 on Friday. The FTSE 100 closed up 7.17 points, or 0.1%, at 7,088.18 on Thursday.

London stocks are called to finish the week on a positive note despite Thursday's stronger-than-expected US inflation print.

"US 10 year yields after initially spiking higher, dropped sharply to hit their lowest levels in three months, below 1.44%, as after a careful parsing of the inflation numbers investors decided to take the Federal Reserve's word for it that all of the inflation pressure, we are currently seeing will be transitory," said Michael Hewson, chief market analyst at CMC Markets.

The US consumer price index surged 5.0% in May, marking a big uptick from 4.2% in April and ahead of market expectations, according to FXStreet, of 4.7%. May's reading marked the largest 12-month increase in US consumer prices since a 5.4% rise in August 2008.

However, Wall Street took the figures in its stride and ended Thursday's session in the green. The Dow Jones Industrial Average added 0.1%, the S&P 500 0.5%, and the Nasdaq Composite 0.8%.

"There is certainly plenty of evidence when drilling down into the numbers that a good proportion of the price rises we are currently seeing are base effects and reversals of the price falls we saw over 12 months ago, but equally there is also increasing evidence of other more persistent factors helping to drive prices higher," Hewson commented.

Meanwhile, a bipartisan group of 10 US senators said Thursday they have reached a tentative agreement on a "realistic" infrastructure plan, days after talks between President Joe Biden and Republican lawmakers collapsed.

The agreement, considerably less ambitious than Biden's original USD2.3 trillion American Jobs Plan, would be "fully paid for and not include tax increases", the five Democrats and five Republicans said in a brief statement.

US media citing sources familiar with the package reported that it amounts to USD1.2 trillion over eight years, with some USD579 billion of it being new spending – and none of it raised through new corporate or income taxes.

In early UK company news, Sanne said it is now in takeover talks with Cinven after receiving a fifth unsolicited approach worth 875 pence per share.

Sanne shares closed at 772p on Thursday, with the latest offer representing a premium of 13%.

The provider of alternative asset and corporate services in late May rejected Cinven's fourth offer of 850p, believing it did not reflect its long-term prospects.

However, Sanne has now decided to enter takeover talks after receiving the 875p bid, and has been granted an extension to the put-up-or-shut-up deadline for Cinven to either announce a firm offer or walk away. The new deadline is July 9. There can be no certainty an offer will be made, Sanne said.

Domino's Pizza Group said Chief Financial Officer Neil Smith is leaving the company to take up another opportunity.

The pizza delivery master franchiser said it will now commence a search process to find a successor, with Smith set to depart on November 26 following completion of his notice period.

Build-to-rent housing provider Sigma Capital said it has agreed to be taken over by funds managed by PineBridge Benson Elliot, in a deal worth GBP188.4 million. Sigma shareholders will receive 202.1p per share in cash, representing a premium of 36% to Sigma's closing price on Thursday.

PineBridge Benson Elliot is a pan-European real estate private equity specialist, with USD3.2 billion of managed equity.

The offer has acceptances representing 61% of Sigma Capital shares and is recommended unanimously by Sigma's independent shareholders.

"We are delighted that our independent directors intend to recommend this offer from PineBridge Benson Elliot, having reviewed a number of options from other parties. We know the team well and believe that our complementary skills, experience and sector knowledge, as well as PineBridge Benson Elliot's capital backing, will make a powerful combination," said Sigma Capital Founder & Chief Executive Graham Barnet.

In Asia on Friday, the Japanese Nikkei 225 index ended flat. In China, the Shanghai Composite was down 0.5%, while the Hang Seng index in Hong Kong was up 0.5%. The S&P/ASX 200 in Sydney finished up 0.1%.

Against the yen, the dollar fell to JPY109.39 versus JPY109.56. The euro traded at USD1.2186 early Friday, higher than USD1.2168 late Thursday.

Gold was quoted at USD1,901.30an ounce early Friday, higher than USD1,891.85 on Thursday. Brent oil was trading at USD72.49 a barrel, firm on USD72.45 late Thursday.

By Lucy Heming; lucyheming@alliancenews.com

Copyright 2021 Alliance News Limited. All Rights Reserved.

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