LONDON MARKET PRE-OPEN: Melrose sells Ergotron for USD650 million

Mon, 06th Jun 2022 07:46

(Alliance News) - Stock prices in London are seen opening higher on Monday, following the long holiday weekend in the UK, tracking gains in Asian equity markets as Beijing further relaxed pandemic restrictions.

In early company news, Melrose Industries sold its Ergotron business for USD650 million. Drugmaker GSK had its Priorix treatment approved by the US regulator. Ad agency M&C Saatchi removed one of its board members, citing a conflict of interest in its ongoing takeover battle.

IG futures indicate the FTSE 100 index is to open 68.55 points higher at 7,601.50. The index closed down 74.71 points, or 1.0%, at 7,532.95 on Wednesday last week before the four-day holiday weekend for the Queen's Platinum Jubilee.

Melrose Industries said it has agreed to sell its Ergotron business to funds managed by Sterling Group for a total of USD650 million.

Completion of the sale is expected to occur in the third quarter of 2022 and is conditional upon customary US antitrust approvals. On or before completion, Melrose will announce how it intends to use the net proceeds, it said.

Ergoton is a manufacturer of ergonomic products such as computer mounts, stand-up desks, and mobile carts.

Melrose said having sold the Nortek Air Management and Nortek Control businesses last year, Ergotron is the last of the businesses remaining from the Nortek acquisition in 2016. On completion, Melrose will have more than doubled shareholders' initial investment, industrial turnaround specialist noted.

Chief Executive Officer Simon Peckham said: "The sale of Ergotron is the final step in our Nortek ownership cycle, capping what has been a very successful acquisition for Melrose shareholders. We will have more than doubled shareholders' equity investment in Nortek and have transformed the businesses themselves. Our attention now remains firmly on achieving the same result for the current group."

GSK said the US Food & Drug Administration has approved its Priorix treatment for active immunisation for the prevention of measles, mumps and rubella in individuals 12 months of age and older.

Priorix is currently licenced in more than 100 countries worldwide, including all European countries, Canada, Australia and New Zealand, with more than 800 million doses distributed to date.

"We're proud to make Priorix available in the US for the first time, adding a choice for providers to help protect patients against these highly contagious diseases and to further strengthen offerings in our paediatric vaccine portfolio," said Judy Stewart, head of US Vaccines for GSK.

Ahead of its annual general meeting on June 30, M&C Saatchi has removed Non-executive Director Vin Murria from its board with immediate effect.

M&C Saatchi said that, in light of the offers for the company by each of AdvancedAdvT - of which Murria is the executive chair - and Next Fifteen Communications, it is "not appropriate" for Murria to be proposed for re-election as a director at the AGM.

In May, Next Fifteen Communications announced it has reached a cash-and-shares offer agreement with independent directors of M&C Saatchi to buy the firm, amid a four-month-long takeover attempt of M&C by AdvancedAdvT.

In Asia on Monday, the Japanese Nikkei 225 index closed up 0.6%. In China, the Shanghai Composite was up 1.1%, while the Hang Seng index in Hong Kong was up 1.6%. The S&P/ASX 200 in Sydney closed down 0.5%. Beijing and Hong Kong reopened after being closed for the Dragon Boat Festival holiday on Friday.

Beijing will gradually lift Covid-19 restrictions this week, city officials said. After some easing in recent days, the Chinese capital - which reported 19 new infections Sunday - announced residents would start returning to work from Monday and schools would reopen from June 13.

From Monday, restaurants will be able to welcome customers again – if they have tested negative in the previous three days – and public transport will operate normally, the city's government said in a statement. In Shanghai, most of the city's 25 million inhabitants have been able to move freely since Wednesday.

CMC Markets analyst Michael Hewson commented: "Asia markets have edged their way higher as Chinese authorities continued to ease Covid restrictions across the country. This rise in Asia markets looks set to translate into a positive European open."

Service sector companies in China increased prices in May, as cost pressures continued to remain high and backlogs of work grew, due to disruption from the lockdowns imposed by Beijing to combat the spread of Covid-19.

The Caixin general services purchasing managers' index rose to 41.4 points in May from 36.2 in April, a reading that had marked a 26-month low. However, the PMI score remained well below the neutral 50-point mark, indicating that activity continued to shrink last month.

In the UK, a confidence vote in Prime Minister Boris Johnson could be announced this week as allies of Johnson appeared braced for a test of his leadership.

A government minister admitted the Conservative Party "may well" hold a vote on whether to keep Johnson as leader, but backed him to "face down" the rebels calling for him to quit. Almost 30 Tory MPs have publicly urged the PM to resign amid the fallout from revelations about Downing Street parties held during lockdown.

But reports have suggested more MPs privately want him to go and that enough letters demanding a confidence vote have been submitted to trigger such a showdown.

Johnson also faced public backlash during the Platinum Jubilee bank holiday weekend, including being booed on Friday by some sections of a crowd during his arrival at a thanksgiving service for the Queen at St Paul's Cathedral.

The pound was quoted at USD1.2505 early Monday, up from USD1.2490 at the London equities close Wednesday.

The euro was priced at USD1.0723, up from USD1.0655. Against the Japanese yen, the dollar was trading at JPY130.70 in London, higher against JPY129.95.

Brent oil was quoted at USD120.42 a barrel on Monday morning, up from USD117.23 late Wednesday. Gold stood at USD1,854.21 an ounce, higher against USD1,843.12.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com