(Alliance News) - The following is a summary of top news stories Tuesday.
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COMPANIES
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GSK said it has agreed to buy Affinivax for up to USD3.3 billion, to gain access its "highly innovative" next-generation 24-valent pneumococcal vaccine candidate. Affinivax is a Boston, Massachusetts-based clinical-stage biopharmaceutical firm focused on developing a novel class of pneumococcal vaccines. London-based GSK said that in addition to a USD2.1 billion initial payment, it will potentially make two milestone payments of USD600 million each, dependent on the achievement of paediatric clinical development milestones. GSK said Affinivax was attractive for its pneumococcal vaccine candidate, as well as multiple antigen presenting system, which GSK described as novel technology. The vaccine targets streptococcus pneumoniae, an anaerobic bacteria that can cause middle ear infections, sepsis in children and pneumonia in immunocompromised individuals.
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Unilever has appointed activist investor Nelson Peltz to board, starting July 20. Peltz is chief executive officer and a founding partner of Trian Fund Management LP. Funds managed by Trian have 37.4 million Unilever shares, a 1.5% stake, both companies confirmed. "We are pleased to be welcoming Nelson to the Unilever board," says Unilever Chair Nils Andersen. "We have held extensive and constructive discussions with him and the Trian team and believe that Nelson's experience in the global consumer goods industry will be of value to Unilever as we continue to drive the performance of our business."
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Johannesburg-based Gold Fields has agreed to buy Toronto-based Yamana Gold in an all-share offer valued at around USD6.7 billion. Yamana shareholders will receive 0.6 of a new Gold Fields share for each Yamana share held. The transaction represents a premium of 34% for Yamana shares. Yamana shareholders will receive either newly issued shares in Gold Fields, which are listed on the Johannesburg Stock Exchange, or newly issued Gold Fields' American depositary shares, which trade on the New York Stock Exchange. The Yamana board has unanimously approved the takeover and is recommending the deal to its shareholders. If the acquisition succeeds, the Yamana shares will be delisted from the Toronto Stock Exchange, the NYSE and the London Stock Exchange. Gold Fields and Yamana shareholders will own about 61% and 39% of the combined group, respectively. The combined entity will be headquartered in Johannesburg with operations across Canada, Australia, South America, Ghana and South Africa.
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B&M European Value Retail has promoted its current chief financial officer to take over from departing Chief Executive Simon Arora. CFO Alex Russo will succeed Arora in "due course", B&M said. "The board will now consider the most appropriate handover plan. A process to recruit a successor to Alex as CFO has already begun. In the meantime, both Simon and Alex will remain in their existing roles in order to minimise disruption to the business. A further announcement will be made when appropriate," B&M added. Turning to its results, B&M reported flat annual profit despite a decline in revenue. For the 52 weeks ended March 26, pretax profit was stable at GBP525 million, while revenue slipped to GBP4.67 billion from GBP4.80 billion the year prior. B&M recommended a final dividend of 11.5 pence, slipping from the 13.0p final payout offered last year. The total dividend was cut to 16.5p from 17.3p.
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Credit Suisse is in the process of looking at options to strengthen its capital following a series of losses, which have eroded its financial buffers, Reuters reported. Citing "two people with knowledge of the matter", Reuters said the size of the increase likely will exceed CHF1 billion; however this has not been finalised, one of the people said. One person said one option would be to sell shares to a few existing investors, according to Reuters; another is to sell one of its businesses, such as Credit Suisse's asset management division. "Credit Suisse is currently not considering raising additional equity capital," the bank told Reuters in a statement.
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MARKETS
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Continental European stock markets were trailing London on Tuesday, with Frankfurt and Milan down 0.8% and Paris down 0.9%, following data showing rising inflation and weakening economic performance, particularly in France. After gross domestic product declined in France in the first quarter, "a further contraction of GDP in the second quarter is expected," said ING. "It means that, in our view, the French economy is currently in a de facto recession. For the second half of the year, we expect a slight recovery." The indicators were released after EU leaders agreed to impose a partial ban on imports of Russian oil, likely to put further pressure on economic activity.
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CAC 40: down 0.9% at 6,500.55
DAX 40: down 0.8% at 14,458.93
FTSE 100: up 0.3% at 7,624.67
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Hang Seng: closed up 1.4% at 21,415.20
Nikkei 225: closed down 0.3% at 27,279.80
S&P/ASX 200: closed down 1.0% at 7,211.20
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DJIA: called down 0.7%
S&P 500: called down 0.7%
Nasdaq Composite: called down 0.4%
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EUR: down at USD1.0734 (USD1.0780)
GBP: down at USD1.2615 (USD1.2640)
USD: up at JPY127.96 (JPY127.60)
Gold: down at USD1,853.10 per ounce (USD1,857.80)
Oil (Brent): down at USD119.45 a barrel (USD120.20)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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Eurozone consumer price inflation is expected to be 8.1% in May, accelerating from 7.4% annually in April, according to the latest flash estimate from Eurostat, the statistical office of the European Union. Energy is expected to have the highest annual rate in May, at 39.2%, compared with 37.5% in April. This is followed by food, alcohol & tobacco at 7.5%, compared with 6.3% in April, and non-energy industrial goods at 4.2%, compared with 3.8% in April.
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EU leaders agreed to ban more than two-thirds of Russian oil imports, tightening economic screws on the country even as Moscow's forces made gains in the eastern Donbas region of war-ravaged Ukraine. The compromise deal, meant to punish Russia for its invasion three months ago, cuts "a huge source of financing for its war machine," European Council chief Charles Michel tweeted. "Maximum pressure on Russia to end the war," he said. Leaders of the 27-nation bloc had met to negotiate the long-sought deal earlier Monday in Brussels, amid concerns raised by Hungary and other neighbouring countries reliant on Russian fuel. The agreement also includes plans for the EU to send EUR9 billion in "immediate liquidity" to Kyiv, Michel announced. On the ground, Russian forces pressed their offensive in Donbas.
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France's economy shrank in the first quarter as households spent even less than previously thought due to rising inflation, the statistics agency said, lowering an initial estimate of zero growth. Prior to the war in Ukraine, France's INSEE statistics agency had expected the French economy to grow in the first quarter after rising sharply last year. Last month it estimated that the economy had flatlined but its new calculations showed that France's GDP contracted by 0.2% in the first three months of the year.
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Switzerland's GDP grew 0.5% in the first quarter of 2022, after a 0.2% increase in the final quarter of 2021, data from the Federal Statistical Office showed.
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Roughly 45.3 million people in Germany were in employment in April according to the latest flash data from the German Federal Statistical Office. Compared with the previous month, the seasonally adjusted number of persons in employment rose by 53,000 or 0.1%. Without seasonal adjustment, the number of people in employment in April rose by 129,000, or 0.3%, against March. As a result, employment exceeded the pre-Covid level of February 2020 for the second month in a row.
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Consumer price inflation in Italy accelerated to a 36-year high in May, preliminary data from Italian national statistics office showed. The annual inflation rate accelerated to 6.9% in May from April's 6.0% rise, beating market forecasts cited by FXStreet of a 6.2% increase for the consumer price index and touching a "level that had not been recorded since March 1986 - when it posted 7.0%," Istat said. The stats office also revised up Italy's economic performance in the first quarter of 2022. Gross domestic product grew by 6.2% year-on-year in the first quarter, the same pace as in the fourth quarter of last year and revised up from the preliminary estimate of a 5.8% increase. On a quarterly basis, the initial 0.2% decline was revised to an increase of 0.1%, compared to a 0.6% increase in the previous quarter.
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Italy is dropping the requirement to show proof of coronavirus vaccination, recent recovery or a negative test before entering the country. The health ministry announced that the requirement to show a so-called "Green Pass" to enter Italy "will not be extended" when it expires on May 31. Italy was the first European country hit by coronavirus in early 2020 and has had some of the toughest restrictions, including requiring all workers to show a Green Pass. As cases eased and a majority of the population were vaccinated, most measures were lifted, although masks are still required on public transport and in schools. Italy on Monday recorded another 7,537 cases and 62 deaths, taking the total to 166,631, according to health ministry figures.
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UK Prime Minister Boris Johnson is facing increasing hostility from his own members of Parliament, with Tory whips said to be discussing how to fight back if rebels trigger an all-important confidence vote. A steady stream of Tories have backed a ballot to decide the PM's future, or called for Johnson to step down, with three new names surfacing on Monday and a fourth MP resubmitting a letter of no confidence he previously withdrew in light of the Ukraine crisis. The Telegraph reported that Conservative whips are now in talks about how to respond if the letter tally reaches 54, which would force 1922 Committee Chair Graham Brady to call a vote. All Tory MPs will be contacted at once if the threshold is reached, according to one whip, the newspaper said, as part of a move to save the PM's job.
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The battle for control of the eastern Ukrainian city of Severodonetsk has reportedly entered its decisive phase, the Ukrainian general staff announced in its Tuesday situation report. Russian forces were "carrying out offensives in the area of the villages of Severodonetsk and Toshkivka in the Severodonetsk region," the report said. Further Russian ground assaults were reported from the region of Bakhmut to the west, with Russian forces attacking the villages of Zolote, Komyshuvakha, Berestove, Pokrovske and Dolomitne. The situation report said the attacks had been unsuccessful so far. The attacks around Bakhmut were apparently intended to cut off the last remaining Ukrainian-held city in the Luhansk region, Severodonetsk, as well as Lysychansk, its neighbour across the river.
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Russia's Gazprom said its has halted gas supplies to the Netherlands after Dutch energy firm GasTerra refused to pay in rubles following the Russian military offensive in Ukraine. "Gazprom has completely stopped gas supplies to GasTerra due to non-payment in rubles," the Russian gas supplier said in a statement.
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China's manufacturing sector improved in May, as some factories gradually resumed work after the easing of strict Covid lockdowns. The purchasing managers' index – a key gauge of manufacturing activity – edged up to 49.6 points from April's 47.4, which was the worst reading since early 2020. However, the reading remained stuck below the 50-point mark separating growth from contraction.
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By Tom Waite; thomaslwaite@alliancenews.com
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