TOP NEWS SUMMARY: Paddy Power And Betfair In High-Stakes Merger

LONDON (Alliance News) - The following is a summary of top news stories Wednesday.
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COMPANIES
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WPP posted a sharp rise in pretax profit for its first half, boosted by exceptional gains and an improved operating performance, and reiterated guidance of net sales growth of over 3% for 2015. WPP proposed a dividend of 15.91 pence, up 37% from 11.62 pence a year before. The significant jump in dividend is a result of WPP revising its dividend pay-out ratio target to 50%, to be achieved by 2017. It said it now seems likely it will achieve this target by the end of 2016, one year ahead of target. The company posted a rise in pretax profit of GBP710 million for the half year to end-June, up 45% from GBP491 million a year before, boosted by exceptional gains on the sale and revaluation of some of the company's associates and investments.
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Defence contractor BAE Systems has lost out on a bid to build the next generation of mine-resistant humvees for the US military, a deal which would have been worth around USD6.7 billion, The Times reported. BAE was part of a Lockheed Martin-led consortium which was on a three-strong shortlist to build the new vehicle, competing with Oshkosh Corp and AM General, the newspaper said. Oshkosh, the Wisconsin-based truck maker, won the contract, under which it will build 17,000 of an eventual 55,000 Joint Light Tactical vehicles for the US Army and the Marine Corps.
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Merger and acquisition fever in the UK gambling industry showed no signs of abating after Betfair Group and Paddy Power said they have reached an agreement in principle to merge in an all-share deal. Under the terms of the merger, Paddy Power shareholders would own 52% of the combined company, with the remaining 48% owned by Betfair shareholders. Immediately prior to completion of the deal, Paddy Power's shareholders would get an EUR80 million special dividend. Gary McCann, the chairman of Paddy Power, would become the chairman of the combined group, with Betfair Chief Executive Breon Corcoran to become chief executive. Paddy Power Chief Executive Andy McCue would become chief operating officer and an executive director, while Betfair Chief Financial Officer Alex Gersh would take the same role in the combined company.
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Construction and support services company Carillion posted flat pretax profit for the first half despite a surge in revenue and said its order intake in the half was sharply lower due to the slowdown in contract awards ahead of the UK's General Election. The FTSE 250 company said its pretax profit for the six months to the end of June was GBP67.5 million, exactly flat against a year earlier, despite revenue in the half rising 21% to GBP2.26 billion from GBP1.87 billion. Carillion blamed the costs of mobilising new contracts and lower margins in construction services for the failure of profit to keep pace with revenue. The revenue growth was driven by the strong order intake the company secured in 2014, but in the first half of 2015, its orders plus probable orders fell to GBP1.0 billion from GBP3.2 billion a year earlier, blamed by the company on the anticipated pause in public sector contract awards ahead of the election.
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Amec Foster Wheeler said it has been approved to bid for work worth up to USD5.0 billion from the US Air Force. The work Amec will be able to bid for is under the US Air Force Contract Augmentation Programme, which was set up by the US Air Force to provide additional capabilities to rapidly support the logistic requirements of its deployed forces through the use of civilian contractors.
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Stagecoach Group posted like-for-like revenue growth across the majority of its divisions, with strong UK trading slightly offset by continued challenges in its US division, though the group said it remains on course to meet its full-year expectations. The transport company said trading in the first months of its current financial year has been in line with its expectations, and it maintained its earnings guidance for the full year.
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OneSavings Bank reported an 88% surge in profit in the first half, driven up by higher-margin new lending and lower costs of funding. The specialist lender, which offers residential, buy-to-let and commercial mortgages, secured loans and development finance, said pretax profit increased to GBP46.6 million in the six months ended June 30, compared with GBP24.8 million in the corresponding half the prior year. OneSavings, which listed on the London Stock Exchange in June 2014, said it will pay a 2.0 pence per share interim dividend.
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MARKETS
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UK indices trade lower as concerns over China continue to weigh on market sentiment.
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FTSE 100: down 1.3% at 6,002.77
FTSE 250: down 1.1% at 16,537.78
AIM ALL-SHARE: down 0.3% at 714.81
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The pound is down against the dollar despite UK mortgage approvals rising to a 17-month high in July.
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GBP: down at USD1.5659
EUR: down at USD1.1460

GOLD: down at USD1133.50 per ounce
OIL (Brent): down at USD43.20 a barrel

(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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UK mortgage approvals rose for a seventh month in a row in July to their highest level in seventeen months, in line with economists' expectations, figures from the British Bankers' Association showed. The seasonally adjusted number of mortgage approvals for house purchased climbed to 46,033 from 44,802 in June, which was revised from 44,488. Economists had forecast 46,000 approvals for July. Approvals have been rising since the start of the year and the latest figure was the highest since February 2014, when they totaled 47,641.
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The Chinese yuan weakened against the dollar in the Asian session on Wednesday, after China's central bank cut its key interest rates Tuesday. Against the dollar, the yuan fell to nearly a 2-week low of CNY6.4230 from an early high of CNY6.4010. On Tuesday, the yuan was trading at CNY6.4112 to the dollar. The People Bank of China set Wednesday's central parity rate for yuan at CNY6.4043 per dollar, compared to Tuesday's reference rate of CNY6.3987.
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South Korea said it could resume suspended talks with North Korea, including the lifting of economic sanctions, as tensions ease this week. "I believe that's an issue that can be fully discussed," said Jeong Joon Hee, a spokesman for the Unification Ministry, "if North Korea brings it to the table. "It is premature to talk about when and at which level [such a meeting] will be held." North Korea had raised the issue of the sanctions during three days of high-level negotiations at the weekend, the South's Yonhap News Agency reported earlier. The talks were called to defuse recent tensions, first sparked when a landmine exploded in the demilitarized zone on August 4, causing two South Korean soldiers on patrol to lose their legs.
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By Arvind Bhunjun; arvindbhunjun@alliancenews.com; @ArvindBhunjun

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