News Column

TOP NEWS: AbbVie Agrees GBP32 Billion Acquisition By Shire

July 18, 2014

Arvind Bhunjun



LONDON (Alliance News) - The following is a summary of top news stories Friday.

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COMPANIES

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FTSE 100-listed Shire PLC has agreed to be acquired by US drugs maker AbbVie Inc in a deal that values the pharmaceutical company at approximately GBP32 billion. Shire has agreed to terms which will give its shareholders GBP24.44 in cash and 0.8960 of an AbbVie share for each Shire share. The terms of the deal give an indicative value of GBP52.48 per Shire share, based on AbbVie's closing share price of USD53.52 on Thursday, said the company. Shire shareholders will own around 25% of the new company.

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RSA InsuranceGroup PLC Chief Executive Stephen Hester is to cut out nearly 10% of the company's GBP2.0 billion in annual costs, the Financial Times reported online on Thursday. According to the report, investors said that Hester, who joined the insurer in February, is set to reduce the insurer's expense base by almost GBP150.0 million over the next three years. The FT also reported that the Central Bank of Ireland is able to fine RSA up to GBP35.0 million, though it said the final amount is likely to be considerably lower. RSA caught the attention of regulators in the wake of an accounting scandal at its Ireland business last year.

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Royal Bank of ScotlandGroup PLC is considering the sale of the overseas operations of its private banking arm, Coutts, the Financial Times reported online on Thursday. The FT reported that bankers said splitting Coutts in two would make sense, because its international clients are on average "much richer" than those in the UK, so the service required is different.

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The Competition and Markets Authority recommended an in-depth market investigation into the UK retail banking sector after finding that essential parts of it do not meet the needs of its customers. The watchdog is now consulting on its provisional decision that there should be an investigation into the markets for personal current accounts and banking for small-and-medium enterprises. The CMA said it will make a final decision on a market investigation in the autumn. The largest four personal current account providers account for over 77% of the market in the UK, while the largest four providers for SMEs account for more than 85% of business current accounts and 90% of business loans.

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Spire HealthcareGroup PLC priced its initial public offering on the main market of the London Stock Exchange at the bottom of the range, valuing the business at GBP842.3 million when conditional dealings in the shares began. Spire said it expects the offer to raise GBP315.0 million gross for the company and GBP200,000 for the selling shareholders assuming no exercise of the over-allotment option. If the option is exercised in full, it will raise GBP47.5 million for the selling shareholders. The over-allotment option is being managed by IPO underwriters Morgan Stanley Securities Ltd.

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SIG PLC said it has acquired Sodimat SAS, a specialist distributor of flat roofing products in France, for EUR4.4 million in cash. "This infill acquisition is in line with the group's strategy of expanding its French roofing business, Lariviere, in the south of France, and strengthening its offering in flat roofing, which SIG believes to be an attractive segment of the market," SIG said in a statement. Sodimat, which is being sold by its founders, the Sitbon family, made a EUR550,000 pretax profit in 2013. It had EUR1.4 million in gross assets at the end of that year.

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Go-Ahead Group PLC and National Express Group PLC expressed their disappointment after losing out on Transport for London'sCrossrail franchise as the government body stated its intention to award the contract to MTR Corporation (Crossrail) Ltd. The GBP1.4 billion contract runs for eight yeas and has an option to extend to 10 years. Transport for London said that its new partner will be integral to delivering the new Crossrail services connecting Reading and Heathrow in the west with Shenfield and Abbey Wood in the east. The company will start running the services from May 31, 2015 between Liverpool Street and Shenfield, taking over the stopping services currently operated by Abellio Greater Anglia. They will be using the existing trains that currently operate on the route.

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Homeserve PLC said it is trading in line with its expectations, and reported "solid progress" in its UK business in the first three months of the current financial year, as well as growing customer numbers and securing partnerships in its international businesses. In a statement, the home emergency and repair company said that trading will, as usual, be weighted towards the second half of the financial year, reflecting the seasonality of its marketing activity and associated renewals profile. Homeserve said its UK business is on track to meet its 300,000 gross new customer target in the 2015 financial year. It expects to have at least 2.0 million customers in the UK during the year, with an 82% retention rate.

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Aer LingusGroup PLC said Chief Executive Officer Christoph Mueller will step down from his position as CEO and executive director in May 2015. In a statement, the airline said Mueller's departure had been mutually agreed, and his leaving date next year is designed to provide the company sufficient time to identify a replacement. Aer Lingus said it will now start the process of identifying a new CEO and executive director.

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MARKETS

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UK stock indices are trading lower across the board, with investors finding little reason to be cheery as they follow development of the horrific stories of the airliner crash in the conflict region of eastern Ukraine and the Israeli ground invasion of Gaza.

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FTSE 100: down 0.6% at 6695.9

FTSE 250: down 0.6% at 15458.86

AIM ALL-SHARE: down 0.2% at 767.95

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The euro is flat against the dollar having fallen to near a five-week low of 1.3511 in early trade.

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GBP-USD: flat at USD1.7097

EUR-USD: flat at USD1.3525



GOLD: down at USD1309.18 per ounce

OIL (Brent): down at USD108.24 a barrel



(changes since end of previous GMT day)

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ECONOMICS AND GENERAL

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The euro area current account surplus declined in May as the income and the surplus on visible trade decreased from April, the European Central Bank said. The current account surplus fell to a seasonally adjusted EUR 19.5 billion from EUR 21.6 billion in April. The surplus on trade in goods declined to EUR 13.8 billion from EUR 16.9 billion in the prior month. On an unadjusted basis, the current account surplus totaled EUR 8.9 billion in May versus EUR 18.8 billion in April.

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The Malaysia Airlines jetliner that crashed in eastern Ukraine with 298 people aboard made no distress call, Malaysian Prime Minister Najib Razak said, adding to suspicions that the plane was shot down. Najib offered condolences to the families and friends of those aboard flight MH 017, which was bound for Kuala Lumpur from Amsterdam, and vowed that "no stone will be left unturned" in the investigation of the disaster. US Vice President Joe Biden said Thursday the downing of the aircraft was "not an accident," characterizing it as being "blown out of the sky," US media reported. Both the Ukrainian government and pro-Russian separatists fighting in eastern Ukraine denied shooting down the Boeing 777-200. The crash follows the March 8 disappearance of another Malaysia Airlines plane, carrying 239 people bound for Beijing from Kuala Lumpur.

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At least 24 Palestinians were killed overnight into Friday - with dozens more reported injured - officials said, as Israel ratcheted up its offensive in the Gaza Strip with ground troops. The first Israeli soldier was also killed in the ground fighting in the northern Gaza Strip, the Israeli military confirmed. That means the overall death toll in the densely populated coastal enclave climbed to more than 260, with 2,000 injured, many of them civilians, Gaza Health Ministry spokesman Ashraf al-Qedra said. The Israeli ground operation came in the wake of a rejection of an Egyptian peace proposal by Islamist group Hamas, which controls the Strip, and the decision by armed groups within the Strip to begin launching rockets immediately after the end of a UN-brokered humanitarian lull in fighting Thursday.

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The UK's current house prices sentiment rose in July, although at a slower pace than in June, results of a survey by Knight Frank and Markit Economics showed. The house price sentiment index, an indicator of house price trends, came in at 62.4 in July, a slight decrease from the 62.5 reading in the previous month. Any reading above 50 indicates rise in prices and this month's reading marked the sixteenth consecutive month of increase in house prices. The index rose in all the surveyed regions, with London showing the steepest increase as the index came in at 70.5 in July. The index was at 69.7 in the South East region and 68.3 in the East of England region.

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New house prices in most Chinese cities declined in June, data from the National Bureau of Statistics showed. Average new home prices in 55 of the 70 cities in China fell compared to the previous month in June. New home prices in Hangzhou fell the most, by 1.7%, followed by home prices declines in Luoyang, Changchun, Xiangyang and Guilin. Also, prices in major cities like Shanghai and Shenzhen dropped by 0.7% and 0.4%, respectively. However, new home prices in Beijing continues to rise, by 0.1% in June. On a year-over-year basis, new house prices in all the cities, with the exception of Wenzhou, increased in June.

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China's business confidence increased in July, results of a survey by research agency MNI showed. The MNI business sentiment index, a measure of current business expectations, rose to 58.2 in July from 55 in June. The index has remained above 50, which indicates rise in expectations, since January 2009. However, confidence concerning future business prospects decreased in July, though it remained above the no change mark of 50. The corresponding index fell to 61.5 in July from 64.2 in June.

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Chinese Premier Li Keqiang said economic growth higher or lower than 7.5% in 2014 would be acceptable, state-run Xinhua News Agency reported late Thursday. "Growth rate slightly higher or lower than 7.5% is acceptable, as long as our development creates jobs, boosts incomes, has quality and efficiency, favors energy savings and environmental protection, and is not an exaggeration and is real," he said at an economic symposium on Tuesday. Li said the government will stick with targeted macro-control policies and permit the market to play a bigger role.

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Members of the Bank of Japan's monetary policy board were content with the pace of the country's economic recovery, minutes from the bank's June 12-13 meeting revealed - and they expect the recovery to continue. Downside risks include the pace of the economic recovery in the US, and the potential for further debt concerns in Europe.

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Source: Alliance News


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