News Column

UK MORNING BRIEFING: Anglo American And SABMiller Make Disposals

July 7, 2014

Tom Waite



LONDON (Alliance News) - UK shares have opened slightly lower Monday, as markets await the reopening of Wall Street following the Independence Day holiday on Friday.



Two large asset disposals headline UK company news early Monday. FTSE 100 miner Anglo American said it has entered a deal with Lafarge SA for Anglo American to sell to Lafarge its 50% holding in building-materials group Lafarge Tarmac Holdings Ltd for a minimum value of GBP885 million in cash.



Meanwhile, brewing giant SABMiller PLC said it could sell all of its 39.6% stake in South African gaming, hotel and entertainment group Tsogo Sun Holdings Ltd.



However, it isWeir Group that leads FTSE 100 gainers after being raised to Buy from Neutral by Citigroup.



Here is what you need to know at the UK market open:

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MARKETS

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FTSE 100: down 0.2% at 6,854.45

FTSE 250: down 0.1% at 16,040.68

AIM ALL-SHARE: down 0.1% at 789.65

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Hang Seng: flat at 23,537.95

Nikkei 225: closed down 0.4% at 15,379.44

DJIA: closed for holiday Friday

S&P 500: closed for holiday Friday

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GBP-USD: down at USD1.7150

EUR-USD: down at USD1.3585



GOLD: down at USD1,313.58 per ounce

OIL (Brent): down at USD110.55 a barrel



(changes since end of previous GMT day)

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ECONOMICS AND GENERAL

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Monday's Key Economic Events still to come

(all times British Summer Time)



09:30 EU Sentix Investor Confidence

13:30 Canada Building Permits

15:00 Canada Ivey Purchasing Managers Index

15:30 Canada Bank of Canada Business Outlook Survey

16:30 US 3-Month and 6-Month Bill Auction

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German industrial production declined unexpectedly in May, official data indicated. Industrial output fell 1.8% in May from the prior month, Destatis reported. This was the third consecutive fall in production. Economists had forecast a 0.2% rise after declining by revised 0.3% in April.

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International Monetary Fund Managing Director Christine Lagarde indicated a slight reduction to the institution's global growth outlook as investment remains subdued. The global economic outlook to be released later this month would be "slightly different" from previous forecasts, Lagarde said at the Cercle des Economists conference in Aix-en-Provence, France on Sunday. Nonetheless, she said the global activity is expected to gain momentum in the second half of the year and to accelerate further in 2015 after an unexpectedly weak start to 2014.

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The US warned Sunday that travellers who show up at overseas airports with electronic devices must be able to turn them on if asked to do so. "Powerless devices will not be permitted onboard the aircraft," the Transportation Security Administration warned. The move appeared to be connected to a rash of concern about threats to US-bound flights.

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German President Joachim Gauck Sunday warned of further strains in German-US relations after the arrest of a man alleged to have passed documents to Washington. If suspicions are confirmed that an employee of the German intelligence service had spied for the US, then it's time to draw a line, he said. "That's enough of this now," he said. Interior Minister Thomas de Maiziere called the situation "grave." Foreign Minister Frank-Walter Steinmeier demanded that nothing more be swept under the carpet.

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Ukraine's military advanced Sunday on the industrial city of Donetsk, where pro-Russian separatists were digging in after losing Sloviansk a day earlier. President Petro Poroshenko called the recapture of the rebel stronghold a "turning point" in weeks of fighting and ordered the continuation of the offensive. The taking of Sloviansk occurred on the day Ukraine and Russia had agreed would be the deadline for starting talks on a long-term ceasefire, but those talks failed to materialize. Russian Foreign Minister Sergei Lavrov said in a phone call with his German counterpart, Frank-Walter Steinmeier, that it was "of grave concern" that the talks between Ukrainian authorities and the rebels had not taken place, the Russian Foreign Ministry said.

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Sunni militants stormed a church in the northern Iraqi city of Mosul on Sunday and kidnapped two priests and a nun, witnesses said. Militants of the Islamic State in Iraq and the Levant jihadist group have in recent weeks seized large parts of northern and western Iraq, including Mosul, as well as a string of towns stretching south towards Baghdad. Fighters of ISIL, an al-Qaeda splinter group, also took control of parts in eastern Syria, and claim to have opened the borders between the two countries to establish their own Islamic caliphate.

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Israeli airstrikes killed nine Palestinian militants in the Gaza Strip overnight, officials said Monday. Israel bombed a site belonging to the Qassam Brigades, the armed wing of the Islamist Hamas movement in control of the Gaza Strip, in the area of a defunct airport outside the town of Rafah, near the Israeli border. The bodies of six fighters were found before dawn Monday, Gaza emergency services chief Ashraf al-Qedra told reporters. They were found in a tunnel dug by the Brigades, Hamas-run al-Aqsa television said. Three others reportedly died in Israeli strikes, which were launched in response to more than 25 rocket attacks from Gaza on Sunday and at least a dozen more on Monday.

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Somalia's radical Islamist group al-Shabaab claimed responsibility for two attacks overnight on the Kenyan coast that police and Red Cross said Sunday left 22 people dead. The shootings took place in the town of Hindi in Lamu County, the site of an attack last month by the militants that left more than 60 people dead. A separate assault took place in Gamba, in neighbouring Tana River County.

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The Nigerian military repelled an attack by terrorist group Boko Haram on a base in northern Nigeria, killing 50 militants, local newspaper Premium Times reported Saturday. At least six soldiers, including a high-ranking officer, were also killed when Boko Haram stormed the base in Damboa in Borno state while most of the soldiers and police were out on patrol late Friday.

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BROKER RATING CHANGES

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CITIGROUP RAISES WEIR GROUP TO 'BUY' ('NEUTRAL') - TARGET 3,100 (2,600) PENCE

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JEFFERIES RAISES BAE SYSTEMS PRICE TARGET TO 500 (350) PENCE - 'BUY'

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TRADERS: INVESTEC RAISES PETRA DIAMONDS PRICE TARGET TO 245 (194) PENCE - 'BUY'

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TRADERS: NUMIS CUTS RM TO 'HOLD' ('BUY')

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TRADERS: INVESTEC RAISES CLINIGEN TO 'BUY' ('HOLD') - TARGET 497 (560) PENCE

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GOLDMAN CUTS BLINKX PLC TO 'NEUTRAL' ('BUY') - TARGET 40 (130) PENCE

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JPMORGAN RAISES IMPERIAL INNOVATIONS TARGET TO 515 (350) PENCE -'NEUTRAL'

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COMPANIES - FTSE 100

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Anglo American PLC said it has entered a deal with Lafarge SA for Anglo American to sell to Lafarge its 50% holding in building-materials group Lafarge Tarmac Holdings Ltd for a minimum value of GBP885 million in cash. The FTSE 100-listed mining giant said it has reached an agreement in principle to sell the stake in Lafarge Tarmac, which supplies aggregates and asphalt from more than 70 production plants and over 100 quarries in the UK, and develops sustainable readymix concrete, lime and powder, and cement products. The company said the sale is being made as Lafarge SA plans to offer a full divestment of the joint venture to the European Commission as part of an ongoing proposed merger between Lafarge and Holcim Ltd. The two major cement makers are being forced to shed a large range of assets so that the merger meets European competition regulations.

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Brewing giant SABMiller PLC said it could sell all its 39.6% stake in gaming, hotel and entertainment group Tsogo Sun Holdings Ltd, disposing of a business it no longer considers part of its main portfolio and using the funds to invest in its remaining businesses. In a statement, SABMIller said it will sell up to the whole holding, valued at about ZAR11.7 billion, or about USD1.09 billion, by selling 305 million shares in a secondary placing into the market, and through a deal whereby Tsogo Sun will buy back about 130 million shares for ZAR2.8 billion or about USD260 million.

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COMPANIES - FTSE 250

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Segro PLC said it has agreed to sell its Pegasus Park in Brussels to funds managed by Ares Management LP in a deal worth EUR83.4 million. Pegasus Park comprises a 81,500-square-metre office park, 90% of which was developed between 1999 and 2003, and seven hectares of development land adjacent to Brussels Airport. FTSE 250-listed Segro said the sales proceeds are in line with the park's book value at the end of 2013 and represents a yield of 9.0%. Segro said this takes into account the EUR900,000 annualised running costs of its office at Pegasus Park, which will be closed as a result of the deal.

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HousebuilderTaylor Wimpey PLC echoed its peers early Monday, citing recovery in the UK housing market for a strong first half of 2014, with sales and pricing at the upper end of its expectations. All of the UK's major housebuilders have reported an accelerating recovery in the UK housing market through 2013 and into this year, particularly in the southeast of England, where Taylor Wimpey has high exposure. Taylor Wimpey said customer confidence remains high, while visitor levels remain strong. It said during the first half it achieved an average private net reservation rate of 0.71 per outlet per week, compared with 0.67 per outlet per week a year earlier. Average selling price of completions increased to GBP206,000 from GBP188,000, while the average selling price on private completions increased 9% to GBP224,00 from GBP205,000.

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COMPANIES - MAIN MARKET AND AIM

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Copper and gold miner Metminco Ltd said it was unaware why its shares rallied sharply or why trading volumes were high on the Australian Securities Exchange Monday. The stock was up 22% in Australia Monday. The company is also listed on AIM in London. Metmico said it was responding to a request from the ASX.

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African low-cost airline fastjet PLC said it flew 53,386 passengers in June, up 24% from a month earlier due to new routes it is flying. Capacity was up 12% from May as it flew 67,425 seats, driven by increases on its Dar-es-Salaam to Mbeya and Dar-es-Salaam to Mwanza routes. Its load factor, a measure of how full its seats are, was 79%. Passenger number were almost double the 27,385 passengers flown in June 2013, but load factor decreased from 82%.

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RM PLC said it expects its performance in the second half of the year to be similar to its first half, as it raised its dividend on an improved profit in the half year ended May 31,despite seeing revenue decline due to the restructuring in its largest division. The educational technology company proposed an interim dividend of 0.96 pence, up from 0.84 pence a year before. RM posted a pretax profit of GBP6.7 million for the recent half, up from GBP4.5 million in the same period a year earlier, despite seeing revenue fall to GBP92.1 million from GBP118.8 million, hit restructuring of its largest division during the year. However, this was offset as the company also cut its cost of sales to GBP57.0 million from GBP85.3 million.

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Residential property management and insurance company HML Holdings PLC Monday said it has bought Bath-based property management business Chilton Estates Management for GBP545,000 in cash, a deal it expects to boost earnings immediately. The deal includes an extra performance-related retention payment of GBP141,000 which will be made in two years time if certain performance targets are met.

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Capital Drilling Ltd said that although its second quarter trading activity slightly improved on its previous quarter, its half year revenues will be significantly lower than the previous year, in line with market expectations, as weak commodity prices, subdued capital markets and a focus on capital discipline hit sales at the company. The emerging and developing markets drilling company said its first half revenues for the six months ended June 30 are expected to be down 27% to USD52.9 million from USD72.7 million the previous year as mining companies reduced their tenders for drilling due to falls in commodity prices and a necessity to focus on capital discipline in the mining industry.

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Solid State PLC expressed optimism over its future prospects as it raised its dividend on an improved profit in the year to end-March, boosted by two acquisitions during the year. The electronic components company proposed a total dividend of 8.5 pence from 8.0 pence. It posted a pretax profit of GBP2.2 million, up from GBP1.8 million, as revenue rose to GBP32.1 million from GBP31.5 million, boosted by the acquisitions of Q-Par Angus Ltd and Electronic Components Ltd during the year and improved gross margins.

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Imperial Innovations Portfolio Company Abzena Prices IPO At 80p Per Share For GBP77.9M Market Cap; To Start Trading On AIM Thursday

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Mosman Oil & Gas Says It Has Encountered Oil Shows In Two Regions At Crestal-1 Well

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Horticulture products company William Sinclair Holdings PLC said Chairman Hugh Etheridge has stepped down with immediate effect and has been replaced by Rupert King, a non-executive director at the company. Etheridge said he made the decision following the recent settlement with Natural England for final compensation for the company's Bolton Fell site.

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COMPANIES - OTHER

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Grain processor Archer Daniels Midland Co reported acquiring WILD Flavors GmbH, giving it the ability to offer food and beverage companies a comprehensive suite of systems to enhance and improve their products. In an all-cash deal worth nearly EUR2.3 billion of enterprise value, ADM would pay EUR2.2 billion to WILD Flavors shareholders Hans-Peter Wild and funds affiliated with Kohlberg Kravis Roberts & Co LP, and assume about EUR0.1 billion of net debt.

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Monday's Scheduled AGMs/EGMs



Leni Gas & Oil

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Source: Alliance News


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