FirstGroup seeks advice on future of business, Cineworld buys Canadian chain Cineplex
London open
The FTSE 100 is expected to open 30 points higher on Monday, having closed up 1.1% at 7,353.44 on Friday.
Stocks to watch
Aberdeen-based bus and train operator FirstGroup said on Monday it had appointed advisors to look at the future of its US business, including a sale. The move comes after pressure from two major shareholders, Coast Capital and Robert Tchenguiz, who hold almost 15% between them. “We are actively addressing the cost base of First Bus through a comprehensive efficiency programme, the results of which will be substantially more evident in the second half of the year and beyond,” FirstGroup said in a statement. “Therefore, the board determined that greater value will be achieved by delivering this margin enhancement prior to any launch of a formal sale process.”
Cineworld has agreed to buy Canadian cinema chain Cineplex for $2.1bn. Under the terms of the deal, Cineplex shareholders will receive CAD34 per share in cash. The acquisition is expected to be double-digit accretive to earnings and cash flow in the first full year after completion and will 165 cinemas and 1,695 screens to Cineworld’s portfolio.
Sports Direct boss Mike Ashley said he expected further House of Fraser store closures as underlying group revenue fell in the first half of the company's financial year.
AstraZeneca has completed an agreement to divest its commercial rights to Seroquel - quetiapine fumarate immediate release - and Seroquel XR - quetiapine fumarate extended release - in Europe and Russia, it confirmed on Monday, to Cheplapharm Arzneimittel. The FTSE 100 pharmaceuticals giant said that, under the terms of the agreement, it received a payment of $178m from Cheplapharm. It said it could also receive future sales-contingent payments of up to $61m.
Newspaper round-up
The “phase one” US-China trade deal will nearly double US exports to China over the next two years and is “totally done” despite the need for translation and revisions to its text, US trade representative Robert Lighthizer said on Sunday. Lighthizer, speaking to CBS’s Face the Nation, said there would be some routine “scrubs” to the text but “this is totally done, absolutely”. Lighthizer said a date and location for senior US and Chinese officials to formally sign the agreement was still being determined. – Guardian
The average price of a home will rise by 2% over the next year, with northern regions performing more strongly than those further south, according to predictions from the UK’s biggest property website. Rightmove said it expects to see asking prices rise by 2% in 2020 – and that the election result could pave the way for increased housing market activity this coming spring. - Guardian
Senior KPMG executives have taken a £6m pay cut after a tough year in which a series of accounting controversies and sliding profits forced the Big Four firm into retreat. The leadership of KPMG UK, the 25 members of its board and executive committee, took home £21m in the year to Sept 30, down from £27m last year. On average, board members took home £840,000 this year, compared to £964,000 in 2018, according to its annual report. – Telegraph
Capita, the outsourced services contractor, is launching an IT consultancy in an attempt to put itself in the same league as large, high-margin professional services firms such as Accenture and Cap Gemini. The one-time FTSE 100 company has started Capita Consulting, with plans to have 450 consultants next year. It wants to advise large organisations on their needs in the digital economy rather than, as hitherto, acting as a much lower-margin contractor. – The Times
An Indian company with deep pockets has promised to wage a price war in an attempt to break into London’s fiercely competitive taxi hailing market. Ola, which is backed by SoftBank, will launch in the capital next month, hoping to benefit from the problems at Uber. The American giant, also backed by the Japanese technology investor, is set to lose its licence in Europe’s most lucrative taxi market after a ruling by Transport for London (TfL) that Uber was not “fit and proper” to hold a licence. last month. Uber intends to appeal. – The Times
US close
Wall Street indices remained above the waterline on Friday, as investors digested the news that the US and China had reached a phase one agreement on trade.
The Dow Jones Industrial Average was up 0.01% at 28,135.38, the S&P 500 added 0.007% to 3,168.30, and the Nasdaq Composite was 0.2% firmer at 8,734.88.
With Washington and Beijing coming to an agreement on trade for the time being, it also meant the planned next round of punitive tariffs on Chinese imports to the US did not go ahead on Sunday.