Legal & General buys rest of CALA Homes, Antofagasta lifts dividend by 177pc
London open
The FTSE 100 is expected to open flat on Tuesday, having closed down 0.13% at 7,214.76 on Monday.
Stocks to watch
Legal & General Group announced on Tuesday that its Legal & General Capital division has acquired the 52.1% of CALA Homes which it did not previously own. The FTSE 100 company said the business had performed “strongly” under joint ownership with Patron Capital Partners, with revenues growing threefold to £748m in 2017 from £241m in 2013, and profits growing at a compound annual growth rate of 12% over the last three years. It said the acquisition cost of the 52.1% share capital was £315m, plus additional transaction costs and financial adjustments to reflect the contribution of management and Patron during the period of joint ownership.
Antofagasta increased its dividend 177% for last year as cash flow surged, though the Chilean copper miner is facing strike action at its Los Pelambres mine. Looking ahead, the crucial events on FTSE 100 giant's horizon in 2018 are the review and expected approval of the major expansion project at Los Pelambres and progressing expansion plans at Centinela.
Old Mutual said it would resist a claim made against it in the US by Travelers and St Paul Fire and Marine Insurance related to disposed of assets. The financial services group said the insurers had “lodged a claim in the United States District Court for the Southern District of New York in relation to pre-existing plc head office legacy items relating to previously disposed of US assets”.
International plastics engineer RPC Group said it had bought polythene film maker Nordfolien for €75m. The purchase is being funded from RPC's existing debt facilities and represents a pre-synergy EBITDA multiple of around seven times. Nordfolien is expected to report revenue of €130m for the same period. RPC said the acquisition would not impact its £100m share buyback programme, currently underway.
Newspaper round-up
Hiring confidence among British companies has reached its highest level in more than a year and recruitment is set to pick up as businesses shrug off downbeat economic projections, according to a closely watched study. Low unemployment and strong demand for more workers means companies are increasingly forced to pay joining bonuses of 15pc or 20pc of salaries to entice new recruits. The poll of 2,102 employers across nine different industry sectors by the recruitment firm ManpowerGroup is used by the Bank of England as an early indicator for changes in the jobs market. - The Times/Telegraph/Guardian
If central banks ever issued their own cryptocurrencies, they could become rivals to cash, draining funds from the commercial banking system and accidentally driving up market interest rates, a global watchdog has warned. Central banks including the Bank of England, the Swedish Riksbank and the US Federal Reserve have all commented on the idea in public, with the Riksbank actively investigating the implications of its own digital currency. - Telegraph
President Trump has blocked a record-breaking merger of two of the world’s largest microchip makers on national security grounds. In an executive order issued last night, he instructed Broadcom, based in Singapore, to terminate its $117 billion hostile takeover of its American rival Qualcomm, which is the largest technology deal ever proposed. The order will be seen as further evidence of Mr Trump’s protectionist agenda. - The Times
One of the City’s top institutional investors has backed Melrose’s proposed hostile takeover of GKN. After a dramatic day in which the bid was raised to £8.1 billion and the war of words between the two intensified, Aviva Investors, a top 25 shareholder in GKN, said that it would support Melrose. - The Times
A record number of households switched suppliers in the retail energy market last month, showing it has never been more competitive, as the Government accelerates its plans to cap prices. The legislation to support a price intervention across the market came under a second parliamentary reading last week ahead of fresh figures which show a record amount of energy switching. - Telegraph
The competition watchdog is assessing whether the proposed merger of SSE and Npower, the energy suppliers, could be affected by the sale of Npower’s parent to a rival. Npower is owned by Innogy, which is majority-owned in turn by RWE. RWE said over the weekend that it planned to sell its stake to Eon, its fellow German utility, as part of a multibillion-dollar asset swap. - The Times
US close
Wall Street finished on a mixed note on Monday, as the Dow Industrials came under selling pressure even as many investors continued to cheer encouraging jobs data at the end of the previous week.
The Dow Jones Industrial Average finished down 0.62% at 25,178.61 and the S&P 500 was 0.13% lower at 2,783.02, while the Nasdaq 100 managed to climb 0.42% to 7,131.12.
Stocks racked up healthy gains on Friday after the non-farm payrolls report revealed the right combination of better-than-expected jobs growth but weaker-than-forecast wage growth, but with some of the best known names in the Industrials down by more than 1%, the broad-market index was up against some stiff headwinds early in the day.
“The numbers we saw on Friday provided the perfect balance of strong job creation and softer wage growth which does not necessarily trigger faster rate hikes,” noted Craig Erlam, senior market analyst at Oanda, earlier in the day.
“The much higher participation rate was a clear reminder that, while unemployment is at a 17-year low, there is still some slack in the economy which may take longer to sort out and explain why wage growth and inflation is so muted.”
An apparent softening in President Trump's stance on trade tariffs was also providing a boost to sentiment, after the Donald tweeted at the weekend that he was working with Australian prime minister Malcolm Turnbull to try and ensure the sunburnt country didn’t end up caught by his planned punitive metals charges.