Lloyd's rings up MBNA purchase, Kier gets green light for renewed highways contract
London open
The FTSE 100 is expected to open two points higher on Tuesday, after closing up 0.08% at 7,017.16 on Monday.
Stocks to watch
Lloyd's Bank said on Tuesday it was buying credit card business MBNA from Bank of America for £1.9bn. The price includes £0.8bn of acquired equity and assumes £240m for future PPI claims, with the group's exposure to PPI liability capped at this amount. The deal will deliver a £650m, or 4%, annual increase to group revenues and will enhance group net interest margin by around 10 basis points annually. “There is also significant opportunity for cost synergies, currently expected at £100m run rate per annum within two years, representing 30% of the 2015 MBNA cost base,” Lloyds said.
Pharmaceutical giant GlaxoSmithKline announced that it achieved positive results from a phase three HIV study, which assessed the efficiency of a two-drug regimen. ViiVHealthcare, which is majority owned by the company with stakes owned by Pfizer and Shionogi, said the first phase three study showed the efficacy of a two-drug regimen, as opposed three or four drugs, as maintenance therapy for HIV.
Property, residential, construction and services company Kier Group confirmed on Tuesday that it has been awarded a 15-year contract, valued at £140m, for repair and maintenance services on Area 13 of the Highways England network. The FTSE 250 firm said the new Area 13 contract, which starts on 1 April 2017, will see Kier provide routine and cyclic maintenance, defect repairs, emergency incident response, traffic management and severe weather services. Kier is the incumbent operator on Area 13, which covers Cumbria and north Lancashire.
Newspaper round-up
The UK’s overseas territories face renewed pressure to abandon corporate secrecy after 80 MPs joined forces to demand greater financial transparency from offshore havens. The cross-party group is backing an amendment to the government’s criminal finances bill on Tuesday that would force Britain’s 14 overseas territories to introduce public registers revealing the true owners of locally registered companies. - Guardian
The Radio Times is poised to go into foreign ownership, as German publisher Hubert Burda finalises a deal to buy its parent company. Immediate Media, which struck a £121m deal with BBC Magazines to buy, license or contract publish titles including Top Gear, Top of The Pops and Match of the Day magazines in 2011, could announce the deal before Christmas. - Guardian
Innovia, the manufacturer of the new plastic £5 notes that contain animal fat, has been snapped up by Canadian label and packaging giant CCL Industries for CAN $1.13bn (£680m). The Wigton-based company, which has about 1,200 employees, is currently owned by a consortium of UK private equity investors managed by The Smithfield Group. - Telegraph
Christine Lagarde looked to be safe in her role as the International Monetary Fund’s managing director on Monday night after its board gave her its backing, just hours after she was convicted of “negligence” over a huge payout to a business tycoon while she was French finance minister. The IMF board praised the “wide respect and trust” for Mrs Lagarde’s leadership as it expressed its “full confidence” in her ability to continue in the role at the upper echelons of international finance. – Telegraph
AstraZeneca has parted company with its head of oncology, who is returning to his native France to take up the post of chief executive of the biotechnology company Innate Pharma. The pharmaceuticals group said that it already had a replacement for Mondher Mahjoubi. Oncology is an important part of the pledge made by Pascal Soriot, Astra’s chief executive, to create a new stable of innovative treatments to combat the so-called “patent cliff”, when established drugs lose their exclusive status and can replicated and sold by rivals. – The Times
Law firms have advised British banks that they could sue the European Union if it fails to give them a gradual path to Brexit. Banks are pushing for retention of rights that allow them to offer services to clients across the European Union from their London offices. – The Times
US close
US stocks ended in the black but off highs on Monday, with volumes beginning to taper off in the run-up to Christmas and as investors eyed events in Germany in Turkey.
The Dow Jones Industrial Average and the S&P 500 ended up 0.2%, while the Nasdaq rose 0.4%.
CMC Markets’ Michael Hewson said: “Attention remains on whether the recent rally in the Dow has the legs to retest the 20,000 level that saw the index fall short on two occasions last week.”
Although the indices managed to eke out some gains, the mood was undermined after a truck drove into a Christmas market in Berlin, killing at least nine people and injuring around 50 in what is believed to have been a deliberate attack.
In addition, investors were digesting news that Russia’s ambassador to Turkey was shot dead by an off-duty policeman at an art gallery in Ankara. The killer was said to have stood over the ambassador’s body shouting “revenge for Syria and Aleppo”.
Geopolitical tensions were also at play on Monday, with Chinese and US officials still in talks after the Chinese navy seized a US underwater drone from the South China Sea on Thursday.
In currency markets, the dollar was 0.8% higher versus the pound and 0.5% firmer than the euro, but down 0.5% against the yen.
In commodities, oil prices settled mixed, with West Texas Intermediate up 0.4% to $52.11 a barrel and Brent crude down 0.8% at $54.75.