Weekly review
The FTSE 100 ended the week 102.18 points higher, closing a truncated Christmas Eve session at 7,372.10 on Friday.
Equity view
UK outsourcing company Capita said it had sold its AMT Sybex software business to Jonas Computing for up to £40m as it continued to offload non-core assets to bolster its balance sheet. AMT Sybex provides utilities and infrastructure software in the UK. Jonas will pay £23m on completion, scheduled for January 1, 2022. A potential £17m is payable over 24 months, subject to certain conditions, Capita said on Friday.
Consumer goods company Reckitt Benckiser has entered into an agreement for the proposed sale of the E45 brand and related sub-brands to Karo Pharma for an implied enterprise value of £200.0m. Reckitt Benckiser said on Friday that the proposed sale marked "another step forward" in its plan to actively manage its portfolio for higher growth, following the recent divestments of IFCN in China and the Scholl brand, as well as the acquisition of Biofreeze.
Investment firm Kazera Global has delayed the publication of its full-year results by up to three months, citing the impact of the Covid-19 pandemic across its geographies. Kazera said on Friday that it had been granted the additional time, with the group now having until 31 March 2022 to publish its annual report and accounts for the year ended 30 June, rather than by 31 December as previously required.
Gambling technology group Playtech said on Friday that it has launched new state-of-the-art Live Casino facilities in Michigan and New Jersey. The simultaneous launch of the two Playtech Live Casino facilities has been done in collaboration with newly established partner, Parx Interactive under the "Play Gun Lake" brand in Michigan and long standing partner, bet365 in New Jersey.
Bookmaker Flutter has acquired Italian online gaming operator Sisal from CVC Capital Partners Fund VI for €1.91bn in cash. Flutter said on Thursday that the acquisition was likely to complete during the second quarter of 2022 and was also expected to be accretive to adjusted earnings in the first 12 months post-completion.
FTSE 250 listed infrastructure investment company International Public Partnerships Limited said it had bought a small portfolio of UK public-private partnership investments for an initial £3.1m. The portfolio is made up of interests in two community hospitals and minority interests in the Building Schools for the Future (BSF) projects. Investment in minority interests in a further five BSF schemes from the same portfolio, representing up to £3m of additional investment, will be made by the company in the coming months, IPPL said on Thursday.
NewRiver REIT said on Thursday that it and Bravo Strategies have completed the disposal of Poole Retail Park in Dorset for £58m. This represents a net initial yield of 6.6%, a 7.4% premium to the latest valuation and is 30% higher than when NewRiver and Bravo bought the asset in October 2019.
Balfour Beatty has agreed to pay $65m in fines and restitution after pleading guilty to a charge of fraud by a subsidiary operating as a military landlord. Balfour Beatty Communities (BBC), one of the US military's largest private landlords, was investigated for defrauding the US Air Force, Army and Navy.
Syncona on Wednesday said it had sold its portfolio company Gyroscope Therapeutics Holdings to Novartis for up to $1.5bn (£1.1bn) on a cash and debt free basis. The company said it would receive an upfront payment of $800m, with another $700m potentially on offer via milestone payments related to clinical development, regulatory approvals and reimbursement.
Property company LondonMetric has acquired Savills IM Income and Growth Fund in a corporate transaction valued at £122.2m, reflecting a blended yield on cost of 4.3% and an anticipated reversionary yield of 4.9%. LondonMetric said on Wednesday that Savills' portfolio of 15 assets generates £5.35m of rent per annum and has a weighted average unexpired lease term of 11 years, with key occupants including the likes of Decora, Fujitsu, Grafton, HSBC, Iveco, MKM and Volkswagen.
Anglo American said on Wednesday that the value of rough diamond sales at its De Beers unit fell in the tenth cycle of the year. The value declined to $332m from $438m in the ninth cycle, and $452m in the tenth cycle of last year.
Building materials distributor and retailer Grafton Group said it had bought Ireland’s Sitetech Building Products for an undisclosed sum. Sitetech is a construction accessories distribution specialist trading from two locations in Dublin and Cork.
International specialist insurer Hiscox said it had appointed Paul Cooper as group chief financial officer. Cooper is currently interim group CFO at M&G, the FTSE 100 asset manager and life insurer and has more than 25 years financial services experience including across both the retail and Lloyd's insurance markets, Hiscox said on Tuesday, adding that his start date would be announced "in due course".
Asset manager Schroders has agreed to acquire a 75% stake in specialist investment manager Greencoat Capital Holdings for an initial cash consideration of £358.0m. Schroders said on Tuesday that the deal included a series of options for it to acquire the remaining 25% of Greencoat over time, at a price based on a fair market valuation at the time of the option exercise. The acquisition also includes a potential earn-out payment, payable three years after completion and capped at £120.0m.
Mining giant BHP Group on Tuesday said it had received all regulatory approvals for the unification of its corporate structure. BHP has had a dual listing in Australia and the UK since 2001, when it merged with Billiton. It proposed in August to consolidate the two by keeping its primary base in Sydney.
Rank Group has appointed Richard Harris as its news chief financial officer with effect from 1 May 2022. Harris will succeed Bill Floydd, who steps down at the end of the year. Simon Hay, director of finance, will take on the role on an interim basis from 1 January.
Rolls-Royce said Qatar has agreed to invest £85m in its nuclear reactor business in return for a 10% stake. The investment is being made by the emirate’s sovereign wealth fund, the Qatar Investment Authority (QIA).
AstraZeneca's lupus treatment has received marketing authorisation by the European Union, the company said on Monday. Its Saphnelo drug is an add-on therapy for the treatment of adult patients with moderate to severe, active autoantibody-positive systemic lupus erythematosus (SLE), despite receiving standard therapy.
Mining giant Rio Tinto has tapped Dominic Barton to succeed Simon Thompson as the company's new chairman, effective from 5 May 2022. Prior to being appointed to the role, Barton spent over 30 years at McKinsey & Company, including six as its Asia chairman, and was also named as Canada's ambassador to China in 2019.
GlaxoSmithKline has appointed former Tesco boss Sir Dave Lewis as chairman of its new consumer healthcare business with effect from 1 January 2022. The consumer healthcare division is being demerged next summer and is expected to be listed on the London Stock Exchange.
Economic news
The UK Health Security Agency said on Thursday that early findings had shown that people with Omicron were 50% to 70% less likely to need hospital care compared with previous variants of the coronavirus. However, the agency also warned that Omicron is more transmissible than previous variants such as Delta, and could still lead to significant numbers of people requiring hospital treatment in the coming weeks.
Health Secretary Sajid Javid confirmed on Thursday that there would be no further restrictions before Christmas and said there were no plans for any announcements on post-Christmas curbs this week. "We're clear that there's no need for any further restrictions of any type before Christmas but of course we will keep the situation under review," Javid said, adding that there would be no post-Christmas restrictions announced this week.
UK car production fell 28.7% in November to 75,756 units, according to the latest figures released on Thursday by the Society of Motor Manufacturers and Traders (SMMT). It was the fifth month of declines in a row, and represented the worst November performance since 1984, as UK car makers continued to wrestle with a worldwide shortage of semiconductors.
The UK economy grew less than initially thought in the third quarter, even before the Omicron Covid variant hit, according to figures released on Wednesday by the Office for National Statistics. GDP rose 1.1%, coming in weaker than the initial estimate for growth of 1.3%. It was also a marked slowdown from the 5.4% growth seen in the second quarter when restrictions were lifted.
Chancellor Rishi Sunak has announced a £1bn funding package to help the hospitality and leisure sectors in England as they take a hit from a surge in Omicron cases. The measures include a £6,000 one-off cash grant per premises. In addition, the government will cover the cost of Statutory Sick Pay for Covid-related absences for small and medium employers.
UK retail sales growth slowed sharply in the year to December as concerns about the Omicron variant kept shoppers away from high streets, according to the latest survey from the Confederation of British Industry. The CBI’s monthly retail sales balance slid to +8 from +39 in November, with sales expected to grow at a similar pace next month.
UK public borrowing fell in November as spending on the pandemic eased and the furlough scheme came to an end, but was still the second-highest figure for the month since records began in 1993. According to data released on Tuesday by the Office for National Statistics, public sector net borrowing fell by £4.9bn from November last year to £17.4bn. However, this was higher than the £16bn expected by analysts and above the Office for Budget Responsibility’s forecast of £14.2bn.
British ministers have been summoned to an emergency meeting of the Cabinet on Monday afternoon as the government responds to the rising number of Omicron Covid variant cases. The meeting was scheduled by Prime Minister Boris Johnson for 1400 GMT where chief medical adviser Chris Whitty and chief scientific adviser, Sir Patrick Vallance will update ministers on the Covid situation.
UK manufacturing activity remained strong in December but stock adequacy hit another record low, according to a survey released on Monday by the Confederation of British Industry. The CBI’s total orders balance nudged down to +24 from a survey record high of +26 in November, but was ahead of expectations for a reading of +20.
Concerns over the Omicron variant of Covid-19 saw shoppers increasingly abandoning retail destinations towards the end of last week, with retail analysis released on Monday showing a sharp drop in footfall in large city centres over the weekend. Retail data outfit Springboard said that overall, footfall across UK retail destinations rose 5.5% last week from the week before, but that over the weekend it declined by 8.5% in central London and by 6.4% in cities outside of the capital.
International events
US consumer sentiment improved in December, according to the University of Michigan's final December consumer sentiment index. The Michigan sentiment index increased to 70.6 from 67.4 in November but was down from 80.7 in December 2020.
Claims for unemployment benefits were unchanged in the seven days ended 18 December after hitting their lowest level since 1969 two weeks earlier. According to the Labor Department, initial jobless claims totalled 205,000 last week, bang in line with estimates and the previous week's downwardly revised total.
US consumer prices rose at their fastest pace in nearly 40 years in November amid surging inflation. Consumer prices increased 5.7%, up from 5.1% in October, according to figures released on Thursday by the Commerce Department.
Sales of US existing homes rose in November despite tight supply and rising prices, according to data released on Wednesday by the National Association of Realtors. Sales were up 1.9% from October to a seasonally-adjusted annual rate of 6.46m. Analysts had been expecting a rate of 6.53m. Compared with a year earlier, sales fell 2%.
Consumer confidence in Germany decreased noticeably in December, according to a closely-watched survey released on Friday, with both economic and income expectations falling significantly, along with the propensity to buy. According to the GfK Consumer Sentiment Study, the economic outlook among consumers clouded over noticeably at the end of the year, with the indicator dropping 13.9 points to 17.1.
China’s central bank cut its lending benchmark loan prime rate (LPR) on Monday for the first time in 20 months as it looks to underpin the slowing economy. The People’s Bank of China cut the one-year loan prime rate to 3.80% from 3.85%, while the five-year loan prime rate was left unchanged at 4.65%. This was the first cut to the benchmark LPR since April 2020, after the pandemic hit. Analysts had been expecting no change.