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London open: Stocks slip after weak US close; UBM surges on Informa merger
London stocks slipped in early trade on Wednesday, taking their cue from a downbeat session in the US, although deal news helped to keep things interesting.
At 0830 GMT, the FTSE 100 was down 0.2% to 7,743.93, while the pound was up 0.1% versus the euro at 1.1258 and down 0.1% against the dollar at 1.3776.
Konstantinos Anthis at ADS Securities said: “The pound didn’t receive any support from yesterday’s inflation report that printed lower, in line with expectations, and until we get fresh data from the UK on Friday this might be a chance for some profit-taking in the British currency. The short-term support lies at the 1.3750 level but if the dollar picks up steam we could see a move towards and below the 1.37 mark today.”
On the corporate front, M&A was in focus as Informa, the events and specialist publishing group, has agreed a merger with smaller events-focused rival UBM in a deal that is expected to generate “significant synergies”. Informa, which will offer 1.083 of its shares and 163p per UBM share, or 972.43p, will also supply chairman Derek Mapp and chief executive Stephen Carter for the combined group. UBM surged but Informa fell on the news.
Sticking with deal news, Melrose Industries was weaker after it went hostile with its bid for engineer GKN, making a firm offer that values each GKN share at 430.1p.
Luxury clothes retailer Burberry slumped as it reported slower sales growth in the last three months of 2017 than had been expected but remained confident of sashaying on to hit full year profit targets as it makes initial progress on its new strategy.
Education publisher Pearson retreated after saying it expects 2017 adjusted operating profit of around £570m to £570m and adjusted earnings per share of 53.5p to 54.5p at effective exchange rates, as lower US educational sales still drag on the company.
Cineworld was under the cosh after announcing a rights issue to part fund its acquisition of US cinema china Regal, as it posted a 12% jump in full-year revenue. Cineworld is offering four new ordinary shares for every one existing share at 157p, which is a 34% discount to the theoretical ex-rights price of 238.3p.
Dairy Crest slipped as it appointed group finance director Tom Atherton as deputy chief executive with immediate effect, while Diploma was in the red even as it said first-quarter revenues were up 10% year-on-year.
Support services and construction company Interserve fell sharply after the Financial Times said it was under government watch following the collapse of contractor Carillion.
On the upside, IWG surged following a Bloomberg report that Brookfield Asset Management Inc and Onex Corp are preparing a bid that values the company at about £2.7bn.
Beazley was on the front foot after the insurer said 2017 full-year profit is likely to be ahead of current market expectations.
In broker note action, GlaxoSmithKline was higher after an upgrade by Barclays, Spire Healthcare was boosted by an upgrade to ‘buy’ at Jefferies and Big Yellow gained after an upgrade to ‘buy’ at Berenberg.
British Land and Workspace were both up after upgrades at Stifel, but Cairn Energy was on the back foot after a downgrade to ‘neutral’ at Macquarie.
