The global market turmoil caused by Russia’s invasion of Ukraine claimed an M&A victim in London on Monday.
Spectris has called off talks with fellow FTSE 250 constituent Oxford Instruments over a potential takeover, blaming the market uncertainty caused by Russia’s attack on its neighbour.
Oxford Instruments confirmed at the end of February it had received a takeover offer proposal from Spectris worth about £1.8 billion. Oxford Instruments, which makes scientific tools for research and industry, said the final offer on February 28 followed a ‘series of earlier proposals’ from Spectris.
‘Oxford Instruments is a quality company and the strategic and financial rationale for a combination of our businesses is highly compelling,’ Spectris Chief Executive Andrew Heath said on Monday.
‘However, with the invasion of Ukraine, the world has changed since our proposed offer was made regarding a combination of our businesses, bringing a high degree of uncertainty to the economic outlook around the world. While we believe this combination is a great opportunity for both companies, the timing is no longer right and we have brought our discussions to a close.’
Oxford Instruments noted the proposal was ‘unsolicited’ and still believes it has a ‘clear and compelling’ strategy to achieve growth on its own.
Oxford Instruments shares were down 23% early Monday, while Spectris was up 0.1%.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 1.8% at 6,863.95
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Hang Seng: down 3.9% at 21,045.21
Nikkei 225: closed down 2.9% at 25,221.41
S&P/ASX 200: closed down 1.0% at 7,038.60
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DJIA: closed down 179.86 points, 0.5%, at 33,614.80
S&P 500: closed down 0.8% at 4,328.87
Nasdaq Composite: closed down 1.7% at 13,313.44
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EUR: down at $1.0871 ($1.0915)
GBP: soft at $1.3208 ($1.3215)
USD: up at JP¥115.02 (JP¥114.76)
GOLD: up at $1,990.60 per ounce ($1,961.27)
OIL (Brent): up at $128.54 a barrel ($114.52)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Monday’s key economic events still to come
1500 EST US consumer credit
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Chinese Foreign Minister Wang Yi on Monday stressed that the friendship between Beijing and Moscow was still very strong, despite international condemnation of Russia’s ongoing invasion of Ukraine, as he said China was open to helping mediate peace. Beijing has walked a tight diplomatic tightrope throughout the crisis, refusing to condemn its close ally Moscow after only last month touting a ‘no limits’ strategic partnership between the two countries. ‘The friendship between the two peoples is rock-solid, and both sides’ future cooperation prospects are very vast,’ said Wang at an annual press briefing. But he said China was ‘willing to work with the international community to carry out necessary mediation, when necessary.’
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Russia’s sovereign credit rating has been cut by both Moody’s and Scope Ratings, with the fallout of a wave sanctions a key risk to the nation’s economy. Western powers have imposed heavy economic sanctions on Russia, in the wake of the latter’s invasion of Ukraine. Companies, including payments firms Visa, Mastercard and American Express, have halted new sales in Russia. Moody’s lowered its long-term issuer and senior unsecured debt ratings to Ca from B3, with a negative outlook, on Sunday. Moody’s had only just downgraded Russian debt to B3 from Baa3 on Thursday. Scope, meanwhile, lowered Russia’s long-term issuer and senior unsecured debt ratings to CCC from BB+. The score is under review for a downgrade.
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UK house prices rose at fastest the annual pace since 2007 to reach new record high, the Halifax house price index showed. Monthly house price growth was 0.5% in February, with prices rising 11% annually. ‘This was an eighth successive month of house price growth, as the resilience which has typified the market throughout the pandemic shows little sign of easing. Year-on-year prices grew by 10.8%, the fastest pace of annual growth since June 2007, pushing the average house price up to another record high of £278,123,’ Halifax Managing Director Russell Galley said. ‘Two years on from the start of the pandemic, average property values have now risen by £38,709, or 16%, since February 2020. Over the last 12 months alone house prices have gained on average £27,215. This is the biggest one-year cash rise recorded in over 39 years of index history.’
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German retail sales growth was ahead of market consensus in January, data from the Federal Statistical Office showed. Retail sales were up 2.0% in January, in real terms, beating market consensus, according to FXStreet, for 1.5% growth. Annually, sales were up 10%.
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China’s trade surplus expanded in the first two months of 2022, as the world’s second largest economy increased trade with the US and European Union. According to China’s General Administration of Customs, the nation’s trade surplus increased by 16% annually to ¥738.8 billion, around $116.81 billion, in the first two months of the year. Exports rose by 14% annually, while imports increased 13%.
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BROKER RATING CHANGES
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BofA raises Lloyds Banking to ’neutral’ (underperform) - price target 46 (42) pence
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Credit Suisse raises Bunzl to ’neutral’ (under-perform) - target 2,900 (2,450) pence
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Goldman raises ITV to ’neutral’ (’sell’) - target 94 (125) pence
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COMPANIES - FTSE 100
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Airtel Africa said it has secured a 10-year temporary licence in its largest market. The company’s Kenyan subsidiary received approval from regulators for a replacement license with a ten-year frequency licence for 2x10 megahertz of spectrum in the 2,100 MHz band. ‘This $30 million investment reflects our continued confidence in the tremendous opportunity inherent in the Kenya market,’ the company said.
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Russian steelmaker Evraz has lost another member of the board. It said Sandra Stash has resigned as non-executive director, effective immediately. On Friday, Evraz said James Rutherford, who also is chair of Egyptian gold miner Centamin, had resigned. Separately, Russian aluminium firm EN+ said Lord Barker, who has been chair since the company floated in London in 2021 and executive chair since 2019, has resigned, handing over to Christopher Bancroft Burnham, who is currently senior independent director. Joan MacNaughton also has resigned as an independent director of EN+
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COMPANIES - FTSE 250
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Shipping services firm Clarkson swung to a profit in 2021, and upped its shareholder payout, following a recovery in shipping markets. For 2021, it recorded a pretax profit of £69.1 million versus a £16.4 million loss in 2020. Revenue increased 24% to £443.3 million from £358.2 million. Clarkson upped its annual dividend to 84 pence from 79p a year prior. Chief Executive Andi Case said: ‘We are positive about the future of the shipping industry. The outlook for Clarksons remains strong and we believe the business will continue to benefit from its market-leading position.’ Clarkson ended 2021 with a forward order book of $165 million, up from $116 million at the same point a year earlier.
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COMPANIES - MAIN MARKET AND AIM
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CareTech Holdings could soon be facing a takeover after shareholder Sheikh Holdings Group, the family office of Haroon and Farouq Sheikh, confirmed press speculation that it is in the ‘early stages of forming a consortium’ to potentially make a bid to buy CareTech. CareTech has not yet been approached, it noted.
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COMPANIES - GLOBAL
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Two of the so-called ‘big four’ accounting firms are pulling out of Russia over Moscow’s invasion of Ukraine. PricewaterhouseCoopers on Sunday said it had decided not to have a member firm in Russia. It has 3,700 people there. KPMG, headquartered in Netherlands, also announced it would withdraw from Russia and Belarus. KPMG has over 4,500 people in Russia and Belarus and said ‘ending our working relationship with them, many of whom have been a part of KPMG for many decades, is incredibly difficult.’
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Monday’s shareholder meetings
Crystal Amber Fund Ltd - GM re change of investment policy
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