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LONDON BRIEFING: WPP To Return GBP1 Billion From Kantar Stake Sale

(Alliance News) - Ad agency WPP confirmed Friday it has agreed to sell 60% of brand and marketing ...

Alliance News 12 July, 2019 | 8:05AM
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(Alliance News) - Ad agency WPP confirmed Friday it has agreed to sell 60% of brand and marketing research firm Kantar to private equity firm Bain Capital.

The deal values all of Kantar at USD4 billion and proceeds to WPP on completion after tax and continuing investment in Kantar are expected to be USD3.1 billion.

WPP said it will return GBP1.0 billion of this to shareholder, with the remainder going toward reducing debt.

WPP Chief Executive Mark Read said: "Kantar is a great business, and we look forward to working with Bain Capital to unlock its full potential. As a strategic partner and shareholder in Kantar, WPP will continue to benefit from its future growth while our clients continue to benefit from its services and capabilities.

"This transaction creates value for WPP shareholders and further simplifies our company. With a much stronger balance sheet and a return of approximately 8% of our current market value to shareholders planned, we are making good progress with our transformation."

WPP shares were up 0.5% at 959.80 pence early Friday.

Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.2% at 7,524.80
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Hang Seng: up 0.2% at 28,487.83
Nikkei 225: closed up 0.2% at 21,685.90
DJIA: closed up 227.88 points, 0.9%, at 27,088.08
S&P 500: closed up 0.2% at 2,999.91
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GBP: soft at USD1.2541 (USD1.2555)
EUR: firm at USD1.1270 (USD1.1260)

Gold: down at USD1,407.12 per ounce (USD1,412.00)
Oil (Brent): flat at USD67.00 a barrel (USD66.95)

(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Friday's Key Economic Events still to come

1100 CEST EU industrial production
1000 CEST France IEA oil market report

0830 EDT US producer price index
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Police in Gibraltar have arrested the captain and chief officer of the Iranian supertanker detained last week in an operation involving British Royal Marines. The move comes just hours after a Royal Navy warship drove off Iranian patrol boats as they attempted to impede the progress of a British tanker through the Strait of Hormuz. The incidents come a day after Iranian President Hassan Rouhani warned of unspecified "repercussions" for the seizure of the Grace 1 tanker off Gibraltar last Thursday.
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China's economy grew at its slowest rate in nearly three decades in the second quarter, according to an AFP survey of analysts, hit by the US-China trade war and weakening global demand. The world's second largest economy expanded 6.2% in April-June, the poll of 10 economists predicted ahead of the official release of gross domestic product figures Monday. The reading would mark the worst quarterly growth in almost three decades but stay within the government's target range of 6.0% to 6.5% for the whole year. The economy grew 6.6% in 2018.
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Tropical Storm Barry gathered strength late Thursday as it chugged toward water-logged New Orleans, with the city and Louisiana coast girding for heavy rains, storm surge and flooding that pose a threat reminiscent of 2005's deadly Hurricane Katrina. The weather system, which has already caused major flooding in the low-lying city, is expected to reach hurricane strength Friday or early Saturday when it nears Louisiana's central or southeast coast, according to the National Hurricane Center. The NHC noted that sustained winds had increased to near 50 miles per hour, with higher gusts, and the storm will bring "life-threatening flooding" to coastal and river areas.
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Sudan's ruling military council has foiled a coup attempt, a top general announced on state television Thursday, saying that 12 officers and four soldiers had been arrested. The announcement came as the ruling military and civilian protesters had agreed to end a political impasse after the army in April ousted longtime ruler Omar al-Bashir on the back of a popular uprising.
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Italian prosecutors are investigating allegations of illicit Russian funding for the far-right League party of deputy premier and Interior Minister Matteo Salvini. "We are looking into the matter to see if crimes have been committed," Milan chief prosecutor Francesco Greco told reporters on Thursday, as quoted by the Adnkronos news agency. Earlier, Adnkronos and the ANSA news agency reported that Greco's office was probing the possible crime of "international corruption" and had conducted some interrogations.
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BROKER RATING CHANGES
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JPMORGAN RAISES BHP GROUP TO 'NEUTRAL' ('UNDERWEIGHT') - TARGET 2070 (2080) PENCE
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REDBURN CUTS RIO TINTO TO 'SELL' ('NEUTRAL')
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KEPLER CHEUVREUX RAISES IAG TO 'HOLD' (REDUCE) - PRICE TARGET EUR5.40
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BERENBERG CUTS WIZZ AIR TO 'HOLD' (BUY) - PRICE TARGET 3700 (3600) PENCE
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BERENBERG RAISES EASYJET TO 'BUY' (HOLD) - PRICE TARGET 1120 (1040) PENCE
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COMPANIES - FTSE 100
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Insurer Hiscox said it expects to deliver pretax profit for the six months ended 30 June in the range of USD150 million to USD170 million. The company estimates an investment return of USD150 million to June-end. Hiscox highlighted that the insurance market has seen continued deterioration from natural disasters in 2018, including Typhoon Jebi in Japan and Hurricane Michael in Florida. "The scale of deterioration has been significant, with industry loss estimates having increased materially since these events. As a result, and as previously announced in its first quarter trading statement, the group has strengthened reserves for prior year claims from Typhoon Jebi, Hurricane Michael and for the risk excess book. The combined impact of reserve strengthening for these events is approximately USD40 million net," Hiscox said. Hiscox added that the absence of prior year reserve releases from Hurricanes Harvey, Irma and Maria, which totalled USD25 million in the first six months of 2018, means that it expects reserve releases in the first half to be materially lower than last year. Hiscox said it remains strongly capitalised and committed to its progressive dividend policy and does not expect any impact on the interim or final dividend.
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Irish support services group DCC said it traded in line with expectations in the first-quarter of 2019 and delivered good growth operating profit, driven by acquisitions completed in the prior year. For the financial year ending March 31, 2020, DCC said profits are significantly weighted towards the second half of its financial year. The company expects financial 2020 to be another year of profit growth and development.
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COMPANIES - OTHER MAIN MARKET AND AIM
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Chinese investor Fosun Tourism Group is in talks to inject GBP750 million into Thomas Cook Group, both companies said. The tour operator added that its 2019 summer programme is 75% sold - slightly ahead of the year before - but its underlying earnings in the second half will be behind the year before due to the "uncertain consumer environment" in the UK. Fosun said that it, along with Thomas Cook's "core lending banks", are considering the proposal to invest capital into the troubled firm. Fosun already is Thomas Cook's largest shareholder with an 18% stake. Thomas Cook said the investment - which will likely comprise a capital injection and new financing facilities - will see a reorganisation of the company's Tour Operator and Airline business. This will lead to Fosun owning a "significant" minority interest in Thomas Cook's Airline.
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Car dealer Lookers said underlying pretax profit for the full year is expected to be below previous expectations. Lookers expects underlying profit to be around GBP32 million, down from GBP43 million a year ago. Lookers said that throughout the first half and in line with general trends in the domestic retail sector, it has continued to experience cost inflation pressures. Lookers expects the recent challenging conditions to continue into the second half, made worse by continued weakness in consumer confidence in light of wider political and economic uncertainty in the UK, and further pressure on used car margins.
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Moody's Investors Service on Thursday upgraded the long-term issuer and senior unsecured debt ratings for the Bank of Ireland to A2 from A3. The credit agency has also upgraded its outlook to stable from positive. Meanwhile, for the bank's holding company, Bank of Ireland Group PLC, Moody's has reaffirmed the Baa3 senior unsecured and issuer rating, as well; as the positive outlook. The increased rating upgrade reflects Moody's expectations of further issues of bail-in-able debt by the bank, thus increasing the level of subordination protecting Bank of Ireland's own senior unsecured debt, and also leading to lower loss-given-failure.
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COMPANIES - INTERNATIONAL
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US President Donald Trump ramped up his attacks on Silicon Valley giants with a call for "regulatory and legislative solutions" to what he described as unfair treatment of conservatives by major online platforms. At a White House social media "summit", Trump excluded internet firms from the gathering of conservative activists who have been curbed on social media. But he said he would invite those companies in the coming weeks for "a big meeting and a real conversation" on the topic. Speaking to his supporters, Trump repeated his argument of political bias, claiming some activists were blocked or limited on social platforms. Trump, a frequent Twitter user who has more than 60 million followers on that service, nonetheless renewed his complaint over "terrible bias" on social media, and vowed a response.
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Twitter apologised to its users after an outage on Thursday caused by "an internal system change". Users across the US and the UK experienced difficulty in accessing the social media networking service, with website downdetector.co.uk reporting that tens of thousands of reports had been made during the outage. A short while after the outage began, @TwitterSupport posted a statement which read: "Twitter is back up for some people, and we're working to make sure our service is available to everyone as quickly as possible."
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Volkswagen and Ford Motor are to extend their cooperation, the German automotive giant announced following a meeting of its supervisory board. The two companies already announced a collaboration on vans and pick-up vehicles earlier this year, in order to save hundreds of millions of euros in development costs. Further details on new areas of cooperation are to be announced by VW chairman Herbert Diess and Ford chief executive Jim Hackett at a press and investors' conference in New York at 8 am local time on Friday.
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Swiss pharma firm Novartis, American biotechnology company Amgen and Banner Alzheimer's Institute announced the partners will discontinue investigation of the BACE1 inhibitor CNP520 in two pivotal second and third phase studies. CNP520 was being assessed for safety and efficacy in the prevention or delay of the onset of Alzheimer's in people at high risk for developing symptoms, based on their age and genetic status. The studies identified worsening in some measures of cognitive function, Novartis said. Given these findings, it was concluded that the potential benefit for participants in the studies did not outweigh the risk.
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Friday's Shareholder Meetings

DCC
Amigo Holdings
Palace Capital
RDL Realisation
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By Tom Waite; thomaslwaite@alliancenews.com

London Briefing is available to subscribers as an email newsletter. Contact info@alliancenews.com

Copyright 2019 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Wizz Air Holdings PLC 3,886.00 GBX 1.07 -
WPP PLC 916.20 GBX -0.35
easyJet PLC 1,235.00 GBX -1.67 -
International Consolidated Airlines Group SA 508.60 GBX -0.90 -
Rio Tinto PLC 3,961.50 GBX 0.00
BHP Group PLC 1,600.00 GBX -0.37

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