LONDON MARKET OPEN: Entain Jumps 27% After MGM Takeover Tilt

(Alliance News) - Stock prices in Europe opened higher on Monday, despite the threat of more ...

Alliance News 4 January, 2021 | 8:37AM
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(Alliance News) - Stock prices in Europe opened higher on Monday, despite the threat of more Covid-19 lockdowns, with investors instead focusing on the promise of vaccine rollouts.

A new national lockdown looks likely to be imposed across England as the UK government was accused by Labour of letting coronavirus "get out of control". As events developed rapidly, the Daily Mail reported the government's key "Covid-O" committee that oversees restrictions was expected to meet on Monday to decide changes to the coronavirus regime.

The newspaper quoted a UK government source as saying ministers were looking at putting even more areas of England into the toughest Tier 4, which already covers a total of 44 million people – or 78% of the population – after changes which came into effect on Thursday.

The FTSE 100 index was up 127.81 points, or 2.9%, at 6,588.33 early Monday. The blue-chip stock measure was up sharply despite a rising pound, which reduces the sterling value of the overseas earnings of the index's constituents.

The mid-cap FTSE 250 index was up 181.84 points, or 0.9%, at 20,670.14. The AIM All-Share index rose 0.5% to 1,162.78.

The Cboe UK 100 index was up 1.8% at 655.49. The Cboe 250 was up 0.9% at 18143.28, and the Cboe Small Companies was up 0.2% 11753.37.

In Paris, the CAC 40 was up 1.5%, while Frankfurt's DAX 30 climbed 1.1%.

"Chances are that 2021 could turn into an exceptionally good year for the global economy. After a dreadful 2020, a calmer US trade policy, vaccines that work, and the end of the most serious Brexit uncertainty underpin a positive economic outlook for 2021 despite the horrific toll which the Covid-19 pandemic will continue to take across much of the world in the next few months," noted Berenberg analyst Holger Schmieding.

Early corporate news in London featured a host of M&A action, with Ladbrokes Coral-owner Entain confirming it has received a takeover proposal from US partner MGM Resorts International, while Ferguson said it has struck a deal to sell its UK heating and plumbing business Wolseley UK for a net GBP308 million. Media firm S4 Capital meanwhile, kicked off 2021 with two acquisitions.

Ladbrokes Coral-owner Entain jumped 27% early Monday to 1,440.50 pence, giving it a market capitalisation of GBP8.47 billion.

The Wall Street Journal on Sunday, citing sources familiar with the matter, had said MGM was looking to buy Entain. The WSJ had said the value of the bid would be above GBP12.85 per share. Entain shares closed New Year's Eve trading at 1,132.50 pence.

Entain said on Monday: "Under the terms of its most recent proposal, MGMRI would offer 0.6 MGMRI shares for each Entain share. Based on closing prices on 31 December 2020, being the last trading day prior to this announcement, MGMRI's proposal represents a value of 1,383 pence per Entain share and a premium of 22% to Entain's share price."

The company said Entain shareholders would own just shy of 42% of the enlarged company under the terms of the offer.

Entain, however, said it told MGM the bid "significantly undervalues the company and its prospects".

"Entain shareholders are encouraged to take no action," the company added. MGM has until February 1 to make a firm offer or walk away.

The news comes after London-listed peers of Entain have received interest from the US or have moved to boost their exposure in the lucrative gambling market there.

Back in September, William Hill agreed to a GBP2.9 billion takeover by US casino and resort operator Caesars Entertainment. And in December, Paddy Power owner Flutter Entertainment struck a USD4.18 billion deal to own nearly all of the US FanDuel gaming business.

In other M&A news, Ferguson climbed 0.3%. It has sold Wolseley UK to private equity firm Clayton, Dubilier & Rice for GBP308 million.

In the financial year that ended July 31, the unit generated revenue of USD1.88 billion. The sale means Ferguson can "focus entirely" on its North American business, noted Chief Executive Kevin Murphy.

"The board's current intention is to make a return of substantially all of the net cash proceeds of sale to shareholders by way of a special dividend," Ferguson added.

Elsewhere in London, S4 Capital said it has bought integrated agency Decoded Advertising and will combine it with its MediaMonks unit. It also has acquired Metric Theory, a digital marketing firm, which will merge with S4's MightyHive.

The news comes after "much of the uncertainty" related to Brexit has been eased, due to the UK agreeing a trade deal with the EU, S4 said.

S4 Capital shares were 2.6% higher.

"The consideration for both Decoded and Metric Theory will be paid, as is usual, half in cash and half by the issue of S4 Capital ordinary shares, with minimum customary lock-ups and no earn-outs, which create fragmentation and hinder a unitary structure," S4 added.

AstraZeneca shares were 1.7% higher on Monday, as first doses of the drugmaker's Covid-19 jab, developed alongside Oxford University, are set to be administered in the UK.

Just over half a million doses of the newly approved vaccine will be available from Monday, with vulnerable groups already identified as the priority for immunisation. Jabs will be delivered at some 730 vaccination sites already established across the UK, with others opening this week to take the total to more than 1,000, according to the Department of Health & Social Care.

In addition, Astra on Monday said it has completed the commercial divestment of heart drugs Atacand and Atacand Plus in over 70 nations to Cheplapharm.

Astra received USD250 million from the German pharmaceutical firm and will receive a further USD150 million in the first half of 2021.

Monday's economic calendar has a raft of manufacturing PMIs, including data from the UK at 0930 GMT, the EU at 0900 GMT before the US at 1445 GMT.

The pound was quoted at USD1.3680 on Monday morning in London, improved from USD1.3656 at the early London equities close on Thursday. The euro was largely unchanged at USD1.2272.

Against the yen, the dollar was trading at JPY102.87, down from JPY103.06 at the London stock market close on Thursday.

Brent oil was quoted at USD53.00 a barrel, ahead of an OPEC meeting on Monday. A barrel of the North Sea benchmark was quoted USD51.10 at the London equities close Thursday.

An ounce of gold fetched USD1,928.91 on Monday morning, up sharply from USD1,894.00 at the London equities close on Thursday.

"Gold prices have started to rise once again as traders are concerned about the possibility of further lockdowns. British Prime Minister Boris Johnson could be announcing tougher lockdown measures this week," said Avatrade analyst Naeem Aslam.

Gold miners Polymetal International and Fresnillo were among the best FTSE 100 performers early on Monday, up 5.4% and 5.8%.

By Eric Cunha;;

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