(Alliance News) - The following is a summary of top news stories Monday.
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COMPANIES
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Facebook announced plans to hire 10,000 people in the EU to build the 'metaverse', a virtual reality version of the internet that the tech giant sees as the future. Facebook Chief Executive Mark Zuckerberg has been a leading voice in Silicon Valley hype around the idea of the metaverse, which would blur the lines between the physical world and the digital one. The technology might, for example, allow someone to don virtual reality glasses that make it feel as if they're face-to-face with a friend – when in fact they are thousands of miles apart and connected via the internet. The European hires will include "highly specialised engineers", but the company otherwise gave few details of its plans for the new metaverse team.
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Gambling software firm Playtech said it has agreed to a GBP2.1 billion takeover by Australia's Aristocrat Leisure. The Playtech board has unanimously recommended the offer from Aristocrat, which manufactures gambling machines and casino management systems and also publishes mobile games. Aristocrat's 680 pence per share offer is a 58% premium to Playtech's closing price on Friday. The offer values Playtech's equity at GBP2.1 billion. On an enterprise basis, meaning including debt, it values the FTSE 250 company at GBP2.7 billion. Playtech shares leapt 56% to 669.20p on Monday in London. The bid is "intended to be recommended unanimously by the board of Playtech". ASX 20-member Aristocrat has a market value of AUD29.24 billion, about GBP15.76 billion. Aristocrat is based in North Ryde, near Sydney. Playtech was founded in Estonia, but now is based in Isle of Man.
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Woodside Petroleum announced a collaboration with solar energy firm Heliogen for a 5 megawatt commercial-scale solar panel demonstration facility in California. The two companies also announced their intent to jointly market Heliogen's technology in the US and Australia. Under the proposed joint marketing arrangement, the companies will look at potentially collaborating on additional potential renewable energy projects.
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Goldman Sachs received approval for full ownership of its Chinese joint venture, acquiring the remaining stake in Goldman Sachs Gao Hua Securities as part of the agreement. "Attaining full ownership of GSGH will enable us to position our firm for long-term growth and success in this market under one wholly-owned entity, to be renamed Goldman Sachs (China) Securities Co Ltd," the investment bank said. The migration of its onshore business from Beijing Gao Hua Securities to GSGH is "well underway", Goldman stated.
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Royal Philips posted a drop in sales in the recent quarter amid supply chain problems and the anticipated revenue consequences of a recall on some of its mechanical ventilator devices. Sales for the third quarter that ended September 30 were down 7.6% to EUR4.2 billion, which Philips attributed to headwinds caused by global supply chain blockages and product recalls in its Sleep & Respiratory Care business. The Eindhoven, Netherlands-based medical devices maker said it has been hurt by shortages of some electronic products, including microchips, causing supply bottlenecks. In June, the company issued a voluntary recall on some of its mechanical ventilator devices as a foam in the devices may present various health risks, potentially even causing cancer. Adjusted earnings before interest, tax and amortisation was EUR512 million, a drop of 25% from EUR684 million a year before.
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AstraZeneca advised shareholders to reject a "mini-tender" offer by TRC Capital Investment for 2.0 million of Astra's American Depositary Shares, an about 0.1% stake in the company. The offer at USD57.88 is 4.5% below the price of the ADSs on October 8, the last day before the offer from the Toronto-based investor commenced, Astra noted. "AstraZeneca does not in any way recommend or endorse the TRC Capital offer and recommends that shareholders reject the offer because the offer price is below the market price for ADSs immediately prior to this announcement."
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Schroders said total assets under management rose 2.4% to GBP716.9 billion on September 30, the end of the third quarter, from GBP700.4 billion on June 30, the end of the second. Asset management AUM edged up just 0.2% to GBP527.2 billion from GBP526.1 billion, held back by a 1.2% decline in Institutional assets to GBP167.5 billion from GBP169.5 billion. Wealth Management AUM rose 2.6% to GBP78.3 billion from GBP76.3 billion, but the biggest rise in the recent quarter was from joint ventures & associates, where AUM jumped by 14% to GBP111.4 billion from GBP98.0 billion.
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National Grid said it is continuing to perform in line with expectations. It also expects underlying earnings per share this financial year to show a "marginally greater weighting" to the first half, which ended on September 30.
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Virgin Media O2 has launched its first joint product since being formed in a GBP31 billion merger earlier this year to take on BT Group. Customers of both brands can expect their pay monthly mobile data allowance to be doubled, while broadband speeds will be upgraded to the next available tier, free of charge. The firm is hoping its Volt offering will lure new customers who may only have one service but not the other, as well as those not currently using either.
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Manchester-based online retail platform THG is looking to rebuild investor confidence, after a disastrous capital markets day early last week resulted in a 34% share price slide and left analysts and investors with more questions than answers. Founder & CEO Matthew Moulding, "in furtherance of good corporate governance", plans to give up his golden share. The special share allows Moulding to veto any takeover bid for three years. It has been unpopular with investors and prevents THG from joining the FTSE 100 or FTSE 250 despite a market capitalisation of more than GBP3.50 billion. "This cancellation will facilitate the group's application to step-up to the premium segment of the Main Market of the London Stock Exchange in 2022," THG explained.
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US car maker Ford Motor is to invest GBP230 million in one of its UK factories to make electric vehicle components, giving a huge boost to the motor industry. The company said the plant at Halewood on Merseyside will be "transformed" to build electric power units for future Ford all-electric passenger and commercial vehicles in Europe. Halewood will be Ford's first electric vehicle component in-house assembly site in Europe, with production beginning in 2024 – and the move safeguards hundreds of jobs. Ford has committed to having all its passenger vehicles as all-electric and two-thirds of its commercial vehicle sales all-electric or plug-in hybrid by 2030. Power unit production in Halewood is expected to begin in mid-2024, with planned capacity of around 250,000 units each year.
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MARKETS
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European equities were lower after a mixed lead from Asia, though Wall Street was called higher Monday, adding to its positive close on Friday. The dollar was stronger across the board, while oil prices continued their ascent, with Brent about USD85 a barrel. "The US dollar is only modestly higher but if EUR/USD breaks 1.15 that changes," commented Kit Juckes of Societe Generale. "GBP is getting no help from BOE Governor Bailey’s hawkish comments, and that's as it should be." Speaking to the G30 group of central bankers on Sunday, Bailey warned the Bank of England "will have to act" to curb inflationary pressure, the Financial Times reported.
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CAC 40: down 0.8% at 6,674.91
DAX 40: down 0.4% at 15,519.09
FTSE 100: down 0.3% at 7,214.92
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Hang Seng: closed up 0.3% at 25,409.75
Nikkei 225: closed down 0.2% at 29,025.46
S&P/ASX 200: closed up 0.3% at 7,381.10
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DJIA: called up 0.9%
S&P 500: called up 0.5%
Nasdaq Composite: called up 0.3%
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EUR: down at USD1.1583 (USD1.1603)
GBP: down at USD1.3720 (USD1.3780)
USD: up at JPY114.35 (JPY114.17)
GOLD: down at USD1,764.32 per ounce (USD1,773.75)
OIL (Brent): up at USD85.48 a barrel (USD84.73)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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China's economic growth tumbled more than expected in the third quarter, official data showed Monday, as the property sector struggled with tighter policy measures and an energy crisis loomed. After a swift coronavirus bounce-back, recovery in the world's second biggest economy is losing steam, with gross domestic product growth coming in at 4.9% on-year, said the National Bureau of Statistics, citing an "unstable and uneven" domestic rebound. The latest figure disappointed expectations of 5.0% growth predicted by analysts polled by AFP, and was a sharp three percentage points down from the 7.9% expansion in the April to June period. Industrial production growth slowed further to 3.1% on-year in September. Economists believe China's growth slowdown likely stemmed from policy tightening this year in key areas including the property sector and a drive to cut emissions.
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UK house prices registered their most substantial October rise in six years, figures from property portal Rightmove showed, with all sectors and regions enjoying a bumper month. Rightmove labelled October as the first "full house" since March 2007, meaning price records were posted in all regions of the UK, as well as property market sectors. Price increases were seen in homes bought by first-time buyers as well as second-steppers, or those who are looking to move up the property ladder. For those at the top of ladder, prices also increased. Overall, UK house prices rose 1.8% monthly in October to GBP344,445. It is the largest rise at this time of the year since October 2015. Annually, prices were 6.5% higher.
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The number of UK businesses that registered as insolvent last month was the highest since the pandemic began. According to data from the Insolvency Service, there were 1,446 company insolvencies across England and Wales in September – up from 1,349 in August and 928 from the same time last year. The figures come after the Bank of England warned that higher borrowing during the pandemic had likely put more businesses at risk. "The increase in debt – though moderate in aggregate – has likely led to increases in the number and scale of more vulnerable businesses," it said.
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The Dublin government is not contemplating the re-imposition of Covid-19 restrictions in Ireland, the Taoiseach said. Micheal Martin insisted the vaccine rollout had put Ireland in a different situation from earlier in the pandemic, despite rising infection rates. The 2,180 cases of coronavirus reported on Saturday was the highest number since January. While Martin has insisted new measures are not on the horizon, he has already cautioned that he cannot guarantee the lifting of the remaining restrictions will proceed as planned this coming Friday.
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By Tom Waite; thomaslwaite@alliancenews.com
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