LONDON BRIEFING: Liontrust buys asset management peer Majedie

(Alliance News) - Liontrust Asset Management on Tuesday said it has agreed to buy peer Majedie Asset Management for up to GBP120 million in cash and shares.

Liontrust said the acquisition of Majedie will add GBP5.8 billion in assets under management and advice, raising its total to more than GBP42.3 billion. It said the purchase will be earnings enhancing for adjusted diluted earnings per share, starting from the financial year ending March 2023.

Liontrust will issue up to GBP97.0 million in new shares, plus pay up to GBP23.0 million in cash, to buy Majedie.

Majedie Chief Executive Officer Rob Harris will join Liontrust as head of Global Institutional Business.

"Majedie is an important acquisition for Liontrust because of its strong presence and reputation in the institutional market," explained Liontrust Chief Executive John Ions. "Liontrust has been increasing our number of institutional clients and the purchase of Majedie will hasten this expansion by enhancing our investment capability and client service credentials."

Majedie Investments noted the deal for its investment manager, saying its 17.6% stake in Majedie AM is valued at GBP22.4 million, plus up to GBP5.7 million in deferred consideration in 2025. It will reflect this in an update to its net asset value.

Liontrust shares were up 1.5% early Tuesday. Majedie Investments was up 0.4%.

Here is what you need to know at the London market open:

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MARKETS

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FTSE 100: up 0.8% at 7,292.67

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Hang Seng: up 2.7% at 23,983.66

Nikkei 225: closed up 1.9% at 28,455.60

S&P/ASX 200: closed up 1.0% at 7,313.90

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DJIA: closed up 646.95 points, or 1.9%, at 35,227.03

S&P 500: closed up 53.24 points, or 1.2%, at 4,591.67

Nasdaq Composite: closed up 139.68 points, or 0.9%, at 15,225.15

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EUR: up at USD1.1295 (USD1.1278)

GBP: up at USD1.3282 (USD1.3253)

USD: up at JPY113.70 (JPY113.46)

Gold: up at USD1,783.12 per ounce (USD1,780.00)

Oil (Brent): up at USD74.25 a barrel (USD71.92)

(changes since previous London equities close)

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ECONOMICS AND GENERAL

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Tuesday's key economic events still to come

1100 CET EU gross domestic product

1100 CET EU employment

1100 CET Germany ZEW indicator of economic sentiment

0830 EST US international trade in goods & services

0830 EST US revised productivity & costs

0855 EST US Johnson Redbook retail sales index

1500 EST US consumer credit

1630 EST US API weekly statistical bulletin

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UK house prices continued to climb in November boosted by a shortage in available properties, figures from Halifax showed. On an annual basis, the Halifax UK house price index rose by 8.2% in November, the same pace as in October. However, the latest reading missed the market forecast, cited by FXStreet, for a 9.4% increase. UK house prices rose 1.0% month-on-month in November, also the same pace as in October. This print beat the market estimate of 0.6%. The average UK house price stood at a fresh record high of GBP272,992 in November, up from GBP270,184 in October. "The performance of the market continues to be underpinned by a shortage of available properties, a strong labour market and keen competition amongst mortgage providers keeping rates close to historic lows," said Russell Galley, managing director at Halifax.

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Retail sales in the UK rose by 5.0% in November from a year before and by 4.1% from pre-pandemic November 2019, according to the BRC-KPMG retail sales monitor. The British Retail Consortium said the increase in sales last month - covering the period from October 31 to November 27 - compares to 0.9% annual growth in November 2020. It was above the three month average of 2.2%, but below the 12-month average of 9.9%. On a like-for-like basis, UK retail sales rose by 1.8% from a year before and 7.8% from two years before. "Looking forward to Christmas, spending patterns suggest that sales could be more spread out than in previous years," said BRC Chief Executive Helen Dickinson. "Consumers, erring on the side of caution, are shopping for gifts earlier to get ahead of issues relating to shipping and transport."

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Separately, Kantar said UK take-home grocery sales fell by 3.8% in the 12 weeks to November 28 compared to 2020 but were up 7.0% from 2019. As workers go back to the office and restaurants have reopened, average shop size has shrunk by 8% compared to a year ago, when many restrictions were still in place.

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Storm Barra will hit the UK and Ireland with disruptive winds, heavy rain and snow on Tuesday, according to the Met Office – threatening more chaos as some households continue to struggle without power in the wake of Storm Arwen. Weather warnings for snow, ice, rain and wind have been issued as Storm Barra sweeps in from the Atlantic. It comes as UK Prime Minister Boris Johnson said homes affected by the power cuts will have supply restored. On Monday, when some 1,600 households in the North East were still without electricity – 10 days after Storm Arwen, Johnson said he had spoken to the chief executive of Northern Powergrid and had been "assured they would be reconnected tomorrow at the latest".

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BROKER RATING CHANGES

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DEUTSCHE BANK RAISES HSBC TO 'HOLD' (SELL) - PRICE TARGET 480 (390) PENCE

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DEUTSCHE BANK CUTS BARCLAYS TO 'HOLD' (BUY) - PRICE TARGET 240 (250) PENCE

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JPMORGAN CUTS ST JAMES'S PLACE TO 'NEUTRAL' (OVERWEIGHT) - PRICE TARGET 1,700 (1,837) PENCE

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COMPANIES - FTSE 100

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British American Tobacco said its performance was benefiting from strong momentum in New Categories which is now a "sizeable" contributor to revenue growth. Further, BAT highlighted it was making "excellent progress" towards its GBP5 billion revenue target for New Categories by 2025, supported by a clear focus on tobacco heating products. New Categories include BAT's glo tobacco heating brand, as well as its Vuse and Vype vapour products and Velo modern oral products. BAT maintained its 2021 guidance at mid-single-figure constant currency adjusted diluted earnings per share growth. BAT said this will allow it to absorb a GBP260 million profit hit from excise changes and competitive pricing in Australia and New Zealand, an increase from the GBP170 million profit hit guided at the interim results. The Dunhill and Lucky Strike cigarette maker said it expects annual revenue growth at constant currency to be above 5% and is confident in delivering on 2021 financial guidance.

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Plumbing and heating products supplier Ferguson said supportive end-markets and continued market share gains drove substantial sales growth during the first quarter of its financial year. For the three months to October 31, net sales were USD6.80 billion, up from USD5.37 billion in the first quarter last year and pretax profit rose to USD711 million from USD422 million. Ferguson's US business grew net sales by 27% which comprised 25% organic growth and a further 1.9% from acquisitions. Price inflation was in the low teens during the quarter, it noted. "Since the start of the second quarter, Ferguson has generated revenue growth similar to that of [first quarter] 2022. We continue to expect a tapering of growth in the second half on tougher prior year comparatives and we remain mindful that the recent tailwinds from inflation on gross margins will likely moderate, although the timing and extent remain uncertain. Given the strong momentum in the business and the agility of our business model, our full year expectations have increased," the company said.

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Equipment rental firm Ashtead raised its dividend after robust interim results. Ashtead said it delivered a record first-half performance with clear momentum across the business. For the six months to October 31, revenue increased by 19% to USD3.88 billion from USD3.26 billion last year and pretax profit jumped by 38% to USD889.8 million from USD645.8 million. In the US alone, revenue rose by 13% to USD3.12 billion from USD2.75 billion a year ago. Ashtead declared an interim dividend of 12.5 US cents, up 28% from 9.76 cents paid last year. "Our business has strong momentum in supportive markets. The benefit we derive from the diversity of our products, services and end markets, our investment in technology and ongoing structural change, enhanced by the environmental and social aspects of ESG, enables the board to look to the future with confidence. Notwithstanding the volatility that continues to arise from Covid, the fundamentals of our business are strong and we now expect full year performance to be ahead of our previous expectations," the company said.

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COMPANIES - GLOBAL

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ABB, ahead of a capital markets day on Tuesday, lifted its annual revenue growth target and unveiled plans to list its e-mobility division in Switzerland next year. The Zurich, Switzerland-based electrical equipment and automation technology firm is targeting constant currency revenue growth of 4% to 7% through the economic cycle, up from its previous aim of 3% to 5%. Of this new sales target, 3% to 5% should be organic growth and the remainder acquired growth. ABB expects to make five or more small to medium-sized acquisitions per year.

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Intel on Monday unveiled plans to take Mobileye, its driver-assistance and autonomous driving business, public in the US next year. "The move will unlock the value of Mobileye for Intel shareholders by creating a separate publicly traded company and will build on Mobileye's successful track record and serve its expanded market," the Santa Clara, California-based computer microprocessor maker said. Mobileye went public in 2014 before being bought by Intel in 2017. Intel will remain the majority owner of Mobileye after the IPO and the two will continue to co-develop technologies.

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Tuesday's shareholder meetings

ASOS PLC - AGM

Amedeo Air Four Plus Ltd - AGM

Falanx Group Ltd - AGM

Schroder Japan Growth Fund PLC - AGM

Henderson International Income Trust PLC - AGM

Corre Energy BV - EGM re moving tax residence to UK

Scottish Oriental Smaller Cos Trust PLC - AGM

U&I Group PLC - GM re acquisition by Land Securities

YouGov PLC - AGM

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By Tom Waite; thomaslwaite@alliancenews.com

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