(Alliance News) - The following is a summary of top news stories Monday.
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COMPANIES
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Consumer goods firm Unilever confirmed its takeover approach for GSK Consumer Healthcare and set out the strategic rationale for the move, saying it plans to push further into health, beauty and hygiene. These categories offer "higher rates of sustainable market growth", Unilever said, adding that it plans to make major acquisitions alongside the divestment of lower growth brands. Over the weekend, GlaxoSmithKline confirmed it received and rejected three unsolicited and non-binding bids for the GSK Consumer Healthcare business from Unilever. The latest offer was made on December 20 and had a total acquisition value of GBP50 billion, comprising GBP41.7 billion in cash and GBP8.3 billion in Unilever shares. The offer was rejected by Glaxo on the grounds that it undervalued the business. Analysts said Glaxo is thought to be holding out for GBP60 billion for the consumer health arm, which it owns alongside Pfizer. It had planned to spin off the division as a separately listed company.
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Credit Suisse announced the appointment of Axel Lehmann as chair of the financial services firm, replacing Antonio Horta-Osorio after one year in the role. Horta-Osorio is leaving following his admission of violating Swiss quarantine rules in December, aimed at preventing the spread of Covid-19. Horta-Osorio was supposed to remain in quarantine for 10 days after his arrival in Zurich from the UK on November 28, but left the country three days later in a private jet, the bank confirmed. "I regret that a number of my personal actions have led to difficulties for the bank and compromised my ability to represent the bank internally and externally. I therefore believe that my resignation is in the interest of the bank and its stakeholders at this crucial time," Horta-Osorio said.
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Banco Bilbao Vizcaya Argentaria announced it expects to distribute at least EUR7 billion to shareholders. BBVA Chair Cahir Carlos Torres Vila said that, for 2021 and 2022, the group expects to distribute more than EUR7 billion to shareholders, which includes the share buyback programme and the expected dividends for both years. The total reflects nearly 20% of the bank's current market capitalisation of EUR38.64 billion. Vila noted that the financial services firm's priority is profitable growth but he did not rule out additional distributions to shareholders.
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UK housebuilder Taylor Wimpey backed market forecasts for 2021 in a year which saw strong demand for its homes. Total UK home completions rose by 47% to 14,087 in 2021, and the net private reservation rate was 0.91 homes per outlet per week, up from the previous year's 0.76. Demand was underpinned by low interest rates and good mortgage availability, while house price inflation fully offset cost pressures. The business "performed very well", and Taylor Wimpey expects to report 2021 results in line with expectations, with significant improvement in operating margin. The current year has started well, with forward indicators positive despite wider economic uncertainty.
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Hikma Pharmaceuticals said it has agreed to buy the Canadian assets of Teligent for USD45.8 million, representing the firm's expansion into Canada. The deal includes a portfolio of 25 sterile injectable products, three in-licenced ophthalmic products, and a pipeline of seven additional products, four of which are approved by Health Canada. Hikma's purchase follows Teligent in October filing for voluntary protection under Chapter 11 of the US Bankruptcy Code. As part of this, Teligent initiated a sale of its core assets, allowing Hikma to snap up its Canadian portfolio. "This acquisition further expands our portfolio of essential sterile injectable medicines and gives Hikma an entry into the highly attractive Canadian injectables market," said Hikma Injectables President Riad Mishlawi.
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BP on Friday said that it has cleared a hurdle in advancing plans for an offshore wind farm for New York, alongside Stavanger, Norway-based energy firm Equinor. The oil major said that it has finalised the purchase & sale agreements with the New York State Energy Research & Development Authority for Empire Wind 2 and Beacon Wind 1. The finalisation of the PSAs concludes the contracts awarded in January last year, when Equinor and bp were selected to provide New York State with offshore wind power "in one of the largest renewable energy procurements in the US to date". Once completed, the projects will produce enough electricity to power about two million New York homes.
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MARKETS
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European equities were trading firm on Monday, despite a mixed lead from Asia. With US markets closed for holiday on Monday and little in the way of major economic data this week, focus in coming days will be on European company updates and fourth-quarter US results. Tuesday also will see a policy decision from the Bank of Japan, after the People's Bank of China on Monday made its first rate cut in almost two years. Among companies in the news on Monday, Credit Suisse was down 1.3% in Zurich. In London, Unilever was down 7.2%, while Glaxo was up 3.7%.
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CAC 40: up 0.7% at 7,195.32
DAX 40: up 0.4% at 15,949.80
FTSE 100: up 0.7% at 7,598.92
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Hang Seng: closed down 0.7% at 24,218.03
Nikkei 225: closed up 0.7% at 28,333.52
S&P/ASX 200: closed up 0.3% at 7,417.30
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US financial markets closed for Martin Luther King Jr holiday.
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EUR: flat at USD1.1424 (USD1.1423)
GBP: flat at USD1.3680 (USD1.3675)
USD: up at JPY114.48 (JPY113.82)
Gold: up at USD1,821.59 per ounce (USD1,818.19)
Oil (Brent): up at USD86.06 a barrel (USD85.56)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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China's pandemic-defying economic growth slowed in the final months of 2021, official data showed in a worrying signal for the global economy as Beijing's central bank cut a key interest rate. The world's second-biggest economy, a key driver of global growth, expanded 8.1% in 2021 on its strong virus recovery, National Bureau of Statistics data showed, beating forecasts of 8.0% in an AFP poll, and compared to 2.3% in 2020. But much of that growth came in the first half of the year, with the economy shaken by a series of shocks towards the end of 2021. Monday's figures showed growth in the fourth quarter was the slowest in more than a year, at 4.0%, down from 4.9% from in the third quarter, but beating FXStreet expectations of 3.6%. The GDP figures came as China's central bank cut the rate on its one-year policy loans to 2.85%, the first drop since April 2020.
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Industrial production in China grew more than expected at 4.3% in December, according to official data. For the full year, industrial production grew 9.6%. But retail sales growth slowed sharply to 1.7% last month, down from 3.9% in November.
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The wave of US price increases that have battered consumers in recent months should slow this year, as supply and transportation issues are resolved, a top Federal Reserve official said Friday. New York Federal Reserve Bank President John Williams said he sees inflation falling to 2.5% this year, but cautioned that the ongoing Covid-19 pandemic means any forecast faces high uncertainty. Given the rapid recovery, improving labour market and high inflation, he said the Fed is "approaching a decision" on raising lending rates. Inflation in 2021 hit its highest rate in nearly 40 years, and the Fed already has begun to remove the massive stimulus pumped into the world's largest economy during the pandemic to aid in the recovery.
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A top policymaker at the European Central Bank has warned in an interview with Germany's Suddeutsche Zeitung that raising interest rates too soon could harm the economy. According to the ECB's projections, medium-term inflation could in fact fall back below the eurozone central bank's target of 2%. "That is why we should not raise interest rates prematurely, as that could potentially choke off the recovery," ECB board member Isabel Schnabel told the newspaper, in an interview to be published on Saturday. However, Schnabel assured that the ECB would act "quickly and decisively" if its experts conclude that inflation may settle above that 2% mark. Inflation in the euro area currently stands at 5%. Schnabel acknowledged that this figure was "higher than we initially expected." The ECB understands that many citizens are concerned because inflation-adjusted wages and interest income have fallen, she told the Suddeutsche, adding, "We take that very seriously."
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The UK property market kicked off the year with a bang, as house prices rose annually at the strongest pace in almost six years, figures from Rightmove showed. UK house prices climbed 0.3% monthly to GBP341,019 in January. Annually, prices were 7.6% higher, the chunkiest yearly growth rate since May 2016, when prices surged 8.3%. "Asking prices traditionally see a rise in January, though this month's figure is compared with an unusual drop in January last year as the rush to beat the March stamp duty deadline started to abate," Rightmove commented. "The jump in average asking prices this month is driven by homes in the 'top of the ladder' and 'first-time buyer' sectors, with first-time-buyer type homes hitting a new record average asking price of GBP214,176."
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The annual rate of consumer price inflation in Italy accelerated to 3.9% in December from 3.7% in November, in line with market expectations, figures from Istat showed. It was the highest reading since September 2008. The annual core inflation rate - which excludes energy and unprocessed food - edged up to 1.5% from 1.3% in November. On a monthly basis, consumer prices rose 0.5%, the same pace posted in November. On a harmonised basis for EU-wide comparison, prices rose by 4.2% yearly, picking up from 3.9% in November. On a monthly basis, they rose by 0.5%.
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By Tom Waite; thomaslwaite@alliancenews.com
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