Oil's blockbuster
Total (Fr:FP) has bought AP Moller-Maersk’s (Den:MAERSK-B) oil and gas division in a deal worth $7.45bn (£5.82bn), in one of the largest deals in the energy sector since oil prices sank three years ago. Under the terms of the transaction, Total will award Maersk $5bn of shares, giving the Danish group a 3.75 per cent stake in the Paris-listed oil company, with the remainder paid for in cash raised through short-term debt financing. The oil major will also take over all of Maersk Oil’s $2.9bn of decommissioning obligations.
Alexa's challenger
Walmart joins Google
Retailers continue to mount their challenge to the Amazon threat. Following Aldi’s delivery partnership with Instacart in the US, Walmart is teaming up with Google to allow customers to buy products using the voice-activated Google Assistant platform on phones and tablets. Amazon's AI virtual assistant Alexa already enables users to shop directly from the online retail giant. The service will launch next month, allowing customers to pick up items in store at a discount or for online delivery.
(Yet another) London reit
Warehouse investor to float
It’s been a record year for real estate investment trusts (Reit) listing in London. The latest to announce its intention to float is Warehouse Reit, which pretty much does what it says on the tin. The company is hoping to raise £150m by listing on the junior market, which it plans to invest in a diversified portfolio of warehouses in urban areas across the country. The company is targeting a dividend of 5.5p, equivalent to a yield of 5.5 per cent, during the year ending 31 March 2019. Management is aiming for a total return of at least 10 per cent, through a combination of dividends and net asset value growth.
Odds improve for Game
Balance sheet improves
Investors in Game Digital (GMD) were offered some respite, after the game and console retailer released its pre-close trading figures for the 12 months to the end of July. The shares jumped 30 per cent after receiving a boost from the launch of the new Nintendo Switch console. Both the Spanish and UK markets delivered solid growth, with sales up 9 per cent and 16 per cent respectively. Management also announced plans to focus on the e-sports market and will try to cut costs further at its retail arm. Nevertheless, full-year revenue is still expected to fall to around £780m, from £822m in 2016.
Sky backs Bad Wolf
First investment secured
Sky (SKY) and HBO have taken a minority stake in UK production company Bad Wolf, the first investment as part of their co-investment deal. The production company will supply large-scale drama for the duo's $250m investment deal, which was announced in April. At the time Sky said it wanted to co-produce two drama series per year with HBO. The two have previously collaborated on series including The Young Pope.
Privatisation in Brazil
The utility of utilities
Latin America’s fiscal problems aren’t confined to Venezuela. A record budget deficit has prompted the Brazilian government to sell off part of its stake in Eletrobras, the hydroelectric company that produces 40 per cent of the nation's electricity. The Ministry of Energy hasn’t said how much of the government's effective 51 per cent stake it wants to sell, but a partial privatisation could generate as much as BRL20bn (£4.96bn). The stock is traded on the Sao Paulo, New York and Madrid bourses and the move has heightened expectations of further privatisation in the region’s biggest economy.
Bucks for your banger
Ford launches scrappage scheme
In 1998, Gordon Brown told us that “diesel cars should attract less vehicle tax than their petrol equivalents because of their better CO2 performance”. With the benefit of hindsight this position may come to be seen as enlightened as the then Chancellor of the Exchequer's decision to sell half the nation’s gold reserves at 20-year lows. With air quality (or lack thereof) high on the public agenda, Ford is the latest automaker – after Vauxhall, BMW, and Mercedes-Benz – to offer motorists at least £2,000 cash to trade in cars more than seven years old, which will then be scrapped.
Chart of the week
The latest technical analysis suggests that the gold/silver ratio could be correcting from its February 2016 (medium-term) peak, with limited support beyond the 80:1 level.
The proportional relationship between the spot prices of gold and silver generally falls during precious metals bull markets. The ratio has only attained this level four times since the late 1980s. And on each occasion, it was followed by a pronounced rally in silver; the last time it happened in 2008, silver gained 362 per cent over the following three years.
Theoretically, you should be able to buy sell one metal when it’s relatively overpriced and invest the proceeds in the underpriced metal.
