Mega-merger blocked
Valued at around $85.4bn (£64.3bn), AT&T’s potential takeover of Time Warner will dwarf the deal Twenty First Century Fox hopes to complete with Sky (SKY). It is therefore unsurprising that the US Department of Justice (DoJ) has sought to block the deal, arguing it would concentrate too much media control in one company. Although the two are not competitors, the regulator said the video distribution infrastructure owned by AT&T, combined with Time Warner’s TV content, could give a combined group power to raise prices for US TV viewers and slow innovation. However, some critics have pointed to President Trump’s dislike of Time Warner-owned CNN as a factor in the DoJ’s lawsuit.
Virgin into new territory
Enters SME market
Investor sentiment towards challenger bank Virgin Money (VM.) took another turn for the worse. Management announced that loan book growth for 2018 would be at the lower end of its guided range of between 3 and 3.5 per cent, while lower front book spreads on its mortgages meant the banking net interest margin is expected to reduce to between 1.65 and 1.7 per cent. The challenger bank also announced its intention to enter the SME banking market, developing a savings product and launching a business current account by the end of 2018.
Stanley Gibbons down
Subsidiary under cosh
Shares in Stanley Gibbons (SGI) took another knock after it announced its Guernsey subsidiary had been granted an administration order. The group clarified that the company and its other subsidiaries “are not in administration, are not counter-party to, and are ring-fenced from, the buy-back guarantees of SG Guernsey”. The overall group’s bank debt stood at around £17.1m as at 16 November, and it continued to trade normally, at the time of going to press. But it is still in default under its banking facilities, as reported in the full-year report published in October.
Serica steps up
BP asset sale
It was one small step for an oil major, one giant leap for a junior market minnow this week, as BP (BP.) offloaded stakes in three large North Sea fields to £72m market cap Serica Energy (SQZ). For an upfront payment of £12.8m, Serica will receive a package of interests including the Bruce, Keith and Rhum fields, as well as some post-tax decommissioning costs. In turn, BP will receive a share of cash flows from production – a game-changing 21,000 barrels of oil equivalent per day (boepd) to Serica – expected to hit £300m over a four-year period. Consequently, the deal will have little impact on BP’s $4.5bn disposals target for 2017, which still looks like a stretch. The future of UK oil and gas investment received a further boost this week, after the chancellor confirmed the tax history of a field could be transferred as part of any sale, allowing buyers to claim greater relief on eventual decommissioning costs.
Deutsche seeks swaps
Clearing scheme launched
The battle for global swaps clearing business has heated up. Deutsche Börse announced around 20 investment banks and market makers – including Barclays (BARC), UBS and HSBC (HSBA) – have signed up to its scheme designed to share profits from interest rate swap clearing with its users. The Eurex Clearing service is another attempt by the Frankfurt-based exchange to tempt global banks away from the London Stock Exchange’s (LSE) clearing business LCH, in the wake of the UK’s EU exit. LCH accounts for 90 per cent of the global clearing business for interest rate and foreign exchange swaps.
| Risers | |
| Nanoco | 16.84 |
| Fenner | 16.32 |
| Motorpoint | 14.42 |
| Premier Foods | 13.7 |
| Diploma | 12.67 |
| Fallers | |
| Carillion | -54.34 |
| Spire Healthcare | -21.82 |
| TalkTalk Telecom | -19.21 |
| Xaar | -18.2 |
| HSS Hire | -16.24 |
Succession drama
Activist steps in
The saga around the departure of London Stock Exchange boss Xavier Rolet took another turn, after reports emerged that Sir Christopher Hohn at hedge fund the Children’s Investment Fund had called for regulators to replace chairman Donald Brydon. In the latest of a series of open letters to Mr Brydon, Sir Christopher argued that the Bank of England governor and the Financial Conduct Authority should intervene to appoint a new chairman, according to reports. The activist investor had already called for an extraordinary general meeting in order to discuss Mr Rolet’s departure.
Argentinian headache
Aggreko suffers
Despite trading being in line with expectations in the third quarter of 2017, shares in equipment hire giant Aggreko (AGK) took another knock. The group continued to struggle in Argentina, where repricing and off-hire levels (the proportion of time an asset is not generating hire revenue) helped push revenue for the power solutions utilities business down 15 per cent against last year. The average off-hire rate was 24 per cent for the first nine months of the year, with the full-year figure expected to rise to the historic average of 30 per cent. This is a considerable drop from the 15 per cent rate reported back in August. The shares closed 11 per cent down on the day of the news.
