May day – No deal
The UK and EU have failed to reach an agreement to move to the next stage of Brexit talks. Theresa May’s positive negotiations with fellow European leaders nosedived to nothing after the Conservative Party’s parliamentary peers at the DUP rejected the proposed Irish border concession. Although Mrs May said she was "confident we will conclude this positively", this delay is a significant disappointment. Northern Ireland's DUP has 10 MPs in Westminster, and their support is vital to the government as it continues to find a solution to present to the European Council on 15 December.
Sky high
Fox/Disney merger
The renewal of merger talks between Disney and 21st Century Fox has, once again, made Sky’s (SKY) future ownership look uncertain. Media mogul Rupert Murdoch – whose family trust owns 40 per cent of Fox – has reportedly been in talks with the US entertainment giant regarding a $60bn acquisition of the majority of Fox’s assets, including its 39 per cent stake in Sky. It is still unknown whether Disney would pursue Fox’s proposed acquisition for the portion of Sky it does not currently own.
Rio rises
New chairman
Since Jan du Plessis announced he would be vacating the chairmanship of Rio Tinto (RIO) to take up the same role at BT (BT.A), investors have been worried Mick Davis, the former boss of Xstrata, would be offered the job. Their relief on the appointment of Simon Thompson – one of Rio’s current non-executive directors – sent the share price up 2 per cent. A big group of shareholders voted against the appointment of Mr Davis, who is currently chief executive of the Conservative Party and led Xstrata before its merger with peer Greencore.
Glaxo invests
Genetics drive
GlaxoSmithKline (GSK) – the UKs largest pharmaceutical company – has pledged to invest £40m in early-stage drug discovery. The group’s chief scientific officer, Patrick Vallance (who is set to become the head of scientific research for the government in 2018), said the funding would strengthen initiatives in genetic research and help “change the definition of disease”. The funding will fall into the government’s life science sector deal, which is part of its industrial strategy aimed at boosting productivity in the UK.
Retail giant
Hammerson merger
Two of the UK’s largest retail property companies are set to merge to create a £21bn pan-European portfolio of retail and leisure destinations. Hammerson (HMSO) has made a bid for peer Intu (INTU), which values the target at £3.4bn, structured as an all-share offer. The deal will bring together some of the UK’s biggest department stores, including London’s Brent Cross, the Birmingham Bull Ring and Bicester Village in Oxfordshire. Against a backdrop of weak growth in UK retail sales, Hammerson suggested that the combined company will sell £2bn of assets to strengthen its balance sheet.
Risers and fallers (%)
| Findel | 33.01 |
| Topps Tiles | 18.46 |
| Circassia | 18.29 |
| Motorpoint | 16.86 |
| Marston's | 13.65 |
| Cineworld | -21.74 |
| Sophos | -11.53 |
| Acacia Mining | -11.08 |
| Vedanta Resources | -10.86 |
| Hochschild Mining | -10.4 |
Oil cut
Opec happy
As expected, the world’s largest oil states flew into Vienna this week, held a few meetings, and eventually extended an output cut agreement that has raised the price of Brent crude by 15 per cent so far in 2017. The existing deal to strike 1.8m barrels from global daily production that was set to end in March has been extended throughout next year. UK oil shares were largely indifferent to the widely trailed development, although there were gains for several US energy stocks, whose free cash flows are more reliant on higher-cost shale production.
RBS pressure
Shareholder committee
The UK’s individual shareholders society, ShareSoc, has resumed its campaign for a shareholder committee at RBS (RBS). The group is rallying its 4,000 members and has written to members of the UK Shareholders Association to garner support for the initiative, which it will pledge at the bank's AGM. This is the second consecutive year ShareSoc will requisition RBS. Campaign manager Cliff Weight is optimistic about the outcome as this year’s resolution addresses “the trivial legal objections previously raised by RBS”. Mr Weight thinks there have been several positive developments, but “there remains much more to be done on shareholder democracy”.
