Golden partnership
To the surprise of the gold industry, Barrick Gold unveiled a hostile $18bn bid for closest rival Newmont, which would create the world’s largest gold producer. The approach comes just one month after the Toronto-based group acquired London-listed rival Randgold for $6bn. The largest active shareholder in both Barrick and Newmont, Flossbach von Storch, has voiced its support for the deal, if the merger was “seamless and not too hostile”.
No-deal rate cut
Support planned
Bank of England governor Mark Carney told the Commons Treasury select committee that the central bank would be more likely than not to cut interest rates in the event of a no-deal Brexit. In written evidence, Mr Carney said that the monetary policy committee would “provide all the stimulus we can subject to delivering price stability consistent with our remit”, to support the UK economy. The BoE also this week said it would offer to lend banks cash weekly rather than monthly during March and April to prevent a squeeze on credit.
Ted warns
Currency challenges
Ted Baker (TED) warned that profits this year would come in below market expectations, but it is not a question of poor demand or significant changes in trading. Rather, the business has blamed foreign exchange movements in the final week of the financial year, costs because of systems upgrades and an “unanticipated” write-down of inventory of approximately £5m. Analysts at Liberum admitted the changes are “unfortunate” but argue they are “one-off, non-cash” and that “there is no impact to the outer year expectations”.
Pound bounces
Delay mooted
Sterling pushed up to its highest level against the euro in almost two years after the possibility of a delay to the UK’s departure from the EU was raised. Theresa May said she would offer a vote on whether to go ahead with a no-deal Brexit on 29 March or take a “short extension” of the Article 50 separation process, if the Commons rejected a revised deal in a vote set for 12 March. That came shortly after Labour leader Jeremy Corbyn gave his backing for a second referendum.
IAG rapped
MSCI exclusion
Airline group IAG (IAG) was removed from several MSCI global equity indices after capping the level of shares non-EU investors could own in IAG at 47.5 per cent to meet EU ownership rules. However, that was in breach of the global index compiler’s regulations on foreign ownership of shares, known as “foreign room”, which set out the minimum thresholds for the number of shares available to foreign investors. The British Airways owner’s cap meant there were insufficient shares available to other non-EU investors. FTSE Russell also said that the airline’s cap might impact its status in its global equities indices following a March review.
Risers and fallers (%)
| DAIRY CREST GROUP | +24.04 |
| PROVIDENT FINANCIAL | +23.55 |
| PLAYTECH | +15.12 |
| ASTON MARTIN LAGONDA GLOBAL HOLDINGS | +13.22 |
| CLIPPER LOGISTICS | +12.93 |
| CENTAMIN | -24.01 |
| MCBRIDE | -24 |
| CMC MARKETS | -20.26 |
| SAINSBURY J | -18.79 |
| PETRA DIAMONDS | -12.07 |
Week to 26 February 2019
Confidence dips
Lending flags
Eurozone lending to non-financial businesses took a knock in January, as the prospect of slowing economic growth in the economic area weakened confidence. Growth in new money supplied dropped to 3.8 per cent from 4.1 per cent in December, according to data from the European Central Bank, and from 3.9 per cent to 3.3 per cent after adjusting for securitisation. The rate of economic growth in the single currency region declined to 0.2 per cent during the last quarter of 2018, the weakest pace in five years.
Interserve sweetens deal
Investor pressure
In a bid to head off shareholder challenges to its debt-for-equity refinancing deal, Interserve (IRV) said lenders had agreed to double the proportion of the outsourcer’s equity that would be owned by existing shareholders to 5 per cent. The troubled support services group’s lenders also agreed to stump up an additional £110m of liquidity until 2022 and write off £1 of debt for every £9 that is being converted to equity. US hedge fund Coltrane had pushed for shareholders to receive 10 per cent of the equity and to remove every member of Interserve’s board, except chief executive Debbie White.
