Shire's mega deal fails to lift FTSE amid global gloom
Reuters
Published Apr 25, 2018 10:34
Shire's mega deal fails to lift FTSE amid global gloom
By Julien Ponthus
LONDON (Reuters) - The prospect of a £64 billion bid for British drug maker Shire failed to lift the UK stock market on Wednesday as worries about rising U.S. bond yields continue to drag global markets down.
Britain's blue chip FTSE 100 index was down 0.55 percent at 7,383.83 points by 0836 GMT while the broader European market also declined after a negative session on Wall Street and Asia.
A rise in U.S. 10-year government bond yields to 3 percent is driving fears of higher borrowing costs for corporations which have thrived in a low-interest rate environment and could encourage investors to dump shares for fixed-income securities.
Rare disease specialist Shire lost 0.5 percent after it said it was willing to recommend a sweetened $64 billion offer from Takeda Pharmaceutical.
The recent fall in its Japanese suitor's shares make the overall offer, comprised 21.75 pounds per share in cash and 27.26 pounds in new Takeda shares, less attractive.
"Shareholders in Shire are likely to be a little concerned about getting a 50% stake in a company which has seen its share price nosedive in the last few months and which could well be worth considerably less by the time any deal is concluded", said CMC Markets analyst Michael Hewson.
The news of the breakthrough in the talks between the two companies nevertheless lifted the pharmaceutical sector with Astrazeneca (LON:AZN) up 1.1 percent and GlaxoSmithKline up 0.6 percent.
The tobacco sector was one of the only other areas trading in positive territory with Imperial Brands (LON:IMB) up 1.7 percent and British American Tobacco (LON:BATS) rising 0.8 percent.
UBS analysts said that the latter's guidance for products such as tobacco heating products would likely reassure the market.
The company said it plans to spend more this year on products such as e-cigarettes with a large number of launches set for the end of the third quarter.
Whitbread (LON:WTB) shares got an initial boost after announcing the spin-off of Costa Coffee - a move long sought by activist investors - but then retreated and were last 1.5 percent down on the day.
Britain's Lloyds Banking Group (LON:LLOY) lost 0.7 percent after slightly missing expectations for pre-tax profits but Jefferies analysts said the earnings figures were unlikely to change the overall picture.
"We do not see consensus estimates moving either way post today’s release", they wrote.
Get The App
Lloyd also said it would not cancel its preference shares following investor complaints about the possibility after insurer Aviva (LON:AV) AV.L abandoned its plans to scrap the high-yielding shares.
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.