The company behind the FTSE indices was again in focus yesterday after a Swiss broker put the chances of a planned $20 billion tie-up with a German rival completing at no better than 50/50.
The proposed merger between London Stock Exchange Group and Deutsche Börse moved a step closer on Wednesday after Intercontinental Exchange (ICE), owner of the New York Stock Exchange, pulled out of making a bid for the LSE.
However, Credit Suisse said the chances of a deal securing regulatory approval could be hampered by the group’s enlarged presence in derivatives clearing, which could fall foul of European competition rules potentially coming into force from 2018. The LSE could also be called upon to explain itself to shareholders after ICE walked away, Credit Suisse added. “We believe LSE shareholders are likely to demand further clarification to understand why ICE was not able to obtain sufficient information to prepare an offer.”
Shares in the LSE were changing hands for close to £30 in March amid interest from ICE, but fell back on Wednesday as the chances of a bidding war receded. They recouped some losses yesterday, despite also turning ex-dividend, to close 38p higher to £26.14.
A number of other companies trading without entitlement to the dividend payment weighed on the FTSE 100, keeping the share index at close to a one-month low, broadly flat on the day, up 5.23 points to 6,117.25.
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Investors pored over a flurry of corporate updates, which dominated the risers and fallers boards.
BT Group was the top riser on the UK’s premier share index, up 11½p to above 451p, after the company posted annual results ahead of the City’s forecasts. Wm Morrison, meanwhile, another top riser, rebounded 4½p to 192p after weakness heading into its update as quarterly sales rose higher than analysts expected.
So too RSA Insurance, which rallied 9¼p to 478¾p. Investors cheered signs that the insurer was on track to beat analysts’ forecasts this year as the company focuses on its core market and slashes cuts. Stephen Hester, the chief executive and former boss of RBS, bought 100,000 shares, also helping to instil confidence.
Centrica was the most eye-catching trade yesterday, losing a tenth of its value after the owner of British Gas surprised the market by moving to raise almost 7 per cent of its share capital to pay down debt of about £400 million, protect its credit rating and to finance two acquisitions. Centrica, which was down 22½p to 208½p, said after the stock market closed that it had raised about £700 million placing 350 million shares at 200p through Goldman Sachs and UBS.
Away from the corporate updates, a rebound in the price of Brent crude also helped to support the equity market. Brent crude, the international benchmark, was buoyed 2.2 per cent to $45.62 a barrel in intraday dealings by hopes of supply disruptions after a huge wildfire in Alberta, Canada’s oil sands region, and violence in Libya.
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Tullow Oil, the Africa-focused oil producer, was the biggest riser on the FTSE 250 index, also flat, up a mere 2.26 points to 16,661.70, having earlier this week said production had restarted at its Jubilee field off Ghana after a damaged turret bearing interrupted work earlier this year. Tullow rallied 14¾p to 257p.
High flyer comes crashing down
Shares in Inmarsat plunged yesterday after the satellite telecommunications company cut its annual revenue guidance, blaming weak maritime and energy markets.
Inmarsat, which was promoted to the FTSE 100 last summer, had shot to an all-time high of £11.48 a share by the end of the year amid hopes for its fledgling aviation business to offer broadband on flights.
However, the shares have fallen by almost a fifth since then and they took another jolt down yesterday after the company warned that a slowdown in the first quarter was likely to continue because of challenges within existing markets.
Inmarsat’s maritime division makes up about half of the group’s revenues, but a recession in commercial shipping markets has led to vessels being scrapped or laid up, helping to drive total revenues down by 2 per cent to $298.6 million in the three months to the end of March, its first quarter.
That prompted the company, based at London’s Silicon Roundabout, to revise its revenue forecast by $50 million to between $1.17 billion and $1.25 billion.
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The shares closed down 7.2 per cent, or 67p, to 863p, the second biggest faller on the FTSE 100.
Wall Street report
Wall Street was dragged down by consumer stocks and retreating oil prices but largely marked time ahead of monthly jobs data today. The Dow Jones industrial average rallied to end 9.45 up at 17,660.71 and the S&P 500 was marginally lower.