UK Pound Falls; Pearson Agrees to Sell IDC

Arthi Gupta, Mayank Mehta and Sanjay Barot
04 May, 2010
New York City

U.K. stocks trade lower led by declining mining stocks on weak commodities prices and on sharply higher Australian taxes on resource companies. Pearson Plc agrees to sell IDC for $3.4 billion. Aberdeen Asset Management profits soar. BP Plc starts new well to cap Gulf leak.

[R]4:00 PM London, 11:00 AM New York – U.K. stocks trade lower led by declining mining stocks on weak commodities prices and on sharply higher Australian taxes on resource companies. Pearson Plc agrees to sell IDC for $3.4 billion. Aberdeen Asset Management profits soar. BP Plc starts new well to cap Gulf leak.[/R]

The pound declined against the dollar as U.K. stocks slipped on weak commodities prices after manufacturing advanced at a slower pace in China. Resource stocks declined after Australia proposed to increase taxes on mining companies.

The pound slumped to a 5-day low against the dollar and fell 0.4% to $1.5190 and dropped 0.3% to 143.69 yen.

Stocks of BHP Billiton Ltd. and Rio Tinto Group dropped on concern Australia’s plans to impose the world’s heaviest tax regime on resource companies will cut billions from profits.

Australia announced on May 2 a 40% tax on resource profits which will start from 2012 and raise A$12 billion or A$11 billion in first two years.

Mining shares also suffered as copper declined in London after an HSBC Holdings Plc report showed Chinese manufacturing fell to a six-month low, indicating that government efforts to cool its economy may be starting to take effect.

The Markit/CIPS U.K. manufacturing purchasing managers'' index rose to fifteen-and-a-half year peak of 58 in April from 57.3 in March, survey data from the Markit Economics showed today.

Output and new orders increased markedly and growth of new exports hit series record. Employment growth was at three-year high as order book backlogs rises for first time in survey history.

Warburg Pincus LLC and Silver Lake agreed to buy Interactive Data Corp. for $3.4 billion. IDC shareholders will get $33.86 for each share they own, London-based Pearson said in a statement today.

Pearson will receive about $2 billion before tax for its 61% IDC stake. The price is 33% more than IDC’s closing share price on Jan. 14, 2010.

Pearson shares rose as much as 1.7% and Interactive Data fell 1.4% to $32.99 a share in New York trading yesterday, valuing the company at $3.1 billion.

""Pearson and Interactive Data have extensive growth opportunities and ambitious expansion plans,"" Pearson Chief Executive Marjorie Scardino said in the statement. ""We believe this transaction will give both companies greater focus and opportunity to invest more in their strong market positions,"" she added.

A huge oil slick caused by an underwater leak continued to creep toward the U.S. Gulf Coast on Monday as the Obama administration pressed energy giant BP Plc to stem the oil gushing from its ruptured offshore well. BP, working with an array of government agencies and private companies, has been unable to stop the flow of crude from the well.

The slick appeared likely to move toward the Alabama and Florida coasts and engulf the Chandeleur Islands off Louisiana''s southeast tip in the next few days, the U.S. National Oceanic and Atmospheric Administration said.

In London FTSE 100 Index closed lower 137.55 or 2.48% to 5,415.74 and the pound edged lower to close at $1.516 and edged higher to close at €1.158.

Gainers & Losers

Aberdeen Asset Management PLC increased 6.5% to 147.00 pence. The independent asset management company said first half revenues rose 53% to £294.9 million from £192.2 million a year ago. Net profit for the first half rose 482% to £41.9 million or 3.76 pence per diluted share compared to net profit of £7.2 million or 0.52 pence per share a year ago.

Aer Lingus Group Plc, the discount airline said first quarter revenues fell 1.8% to €230.0 million from €234.1 million a year ago. Pre-tax loss for the quarter was €36.2 million compared to pre-tax loss of £67.9 million a year ago.

AMEC plc fell 0.1% to 833.50 pence.

Balfour Beatty plc fell 1.2% to 273.70 pence:

BHP Billiton plc decreased 3.3% to 1,957.50 pence.

BP Plc rose 0.1% to 50.26 pence.

The British Land Company PLC rose 0.7% to 471.80 pence.

Carillion plc fell 1.0% to 339.60 pence.

G4S plc rose 2.6% to 274.40 pence after the security group reported first quarter overall revenue increased 4% at constant exchange rates.

Imagination Technologies Group plc fell 0.1% to 275.00 pence.

Michael Page International plc rose 2.2% to 437.30 pence.

Pearson plc fell 1.5% to 1,035.00 pence after the text book publisher announced Interactive Data Corporation has entered into an agreement to be acquired by investment funds managed by Silver Lake and Warburg Pincus in a transaction valuing $3.4 billion. Pearson owns approximately 61% of Interactive Data and has executed a written consent providing approval for the transaction.

Premier Oil plc fell 1.3% to 1,255.00 pence.

FTSE 100 Index Movers

Of the stocks in the FTSE 100 index, 17 increased, 82 declined and 3 were unchanged.

Eurasian Natural Resources Corporation Plc decliners in the FTSE 100 index with a loss of 11.50% followed by losses in Antofagasta Plc of 8.11%, in Xstrata Plc of 8.10%, in BHP Billiton Plc of 7.65%, and in Lloyds Banking Group Plc of 7.56%.

Inmarsat Plc led gainers in the FTSE 100 index with a rise of 2.16% followed by increase in British American Tobacco Plc of 1.83%, in G4S Plc of 1.35%, in The Capita Group Plc of 1.31%, and in BAE Systems Plc of 1.28%.