FTSE 100 Falls 2.1%; Ryanair Net Rises

Arthi Gupta, Mayank Mehta and Sanjay Barot
01 Jun, 2010
New York City

The UK benchmark dropped after BP

[R]4:00 PM London, 11:00 AM New York – The UK benchmark dropped after BP’s inability to contain oil leak in the Gulf of Mexico. UK service sector profitability weakens. AIG refuses to lower the price for its Asia unit sale to Prudential Plc. Covidien agrees to acquire Ev3 for $2.6 billion in cash.[/R]

UK stocks declined on worries that a slowdown in China and Europe''s efforts to reduce budget deficits may impede global economic recovery. Concerns about the sovereign debt crisis in the euro region, Spain’s downgrade by rating agencies, and weaker than expected manufacturing data from China also impacted investor sentiment.

AstraZeneca receives FDA approval for AXANUM. Ryanair reports profit for fiscal 2010.

In London FTSE 100 Index closed lower 36.70 or 0.71% to 5,151.73 and the pound edged higher to close at $1.456 and to close at €1.198.

UK firms selling services to consumers said their sales volume declined in the last three months, while sales volumes in business and professional services remained flat, according to a quarterly survey conducted by the Confederation Industry today.

The Services Sector Survey was carried out between April 28 and May 12 covering 151 service sector firms. The overall profitability of firms selling services to consumers fell, with a balance of minus 34%, the most negative since August last year. At the same time, the profitability of firms selling business and professional services decreased consistently for two years, with a balance of minus 18%.

England and Wales house prices climbed for the sixth month in a row in April, data from the Land Registry showed today. Annual growth in house prices was 8.5% and the average property value totaled £165,596. The monthly increase from March to April was 0.2%.

American International Group, Inc. said that it will not consider revisions to the agreement terms it reached earlier with Prudential Plc for Prudential to acquire the New York-based company''s wholly owned Asian insurance unit.

It was on March 1 that AIG announced a deal to sell Hong Kong-based AIA to the U.K.-based insurance and financial services provider for about $35.5 billion in cash and stock. The total consideration includes $25 billion in cash, $8.5 billion in face value of equity and equity-linked securities, and $2.0 billion in face value of preferred stock of Prudential, subject to closing adjustments. The transaction, which was approved by the boards of both AIG and Prudential, was expected to close by the end of 2010.

AIG said today it has decided to adhere to the original terms of the AIA deal after careful consideration.

Institutional investors with more than 15% of Prudential stock and private shareholders owning almost 5% plan to oppose the deal. Prudential needs approval of 75% of its shareholders for the AIA deal and shareholders are set to vote on the deal at the company''s annual general meeting to be held on June 7.

AIG intends to use the cash proceeds from the AIA sale towards repaying the Federal Reserve Bank of New York or FRBNY, which in December exchanged $25 billion of its AIG debt for preferred equity in AIA and another AIG life insurance unit, American Life Insurance Co.

AIG closed Friday''s trading at $35.38, down $1.08, on a volume of 6.28 million shares.

On the NYSE, PUK dropped $0.45 and ended Friday''s trading at $15.61, on a volume of 294,800 shares.

PRU.L is trading at 564 pence on the LSE, up 22.50 pence, on 4.45 million shares

AstraZeneca has received a Complete Response Letter from the U.S. Food and Drug Administration for the new drug application for AXANUM (aspirin/esomeprazole magnesium) tablets. The company also received a CRL for the supplemental new drug application (sNDA) for NEXIUM (esomeprazole magnesium).

AstraZeneca is currently evaluating the CRLs, and will continue discussions with the FDA to determine next steps with respect to both the AXANUM NDA as well as the NEXIUM sNDA and will respond to the agency’s request for additional information.

AstraZeneca submitted both applications to the FDA on April 30, 2009, seeking approval for AXANUM, for the risk reduction of low dose ASA-associated gastric and/or duodenal ulcers in patients at risk. The NEXIUM sNDA was submitted for the risk reduction of low-dose aspirin-associated peptic ulcers.

Covidien Plc, the healthcare products company said that it signed a preliminary merger agreement to acquire endovascular company ev3 Inc. for $22.50 per share in cash, for a total of about $2.6 billion, net of cash acquired. ev3 shares are currently trading about 18% higher on the Nasdaq. Separately, Covidien agreed to sell its Sleep Therapy continuous positive airway pressure, or CPAP, and Bi-level products to PH Invest.

Dublin, Ireland-based Covidien said the transaction with ev3 is expected to be completed by July 31, 2010, subject to customary closing conditions, including receipt of certain regulatory approvals. The acquisition of ev3 is expected to position Covidien to become a leading endovascular player, with strong positions in both the peripheral vascular and neurovascular markets.

The deal, which has been unanimously approved by the Boards of Directors of both companies, will be through an all-cash tender offer by a subsidiary of Covidien, followed by a second-step merger. Following the purchase, Covidien will report ev3 as part of its Vascular Products line in the Medical Devices business segment.

Gainers & Losers

AstraZeneca Plc fell 1.0% to 2,872.50 pence. The biopharmaceutical company has received a Complete Response Letter from the U.S. Food and Drug Administration for the new drug application for AXANUM tablets. The company also received a CRL for the supplemental new drug application.

BP Plc, the oil and gas company plunged 13.6% to 427.00 pence.

The Capita Group Plc fell 0.8% to 774.00 pence. The outsourcing company announced today that it has acquired Premier Medical Group Ltd for a cash consideration of £60 million on a cash-free, debt-free basis. PMG is a leading provider of medical reporting and screening services across the UK.

Chemring Group PLC fell 2.1% to 3,102.00 pence after the manufacturer of energetic material products announced that it had entered into a conditional agreement to acquire the entire issued stock capital of The Allied Defense Group, Inc. a US public company traded on the NYSE AMEX, for a cash consideration of $7.25 per share equating to $59 million.

FirstGroup plc fell 1.8% to 370.00 pence after the rail and bus operator today announced the disposal of GB Railfreight Ltd to Europorte, a wholly owed subsidiary of Eurotunnel plc, for a gross consideration of £31 million.

Gartmore Group Limited, the fund manager fell 5.6% to 116.60 pence.

Northern Foods plc rose 0.5% to 48.50 pence after the food producer said fiscal year 2010 revenues rose 0.2% to £977.0 million from £975.2 million a year ago. Net profit for the year rose 452% to £13.8 million or 2.94 pence per diluted share compared to net profit of £2.5 million or 0.52 pence per share a year ago.

Prudential plc, the international financial services company rose 4.2% to 564.50 pence.

Ryanair Holdings plc, the low-fares, scheduled passenger airline said fiscal year 2010 revenues rose 2% to €2.99 billion from €2.94 billion a year ago. Net profit for the year was €305.3 million or 20.60 cents per diluted share compared to net loss of €169.2 million or cents per share a year ago.

Scottish and Southern Energy plc, the energy provider increased 1.5% to 1,068.00 pence.

Shire plc, the specialty biopharmaceutical company fell 0.3% to 1,416.00 pence.

Standard Chartered PLC, the bank fell 1.1% to 1,618.50 pence.

Tesco PLC fell 1.5% to 405.25 pence. The international retailer said fiscal year 2010 revenues rose 5.6% to £56.9 billion from £53.9 billion a year ago. Net profit for the year rose 9.5% to £2.3 billion or 29.19 pence per diluted share compared to net profit of £2.1 billion or 26.96 pence per share a year ago.

Valiant Petroleum plc, the independent oil and gas company rose 9.2% to 694.00 pence.

Volex Group plc closed unchanged at 125.00 pence after the cable specialist said fiscal year 2010 revenues fell 13.6% to £229 million from £265.1 million a year ago. Net profit for the year was £5.23 million or 9.1 pence per diluted share compared to net loss of £19.4 million or 34.1 pence per share a year ago.

Whitbread PLC, the hotel and restaurant group fell 1.7% to 1,361.00 pence.

Xchanging plc, the business processing outsourcing company declined 1.1% to 178.90 pence.