FTSE Rises 0.5%; BSkyB Surges

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

The UK indexes gain after annual inflation dips to 3.4% in May. Fitch slashes BP Plc rating. British Sky Broadcasting rejects News Corp''s buyout offer.

[R]4:30 PM London – The UK indexes gain after annual inflation dips to 3.4% in May. Fitch slashes BP Plc rating. British Sky Broadcasting rejects News Corp''s buyout offer.[/R]

UK stocks advanced for the fifth consecutive day led by banks. A downgrade of Greece''s debt rating by Moody''s did not dampen investor confidence.

In London FTSE 100 Index traded higher 26.03 or 0.50% to 5,228.16 and the pound edged lower to close at $1.473 and close at €1.202.

UK''s annual inflation eased to 3.4% in May from 3.7% in April, according to data from the Office for National Statistics released today. The annual rate in May stood slightly below the expected 3.5%, but continues to stay well above the central bank''s 2% target.

House prices in the UK climbed 10.1% in April from last year, the Department of Communities and Local Government said. This follows a 9.7% increase in March.

Ratings agency Fitch said today it had slashed BP Plc''s credit rating by six notches from ""AA"" to ""BBB"", citing the impact of the Gulf of Mexico oil spill disaster.

""Fitch Ratings has downgraded BP plc''s long-term issuer default rating and senior unsecured rating to ''BBB'' from ''AA'',"" it said in a statement. The ''BBB'' rating is just two notches above junk status.

""The principal changes in circumstances include the indication late last week from US government scientists of a significantly higher spill rate than previously announced by all parties, which Fitch expects will materially increase BP''s exposure to Justice Department fines,"" it said.

It also added that there was a ""significant step-up in action from the US government surrounding calls for pre-emptive escrowing of damage claims.""

""Both of these events have a direct bearing on BP''s fundamental financial flexibility.""

""The scale of today''s rating action has been partly driven by the increased risk that the balance between long-term and near-term cost payments may now be skewed much more heavily towards the near-term than previously anticipated by Fitch,"" Fitch added.

British Sky Broadcasting Group Plc or BSkyB rebuffed the takeover offer from media conglomerate News Corp. stating the offer significantly undervalues the company.

According to BSkyB, News Corp. on June 10 offered to buy the remaining shares of BSkyB not owned by it for 675 pence in cash per share, but increased the proposal to 700 pence in cash per share following discussions with BSkyB. The latest proposal values the BSkyB, excluding the shares already owned by News Corp., at approximately £7.8 billion or $11.5 billion. News Corp. currently owns about 39.1% of BSkyB''s issued share capital.

The Independent Directors of BSkyB today have determined that they would not recommend an offer if it were made at 700 pence per share, and have indicated that they would be prepared to accept a proposal of more than 800 pence per share

The acquisition of remaining stake of BSkyB would help News Corp., owned by media mogul Rupert Murdoch and with market capitalization of about $35 billion increase the geographic diversification of its earnings base, reducing exposure to cyclical advertising revenues and increasing direct consumer subscription revenues.

British Sky Broadcasting Group Plc ((BSY.L)) rose 113.00 pence or 18.82% and is currently trading at 713.50 pence per share on the London Stock Exchange.

Gainers & Losers

Bellway plc, the house builder fell 1.7% to 624.00 pence.

British Sky Broadcasting Group plc surges 18.3% to 710.50 pence after the pay-TV provider’s independent directors on Tuesday swiftly rejected a proposal a 700 pence per share from News Corporation.

Healthcare Locums plc, the healthcare staff supplier plunged 18.6% to 177.00 pence.

Ideal Shopping Direct Plc, the TV shopping channel rose 9.2% to 169.30 pence.

Oxford Instruments plc rose 6.3% to 287.00 pence after the high-tech tools manufacturer said fiscal year 2010 sales rose 2.4% to £211.5 million from £206.5 million a year ago. Net profit for the year was £13.3 million or 27.1 pence per diluted share compared to net loss of £6.7 million or 13.9 pence per share a year ago.

Ted Baker PLC traded unchanged at 510.00 pence after the designer brand company said total sales climbed 18% in the 19 weeks from January 31 to June 12.

Tesco PLC, the international retailer rose 1.0% to 395.55.

Photo-Me International plc, the instant service equipment group surges 13.3% to 34.00 pence.

The Royal Bank of Scotland Group plc rose 1.8% to 43.93 pence.