UK Stocks Decline; Resolution, AXA UK Merge

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

The UK indexes remain sluggish after renewed skepticism on global economic recovery. Ireland trade surplus remains flat in April. Resolution agrees to buy AXA UK Life Business for

[R]4:30 PM London – The UK indexes remain sluggish after renewed skepticism on global economic recovery. Ireland trade surplus remains flat in April. Resolution agrees to buy AXA UK Life Business for £2.75 billion.[/R]

In London FTSE 100 Index traded lower 85.73 or 1.66% to 5,092.79 and the pound edged higher to close at $1.498 and to close at €1.222.

Irish trade surplus remained unchanged in April from the previous month and stood at €2.91 billion in April according to data from the Central Statistical Office released today. A year ago, the trade surplus stood at €3.92 billion.

Month-on-month, exports increased a seasonally adjusted 4% to €4.16 billion in April, while imports rose 8% to €7.07 billion. Year-on-year, the total value of exports dropped 7% in April, while the value of imports increased 12%.

Resolution Ltd. and AXA SA announced the agreed acquisition of the AXA UK Life Business by FPH, a subsidiary undertaking of Resolution.

FPH agreed to acquire the AXA UK Life Business by purchasing all of the issued shares of AXA Sun Life Holdings Limited and Winterthur Life UK Limited, respectively.

On June 14, Resolution said it is in discussions regarding a potential acquisition of French insurer Axa SA''s UK operations in the risk areas of protection and annuities as well as its group pensions business for the total consideration of £2.75 billion or $4.1 billion.

Of the total purchase price, £2,224 million will be paid in cash to the seller at completion, £26 million net to be paid in cash on completion of certain steps in an agreed reorganization after the purchase and up to £500 million, consisting of Deferred Consideration Notes to be issued to the Seller.

The consideration will be reduced if less than £1,000 million of the AXA reattributed inherited estate is available for release in 2011. If none of the estate is available, the consideration will fall to £2,600 million, the group noted.

The total cash consideration for the acquisition, together with associated expenses, will be fully funded through a rights issue, bank loans and cash of the RSL Group.

New York State Comptroller Thomas DiNapoli said that he will sue oil giant BP Plc on behalf of the state pension fund and will seek lead plaintiff status in the possible class-action lawsuit that stems from BP''s Deepwater Horizon explosion and oil spill in the Gulf of Mexico in April.

BP Plc reinstalled the containment cap it removed temporarily yesterday for observation of the leaking oil well in the Gulf of Mexico. The well continues to seep oil into the Gulf at an undetermined pace.

Gainers & Losers

AEA Technology plc rose 7.0% to 19.00 pence after the energy and climate change consultancy said fiscal 2010 revenues rose 21% to £113.2 million from £93.7 million a year ago. Net profit for the year fell 53% to £3.3 million or 1.4 pence per diluted share compared to net profit of £7.0 million or 3.5 pence per share a year ago.

BP Plc rose 0.4% to 335.10 pence after the international oil and gas explorer said the lower marine riser package cap containment system was successfully reinstalled on the Deepwater Horizon''s failed blow-out preventer.

British American Tobacco plc, the maker of cigarettes announced that Nicandro Durante will become Chief Executive on the retirement of Paul Adams at the end of February 2011.

Carillion plc, the support services company fell 0.5% to 320.80 pence.

Dana Petroleum plc, the independent oil company fell 4.9% to 1,202.00 pence.

Dart Group PLC, the aviation services and distribution company said fiscal 2010 revenues fell 1% to £434.5 million from £439.3 million a year ago. Net profit for the year fell 42% to £15.6 million or 10.62 pence per diluted share compared to net profit of £27.1 million or 18.80 pence per share a year ago.

DSG International Plc, the electrical and computing retailer said fiscal 2010 revenues rose 2.4% to £8.5 billion from £8.3 billion a year ago. Net profit for the year was £59.8 million or 1.7 pence per diluted share compared to net loss of £219.4 million or 10.2 pence per share a year ago.

DS Smith plc, the packaging and office products wholesaling company said fiscal 2010 revenues fell 2% to £2.07 billion from £2.11 billion a year ago. Net profit for the year was £37.9 million or 9.5 pence per diluted share compared to net loss of £11.8 million or 3.0 pence per share a year ago.

Eaga plc, the heating and renewable energy solutions provider rose 0.1% to 118.20 pence.

The Go-Ahead Group plc, the public transport company fell 3.4% to 1,273.00 pence.

Micro Focus International plc, the provider of enterprise application management solutions said fiscal year 2010 revenues rose 57% to £432.6 million from £274.7 million a year ago. Net profit for the year rose 21% to £74.4 million or 36.71 pence per diluted share compared to net profit of £61.5 million or 31.92 pence per share a year ago.

Pennon Group Plc fell 0.2% to 546.50 pence. The water supplier and waste management group announced that it has acquired Reconomy Recycling Solutions Ltd, a UK materials recycling company for £23.8 million in cash.

Petrofac Limited, the oilfield support services group rose 0.2% to 1.254.00 pence.

Yule Catto & Co plc, the chemicals company rose 5.6% to 191.25.