Resource Stocks, UK Indexes Down

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

The UK markets slump after the Conference Board drastically revised down its April gauge for China''''s economic outlook. UK mortgage approvals decline slightly but money supply remains static in May. Scott Wilson agrees to better offer from CH2M HILL. Emerson Electric rebids to acquire Chloride Group.

[R]4:30 PM London – The UK markets slump after the Conference Board drastically revised down its April gauge for China''s economic outlook. UK mortgage approvals decline slightly but money supply remains static in May. Scott Wilson agrees to better offer from CH2M HILL. Emerson Electric rebids to acquire Chloride Group.[/R]

UK indexes declined sharply on the weakness in resource stocks after China led the decliners in Asia. Resource stocks in London trading fell after a private researcher lowered China economic outlook.

The leading economic indicator for China rose 0.3% in April, much less than the 1.7% gain reported on June 15.

In London FTSE 100 Index traded lower 165.94 or 3.27% to 4,905.74 and the pound edged lower to close at $1.506 and edged higher to close at €1.236.

The number of loans approved for house purchase in the UK decreased slightly to 49,815 in May from April''s 49,828, according to data issued by the Bank of England today.

Total net lending to individuals rose £1.5 billion or 0.1% in May. The twelve-month growth rate increased to 0.9% in May from 0.8% in April.

The Bank of England data showed that consumer credit rose £0.3 billion in May, following a decline of £0.1 billion in April. Consumer credit grew 0.1% on a monthly basis and remained flat on an annual comparison in May.

The M4 money supply remained unchanged in May from the previous month, according to a final report by the Bank of England released today.

The monthly M4 money supply remained flat over the month, compared to a 0.1% rise in April. Year-on-year, M4 money supply increased 2.8% in May, slower than a 3.2% growth in the previous month.

Battle for Scott Wilson Heats Up

Scott Wilson Group plc, the engineering, construction and technical services provider said today that U.S.-based engineering firm CH2M HILL Companies, Ltd. has offered to buy the company for 245 pence per share, better than URS Corp.''s 210 pence per share bid that was earlier accepted by Scott Wilson.

San Francisco, California-based URS yesterday recommended an offer to acquire Scott Wilson for 210 pence per share in cash, valuing the company for approximately £161 million or about $242 million, saying the acquisition would significantly expand its growth in the UK and worldwide.

CH2M HILL holds 9.66 million Scott Wilson shares, representing about 13.1% of the company and it has also received irrevocable undertakings from certain Scott Wilson shareholders to accept the CH2M HILL offer in respect of around 5% of the company.

Scott Wilson has given time to URS until July 1 to match the superior offer, and further agreed that it shall not recommend any independent competing offer unless URS notifies Scott Wilson that it is not prepared to revise its offer.

Scott Wilson Group plc rose 6 pence or 2.37% and is currently trading at 259 pence per share on the London Stock Exchange.

In Monday''s regular trading session, URS Corp. ((URS)) closed trading at $41.32 per share on the NYSE.

Chloride Group Plc''s board intends to engage with Emerson Electric Co. to clarify certain aspects of its offer. The company stated that a further announcement would be made in due course.

Emerson Offers More for Chloride Group

Emerson Electric Co.''s board announced the terms of cash offer to be made by its subsidiary, Rutherfurd Acquisitions Ltd., to purchase Chloride Group for 375 pence per share in cash. Emerson''s offer values Chloride at around £997 million higher than the current offer from ABB.

Recently, Chloride Group agreed to be acquired by ABB Ltd. for £860 million or about $1.25 billion. ABB''s all-cash offer values each Chloride Group share at 325 pence per share.

BP Plc is likely to face additional challenges in its oil cleanup efforts in the Gulf of Mexico as Tropical Storm Alex is forecast to ramp up to hurricane strength today. The storm is expected to hamper the efficiency of the cleanup and spread oil further along the coast.

Gainers & Losers

Assura Group Limited traded unchanged at 42.50 pence after the healthcare firm said fiscal year 2010 revenues rose 17% to £55.8 million from £47.6 million a year ago. Net loss for the year was £7.2 million or 2.27 pence per diluted share compared to net loss of £108.8 million or 42.63 pence per share a year ago.

Axis-Shield plc fell 4.5% to 250.00 pence after the in vitro diagnostics firm reported that a poor influenza season has impacted revenues for the first half of the year.

Balfour Beatty plc fell 0.2% to 239.80 pence after the infrastructure contractor announced today that it has been appointed as preferred bidder by Oldham Council for their building schools for the future program, which is worth up to £175 million.

Catlin Group Limited fell 1.4% to 350.50 pence after the reinsurer announced that it intends to form a reinsurance company in Switzerland to significantly expand the European-based reinsurance business underwritten by the Group.

Carpetright plc fell 9.6% to 641.50 pence. The specialist floor covering retailer said fiscal year 2010 revenues rose 7% to £516.6 million from £482.8 million a year ago. Net profit for the year rose 34% to £15.8 million or 23.5 pence per diluted share compared to net profit £11.8 million or 17.6 pence per share a year ago.

Chloride Group PLC surges 11.6% to 389.00 pence after the uninterrupted power system supplier announced this morning an offer for the company by Emerson of 375 pence per share and share capital at approximately £997 million.

Hiscox Ltd fell 0.4% to 339.50 pence after the insurer announced that it has published on its company Web site today a summary of its initial 2011 business forecast for Syndicate 33. Hiscox envisages a Syndicate capacity of £900 million for 2011, a reduction of £100 million from 2010.

National Express Group PLC fell 1.2% to 224.20. The transport group said that trading has continued in line with expectations through the second quarter of the year, building on the good start to 2010 and profit before tax is expected to show good progress over the prior year.

Pinewood Shepperton plc traded unchanged at 140.00 pence after the provider of studio and related service’s strategy has enabled the business to withstand the difficult economic conditions of the last few years.

Pursuit Dynamics PLC fell 1.5% to 239.25 pence. The food processing equipment maker said first half revenues rose 984% to £79.1 million from £7.3 million a year ago. Net loss for the first half was £3.5 million or 5.33 pence per diluted share compared to net loss £3.3 million or 5.54 pence per share a year ago.

Salamander Energy Plc fell 6.2% to 225.40 pence after the oil explorer announced that it has plugged and abandoned the Tom Su Lua-1X exploration well in Block DBSCL-01, in the Vinh Chau Graben system, offshore southern Vietnam.

Scott Wilson Group plc rose 1.9% to 258.00 pence. The design and engineering consultancy said fiscal year 2010 revenues fell 6% to £326.6 million from £345.8 million a year ago. Net profit for the year rose 73% to £13.3 million compared to net profit £7.7 million a year ago.

Serco Group plc fell 2.4% to 608.50 pence after the business services company remains on track to deliver financial guidance for 2010, which is for continued strong organic revenue growth and further progress this year towards 2012 margin guidance.

WSP Group plc rose 0.08% to 315.25 pence after the engineering and management consultancy said the group is trading in line with its expectations in a market which continues to show ongoing uncertainty. (According to share cast).