FTSE Climbs; Brit Rebuffs Apollo

Arthi Gupta, Mayank Mehta and Sanjay Barot
02 Jul, 2010
New York City

The UK indexes soar after Australia and miners agree on the lowered taxes. UK construction activity expands in June. Chloride accepts Emerson Electric''s 375 pence a share offer. Brit Insurance rebuffs Apollo Global takeover bid. RBS sells its commodities division to JPMorgan.

[R]4:00 PM London – The UK indexes soar after Australia and miners agree on the lowered taxes. UK construction activity expands in June. Chloride accepts Emerson Electric''s 375 pence a share offer. Brit Insurance rebuffs Apollo Global takeover bid. RBS sells its commodities division to JPMorgan.[/R]

Mining and metal stocks rose after the Australia announced fresh proposals for resource companies, withdrawing the controversial super tax proposal introduced earlier.

""There will be no resources super profits tax,"" said Gillard in her announcement of what will instead be called the Minerals Resource Rent Tax. The settlement announced by Gillard cuts A$1.5 billion from the expected revenues resulting from the tax, which will be capped at 30% and affect only iron ore and coal. The original proposal capped the tax at 40%.

In London FTSE 100 Index traded higher 48.73 or 1.01% to 4,854.48 and the pound edged higher to close at $1.520 and edged lower to close at €1.211.

The Financial Reporting Council today published the first Stewardship Code for UK institutional investors. The main purpose of the code is to improve the quality of corporate governance through promoting better dialog between shareholders and company boards.

According to the new code, institutional investors should publicly disclose their policy on how they will discharge their stewardship responsibilities. The code calls on shareholders to monitor investee companies. The code also includes guidance regarding collaboration with other investors.

Construction activity in the UK continued to rise at a strong pace in June although the sector''s recovery faces an uncertain outlook, according to new survey figures.

Markit Economics said the CIPS construction purchasing managers'' index stood at 58.4 in June, down from 58.5 in the previous month.

All of the three construction sub-sectors showed a rise in activity during June. Residential construction was the strongest performing of the three categories, growing at the fastest rate since December 2003. Civil engineering and commercial-based construction also recorded solid growth.

UK-based power solutions provider Chloride Group said today that its Board of Directors intends unanimously to recommend acceptance of Emerson Electric Co.''s cash offer of 375 pence per share, totaling £997 million or $1.51 billion.

The decision follows further discussions between both companies, after Swiss power and automation technology company ABB Ltd. announced on Thursday its exit from the contest, saying it is not prepared to match a superior offer from U.S.-based diversified technology company Emerson.

Norman Broadhurst, Chairman of Chloride, said, ""Chloride is an excellent business with a strong strategic position in an attractive growth market. The Emerson offer reflects these qualities, our expertise and the Group''s potential. Consequently, the Board believes it is in the best interests of shareholders to recommend Emerson''s offer.""

The offer will be made by Emerson''s unit Rutherfurd Acquisitions Limited. In the offer, Chloride shareholders will also be entitled to receive the final dividend of 3.3 pence per share as proposed by the Board of Directors of Chloride on May 24, 2010.

Brit Insurance Holdings N.V. rejected an approach from Apollo Global Management LLC regarding a potential takeover offer. Its board has informed Apollo that the offer at this level undervalues the company and, accordingly, would not represent a basis on which the board is prepared to engage with Apollo.

Brit Insurance said that its board remains open to engaging if Apollo were to put forward an offer capable of recommendation.

Brit Insurance noted that Apollo''s advisers recently contacted the company''s advisers and informed them that Apollo may be prepared to acquire the company at £10.50 per share in cash.

Royal Bank of Scotland Group Plc announced today that it has completed the sale of RBS Sempra Commodities or RBSSC Metals, Oil and European Energy business lines to J.P. Morgan Chase & Co.

The UK-based bank stated that J.P. Morgan has acquired the business for a total cash consideration of $1.6 billion, post interim distributions of which RBS’s share is nearly 47%. The acquisition was originally announced on February 16.

RBS had bought a controlling stake in Sempra Commodities in April 2008 for $1.7 billion to benefit from rising investor interest in gold, oil and other raw materials, while Sempra Energy invested $1.6 billion. In November 2009, RBS said it planned to divest its share of the joint venture, following a directive from the European Union to dispose of certain assets.

According to RBS, an active sales process together with JV partner Sempra Energy is progressing for RBSSC’s remaining North American Power and Gas, and Sempra Energy Solutions business lines.

Gainers & Losers

Chloride Group PLC, the power supply systems maker rose 0.2% to 371.10.

InterContinental Hotels Group PLC rose 0.1% to 1,047.00 pence after the international hotel manager announced the sale of the 422 room InterContinental Buckhead Atlanta to Maryland based Pebblebrook Hotel Trust for $105 million in cash.

Marshalls Plc rose 2.8% to 82.00 pence after the manufacturing company reported that revenue for the first half 2010 was in line with expectations at £170 million.

Morgan Sindall plc rose 5.8% to 519.50 pence after the construction and regeneration company said that the business is in line with expectations.

News Corporation fell 0.4% to 11.91 pence after the diversified media company announced that customers will be requested to pay for access to the Times and The Sunday Times from tomorrow, July 2.

Rockhopper Exploration Plc, the oil explorer rose 3.1% to 291.00 pence.

The Royal Bank of Scotland Group plc rose 0.6% to 39.73 pence after the global banking and financial services group has completed the previously announced sale by RBS Sempra Commodities of its metals, oil and European energy business lines to J.P. Morgan for a total cash consideration of $1.6 billion.

Travis Perkins plc rose 5.3% to 747.00 pence after the builder merchant and home improvement retailer reported a strong rebound in trading following a slow start in the first two months of the year. The company expects to declare an interim dividend of 5 pence per share.