Vallar, Sembcorp Offerings Lift UK Sentiment

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

The UK indexes climb on better-than-expected U.S. jobless claims. UK wholesale inflation increased 5.1% in June and trade deficit widened in May. U.S. government urges BP Plc for oil spill containment plans. Sembcorp completed tender offer for Cascal shares. Vallar raised $1.07 billion in offering.

[R]4:00 PM London – The UK indexes climb on better-than-expected U.S. jobless claims. UK wholesale inflation increased 5.1% in June and trade deficit widened in May. U.S. government urges BP Plc for oil spill containment plans. Sembcorp completed tender offer for Cascal shares. Vallar raised $1.07 billion in offering.[/R]

In London FTSE 100 Index traded higher 33.38 or 0.65% to 5,138.83 and the pound edged lower to close at $1.512 and edged higher to close at €1.196.

UK output prices fell 0.3% in June compared to a revised 0.1% increase in May, according to a report released by the Office for National Statistics today.

Output price annual inflation eased to 5.1% in June from a downwardly revised 5.5% rate in May. Input price annual inflation rose by 10.7% compared to an increase of 11.5% in May.

UK trade deficit unexpectedly widened in May as the growth in imports outpaced the rise in exports.

The trade deficit was £8.1 billion in May, increasing from a revised deficit of £7.4 billion in April, according to data released by the Office for National Statistics today.

In May, exports of goods rose 0.2% month-on-month to £21.5 billion and imports increased 2.4% to £29.5 billion.

The deficit on trade in goods and services increased to £3.8 billion in May, compared with a revised deficit of £3.5 billion in April.

The U.S. government demanded an immediate report from BP Plc detailing plans to improve its containment and clean-up efforts on the Gulf of Mexico oil spill.

U.S. Coast Guard Admiral Thad Allen, who is coordinating the government response to the Gulf oil spill, sent a letter on Thursday to BP’s Managing Director Bob Dudley asking the company to submit within 24 hours ""detailed plans and time-lines"" on containing the 80-day-old major oil leak.

The information is sought as the government is concerned over the risks involved in BP''s plans to change caps on the oil well.

This is the second letter sent to British Petroleum recently reflecting the Obama administration''s stringent scrutiny on the oil major over the oil spill.

Sembcorp Industries, the Singapore-based utilities and marine group said it successfully completed the initial tender offer by its subsidiary, Sembcorp Utilities Pte Ltd, for UK-based Cascal N.V. shares at $6.75 per share. Sembcorp owns 92.26% of Cascal after the offering.

Sembcorp also announced asubsequent offering for the remaining Cascal shareholders to divest their shares to Sembcorp Utilities till July 30. Following subsequent offering period, Sembcorp own at least 95% of Cascal Shares.

Sembcorp intends to complete Cascal acquisition by effecting squeeze-out proceedings. Upon consummation of squeeze-out proceeding, Cascal will no longer be a public company.

The company said that the transaction is not expected to have material impact on earnings per share for the current financial year. The transaction is expected to be accretive to earnings starting from the second year after the acquisition.

Vallar Plc, financier Nathaniel Rothschild''s mining investment vehicle stated today that it raised gross proceeds of £707.2 million, or about $1.07 billion, in an initial public offering in London. The company placed 68.7 million ordinary shares at £10 per share.

Vallar said the placing will enable it to pursue its objective of acquiring a single major company, business or asset that has significant operations in the global metals, mining and resources sector.

Vallar stated that conditional dealings are expected to commence today under the ticker symbol ""VAA."" Admission to a Standard Listing on the Official List of the FSA will become effective and unconditional dealings in the ordinary shares on the London Stock Exchange''s main market for listed securities will commence on July 14.

Gainers & Losers

Autonomy Corporation plc fell 0.7% to 1,885.00 pence after the computer software firm said that Dassault Systemes had extended its original equipment manufacturer license agreement with the company.

Bodycote plc surges 11.5% to 212.80 pence after the engineering firm continued to see a steady and broad-based improvement in demand. Revenue for the first half of 2010 is expected to be 8% higher than the last year.

Bovis Homes Group Plc fell 2.5% to 340.00 pence after the housebuilder is selling homes in line with its targeted weekly sale rate.

British Airways Plc fell 0.4% to 204.50 pence.

Interserve Plc rose 1.1% to 204.25 pence after the building and maintenance company said trading in the first half is in line with expectations.

Michael Page International plc rose 2.6% to 395.90 pence after the specialist recruitment consultancy reported that they achieved a strong performance in the second quarter. The group gross profit for the second quarter rose 33% to £111.5 million compared to £83.8 million a year ago.

Moneysupermarket.com Group Plc rose 0.4% to 69.40 pence after the price comparison site said first half revenue is estimated in the region of £71.5 million. UK internet revenues grew approximately 6% year on year.

SIG plc rose 1.7% to 106.30 pence after the supplier of specialist products to the construction industry said that underlying profit before tax for the first half of 2010 will be above market expectations.

In the six months to June 30, sales in Sterling fell 4% to about £1,291 million from £1,345 million a year ago.