UK Stocks Gain; Ocado IPO

Arthi Gupta
21 Jul, 2010
New York City

The UK indexes gained and the BoE left key interest rate at 0.5%. The UK public sector employment may drop in the next six months. Dana increases strategic position offshore Nile delta. Reckitt Benckiser agrees to acquire SSL for

[R]4:30 PM London – The UK indexes gained and the BoE left key interest rate at 0.5%. The UK public sector employment may drop in the next six months. Dana increases strategic position offshore Nile delta. Reckitt Benckiser agrees to acquire SSL for £2.54 billion. Ocado prices IPO at 180 pence a share.[/R]

U.S. and European markets rose after Apple reported positive earnings growth. BP agrees to sell North America and Egypt asset deals with Apache.

In London FTSE 100 Index traded higher 86.67 or 1.69% to 5,226.13 and the pound edged lower to close at $1.5212.

The Bank of England''s policy makers retained the key interest rate at 0.5% in July and maintained the stock of asset purchases financed by the issuance of central bank reserves at £200 billion.

For one member, it was appropriate to start to withdraw some of the exceptional monetary stimulus provided by the easing in policy in late 2008 and 2009,"" the minutes said. ""Economic conditions had improved over the past twelve months and the inflation outlook had shifted sufficiently to justify beginning to raise interest rates gradually.

Seven members of the Committee voted in favor of the proposition. Andrew Sentance voted against, preferring an increase in bank rate of 25 basis points.

Public sector employment in the UK would decline in the next six months, according to data released by the Bank of England''s agents. But, private sector employment is expected to rise at a moderate pace.

The BoE agents'' further stated some public bodies had already begun reducing staff numbers, and the planned fiscal consolidation was expected to lead to further reductions in headcount. They felt food price inflation is expected to ease back over the remainder of 2010, while clothing and footwear prices were expected to rise.

Dana Petroleum Plc, the oil and gas exploration company announced that it signed an agreement with BG International Limited to acquire a 50% interest in the El Manzala Offshore Area Concession, located in the Mediterranean Sea, offshore Egypt.

Dana will fund the cost of the next exploration well up to an agreed cap in order to earn the 50% interest.

This deal continues Dana''s program to grow its business in Egypt and the offshore Nile Delta.

Reckitt Benckiser plc agreed to acquire SSL International plc that values the company £2,540 million.

Under the terms of the offer, SSL shareholders will be entitled to receive 1,163 pence in cash a SSL share and the proposed final dividend of 8 pence per share in respect of the year ended March 31, representing, in aggregate, 1171 pence per SSL share.

The offer price plus the SSL dividend values SSL''s fully diluted share capital at approximately £2,540 million.

The cash payable by Reckitt Benckiser under the terms of the offer would be funded using a new £1.25 billion loan facility and other facilities arranged by HSBC Bank plc, together with Reckitt Benckiser''s working capital resources and existing facilities.

Ocado Group plc priced its initial public offering at 180 pence per share, which is lower than the indicative price range of 200 pence to 275 pence per share when the flotation started.

The company raised net proceeds of £200 million in the offer by selling shares to institutional investors in the UK, the US and elsewhere, to employees and officers of Ocado and to customers.

The company noted that Goldman Sachs International has been granted an over-allotment option by UBS Cayman Holdings Limited over up to approximately 18.1 million ordinary shares, representing 9% of the ordinary shares comprised in the offers. The over-allotment option is exercisable for a period of 30 calendar days from today.

Tim Steiner, chief executive officer of Ocado said, ""We are delighted with today''s news. We have had extremely positive reactions from investors in the UK, Continental Europe and the US and the fact that our IPO completed successfully in very difficult markets is an endorsement of the long-term growth potential offered by Ocado.""

BP announced today that it entered into several agreements to sell upstream assets in the United States, Canada and Egypt to Apache Corporation. The deals, together worth a total of $7 billion, comprise BP’s Permian Basin assets in Texas and south-east New Mexico, US; its Western Canadian upstream gas assets; and the Western Desert business concessions and East Badr El-din exploration concession in Egypt.

The decision to make these divestments follows the announcement made by BP last month that it was increasing its target for divestments to $10 billion.

Apache is due to pay BP a cash deposit of $5 billion in aggregate on July 30. The deposit is split $3.25 billion for Canada, $1.5 billion for Permian and $0.25 billion for Egypt.