UK Indexes Weak; KNOC Seeks Dana Petroleum

Arthi Gupta
20 Aug, 2010
New York City

The UK indexes dropped after a fall in resource stocks. KNOC makes a hostile offer of

[R]4:00 PM London – The UK indexes dropped after a fall in resource stocks. KNOC makes a hostile offer of £1.87 billion for Dana Petroleum. Mitchells & Butlers announced the disposal of 333 non-core pubs for £373 million.[/R]

In London, FTSE 100 Index traded lower 15.87 or 0.30% to 5,195.42 and the pound edged lower to close at $1.5505.

Online shopping in the UK rose 18% from a year ago in July, the highest annual growth since 2007, the Interactive Media In Retail Group said today.

The IMRG Capgemini e-Retail Sales Index showed that shoppers spent £5 billion online in July, the highest in any month this year. As retailer promotions drew shoppers online, online shopping rose 14% month-on-month, the highest monthly growth so far this year.

The Irish central bank Governor Patrick Honohan reaffirmed that the bailout of Anglo Irish Bank is costly but manageable. Anglo Irish Bank bailout would cost the Irish government to about €25 billion.

Talking to reporters during his visit to Tokyo, Honohan said Irish government debt spreads over German sovereign debt are still high. But, bailing out troubled banks will not raise debt to an uncomfortable level, he said.

Honohan further added that the Irish government readjusted its spending and tax profile and the budget deficit will fall back to 3% of the GDP by 2014 if economic growth remains consistent with the central bank''s projections. Ireland has committed to reduce its deficit to below the EU ceiling of 3% of gross domestic product by 2014.

Korea National Oil Corp. announced the terms of cash offer for Dana Petroleum plc at 1,800 pence per share. In addition, KNOC announced a cash offer for the Dana convertible bonds.

The company stated that the offers together value the entire issued ordinary share capital of Dana and bonds at around £1.87 billion.

Mitchells & Butlers plc announced the proposed disposal of 333 non-core pubs for a cash consideration of £373 million to Stonegate Pub Company Limited, a company controlled by TDR Capital LLP.

The company added that the disposal is in line with its strategy to withdraw from the lower price, drinks-led market and the late night high street bars and venues as announced in March 2010. Completion of the disposal of 333 non-core pubs is scheduled to occur by mid November 2010 and is conditional on the approval of the company''s shareholders.

Following the completion of the disposal, £500 million would have been realized from recent non-core disposals, the company added.

Gainers & Losers

Anglo-Eastern Plantations PLC plunged 4.72% to 560.00 pence after the palm oil producer first half revenue rose 18% to $77.92 million from $57.64 million in the previous year. Net profit for the period increased 16% to $16.57 million or 41.93 cents per diluted share, compared to net profit of $14.05 million or 35.6 cents a year ago.

Cobham plc dipped 0.24% to 210.00 pence after the defense products group won a contract worth $18 million to provide breathing kits for the U.S. Air Force.

EMED Mining Public Limited declined 1.95% to 10.05 pence after the copper and gold miner issued 1.35 million new shares to Resource Capital Fund IV L.P. and RMB Australia Holdings as payment of interest fees in relation to the convertible note agreement they have with EMED Mining.

Stobart Group Limited gained 0.07% to 142.10 pence after the transport and logistics solutions provider reported its first-half performance came in line with management expectations and was “significantly ahead of the prior year.”

The company further noted volumes in Eddie Stobart remained strong, benefiting from new contracts announced in the last 12 months including a recent new contract win for transport and warehousing for AG Barr worth around £7 million per annum.

Xcite Energy Limited slumped 2.92% to 68.20 pence after the North Sea explorers announced a placing to raise funds for an enhanced work program on its 9/3b-R well in the North Sea.