Weak UK Home Prices; 3i Group, HgCapital Deals

Arthi Gupta
27 Sep, 2010
New York City

The UK indexes traded sideways after home prices fell to record lows in September. HgCapital agreed to sell 63.5% stake in Visma to KKR for $1.9 billion. 3i Group agreed to buy Mizuho Investment Management for

[R]4:00 PM London – The UK indexes traded sideways after home prices fell to record lows in September. HgCapital agreed to sell 63.5% stake in Visma to KKR for $1.9 billion. 3i Group agreed to buy Mizuho Investment Management for £18.3 million.[/R]

The UK financial service sector activity growth accelerated. Unilever agreed to buy Alberto-Culver for $3.7 billion.

In London trading, FTSE 100 Index fell 21.07 or 0.38% to 5,577.41 and the pound edged higher to close at $1.5816.

The government may lower tax for middle classes once the budget deficit is sorted out and the economy recovers, British Prime Minister David Cameron said in an interview with the Daily Telegraph.

""There will be an ability over time once you''ve sorted out debts and deficits to give people back something from a growing economy,"" he said. ""I nearly said, share the proceeds of growth,"" Cameron said in the interview that was published on the daily''s Web site on Friday.

The UK financial services sector activity during three months to September improved at the fastest pace since June 2007, a new survey showed on Monday.

According to the latest survey from the Confederation of British Industry and PricewaterhouseCoopers LLP around 37% of respondents said that business volumes rose and 9% said they fell during the three months to September. The resulting balance of positive 28% was the most positive since June 2007. A similar pace of growth is expected next quarter, by a balance of positive 24% of firms.

Home prices in England and Wales dropped for the third straight month in September, as home supply stayed ahead of demand.

On a monthly basis, the average asking price for a home decreased 0.4% to £157,600 in September, following a 0.3% fall in August, according to data from Hometrack, the laregst fall in house prices since March 2009.

There was a decrease in the number of buyers entering the market in September, with demand falling 2.9% during the month. This was exacerbated by a rise in supply, with the number of homes coming on to the market rising 1.2%.

Unilever plc, the Anglo-Dutch consumer products maker announced a deal to acquire U.S.-based Alberto-Culver Co. for $3.7 billion in cash. Unilever expects the acquisition to be accretive to earnings per share in the first full year, excluding restructuring costs, and to deliver significant synergies.

Unilever said that the Alberto-Culver acquisition would make it the world''s leading company in hair conditioning, the second largest in shampoo and the third largest in styling. The transaction is expected to enhance Unilever''s hair care presence in the U.S., Canada, the UK, Mexico and Australasia.

HgCapital Trust plc, the investment trust said its private equity investment arm HgCapital is selling 63.5% of its stake in Norway-based software services provider Visma Holding to buyout firm Kohlberg Kravis Roberts & Co. for an enterprise value of £1.2 billion or about $1.9 billion.

HgCapital clients will retain 36.5% of their stake, or 17.7% of the total business, in Visma, which provides accounting, resource planning and payroll software and related business process outsourcing services to small and medium-sized enterprises in the Nordic region.

3i Group plc, the British private equity firm stated that its wholly owned subsidiary 3i Debt Management Ltd. signed a deal with Japan''s Mizuho Corporate Bank, Ltd. to acquire 100% of shares in Mizuho Investment Management (UK) Ltd for an enterprise value of £18.3 million or $28.92 million.

3i stated that its existing debt management activities will be merged with MIM to form a distinct business line, 3i Debt Management, with total assets under management of about £4.0 billion.

MIM is one of Europe''s leading debt management businesses with assets under management of £3.7 billion.

Spice plc, the UK-based utility support services provider agreed to sell itself to European buyout firm Cinven Ltd., for £251.1 million in cash, after rejecting two earlier offers.

Cilantro Acquisitions Ltd, a company formed at the direction of funds managed and advised by Cinven would pay Spice shareholders 70 pence in cash for each Spice share. The current offer price of 70 pence for each Spice share represents a premium of about 40.7% to the closing price of 49.75 pence per Spice share on June 14, the last business day before Spice''s announcement.

Imperial Tobacco Group Plc signed a cooperation agreement with the European Commission and the Member States of the European Union to jointly combat illicit trade in tobacco.

The company further noted that the agreement would strengthen cooperation in a number of areas and added that it would pay $300 million over twenty years to fund anti-illicit trade initiatives.

HSBC Holdings plc on Friday revealed a new leadership team, stating that Douglas Flint would succeed Stephen Green as Group Chairman. Stuart Gulliver would be appointed Group Chief Executive with effect from January 1, 2011, following Michael Geoghegan''s decision to retire early next year

Sandy Flockhart, an Executive Director of HSBC Holdings plc, currently Chairman of Personal and Commercial Banking, would become Chairman, Europe, Middle East, Africa, Latin America, Commercial Banking and Chairman of HSBC Bank plc. The company further said that Simon Robertson would remain the senior independent non-executive Director and assume the role of Deputy Chairman.

Gainers & Losers

Atlantic Coal plc surged 4.26% to 0.49 pence after the coal production and processing company said first-half revenues grew 41.2% to $4.83 million from $3.42 million in the same period last year. Loss in the period narrowed 44% to $1.49 million or 0.10 cents per share, compared to a loss of $2.64 million or 0.21 cents per share in the prior year.

DDD Group plc fell 2.28% to 19.30 pence after the company that develops and licenses software and hardware intellectual property and technologies said first-half turnover declined 0.4% to £723 thousand, from £726 thousand in the same period a year ago. Net loss in the period narrowed 33.3% to £372,000 or 0.33 pence per share compared to net loss of £558,000 or 0.62 pence per share a year earlier.

IDOX plc declined 2.13% to 11.50 pence after the software company completed the acquisition of 11 long-term managed-service contracts for the provision of land and property information solutions to UK Local Authorities from Macdonald, Dettwiler and Associates.

London Stock Exchange Group plc gained 0.71% to 707.50 pence said its Deputy Chairman, Angelo Tantazzi, will step down from the Board. Paolo Scaroni, CEO of Eni and London Stock Exchange Group Non-Executive Director since 2007 will replace him as Non-Executive Deputy Chairman.

Wolseley Plc fell 0.46% to 1,523.00 pence after the building and heating materials retailer reported fiscal 2010 revenue declined 9% to £13.20 billion from £14.44 billion in the previous year. On a constant currency basis, revenues fell 10%, and like-for-like sales drop was 6%.

Loss from continuing operations for the year narrowed 50% to £366 million or 129.8 pence per share compared with a loss of £732 million or 348.2 pence per share in the prior year.

In addition, Wolseley announced a proposal to change its corporate structure to create a new holding company which is UK-listed, incorporated in Jersey and its tax residence in Switzerland.