UK Indexes Rise; GE Bids for Wellstream

Arthi Gupta
13 Dec, 2010
New York City

The UK indexes climbed after home prices declined in December. The IMF delayed consideration of Irish bailout package. Reckitt Benckiser agreed to acquire India-based Paras Pharmaceuticals for $726 million and GlaxoSmithKline agreed to buy Maxinutrition for

[R]4:00 PM London – The UK indexes climbed after home prices declined in December. The IMF delayed consideration of Irish bailout package. Reckitt Benckiser agreed to acquire India-based Paras Pharmaceuticals for $726 million and GlaxoSmithKline agreed to buy Maxinutrition for £162 million.[/R]

The Bank of England said on Monday that the UK bank loans to businesses and households deteriorated significantly following the start of the global financial crisis. The central bank, in its quarterly bulletin, said that weak lending reflects tight supply rather than weak demand.

The Bank of England Deputy Governor Charles Bean said in a speech at the Market News International annual seminar in London on Monday that the recent unexpected strength of inflation increased price expectations.

He said the British economic recovery has so far turned out to be broadly in line with that expected a year, but the outlook for growth remains “highly uncertain.”

In London, FTSE 100 Index gained 51.46 or 0.90% to 5,864.40 and the pound edged lower to close at $1.5761.

UK Home Prices Drop, Input Prices Rise

The UK home prices fell 3% on a monthly basis in December to £222,410 following a 3.2% decrease in November, according to figures released by property Web site Rightmove.

On a yearly basis, home prices rose 0.4% in December after a 1.3% increase in November.

Rightmove said the prospect for 2011 was bleak, with the national average forecast to fall by as much as 5% through the year.

UK input prices edged higher 9% in November from the previous year, the Office for National Statistics said on Monday.

On a monthly basis, input prices advanced 0.9% in November, reflecting rises in the price of crude oil and fuels.

Excluding the food, beverages, tobacco and petroleum industries, input prices rose 7% annually. Seasonally adjusted, the index rose 0.6% between October and November.

UK Retailers Estimate Flat Christmas Sales

The Christmas Trading Snapshot Survey released by the British Retail Consortium showed that 29% of retailers expect sales to be the same as last year, while 35% anticipates better sales. However, 36% of merchants foresee a decline.

A majority of retailers think there will be a splurge of customers into shops ahead of January''s VAT hike to 20%.

The survey noted retail stores are offering exceptional numbers of promotions and discounts to customers to boost sales.

IMF Delays Irish Loan Aid

The International Monetary Fund postponed the consideration of the proposed €22.5 billion rescue package to Ireland.

""In deference to Ireland''s parliamentary process, the IMF has decided to postpone consideration by its Board of the proposed loan under the Extended Fund Facility until after the debate,"" an IMF spokesperson said.

The vote on this motion in Irish parliament is scheduled for December 15. If the motion is passed, the IMF Managing Director would recommend approval by the Fund''s executive board for the proposed loan as early as December 16.

Reckitt Benckiser Buys Paras Pharmaceuticals

Reckitt Benckiser Group plc, the U.K.-based consumer goods company agreed to buy privately-held India based personal care company Paras Pharmaceuticals Ltd. for about 32.6 billion rupees or $726 million.

Under the deal, private equity investor Actis Capital LLP will sell its 63% stake in Paras to Reckitt Benckiser. Sequoia Capital and the remaining shareholders, including Paras founder Girish Patel and his family, will also sell their shares to RB.

GE Proposes to Buy Wellstream

General Electric Co., the diversified technology, media, and financial services company said it plans to make a cash bid for UK-based oil and gas services group Wellstream Holdings Plc at 780 pence per share and a special dividend of 6 pence per share.

The offer values Wellstream''s share capital at £0.8 billion or $1.3 billion.

GlaxoSmithKline Acquires Maxinutrition

GlaxoSmithKline Plc agreed to buy sports nutrition company Maxinutrition Group Holdings Limited, a UK company that manufactures protein-enhanced functional nutrition products, from Darwin Private Equity for a cash consideration of about £162 million.

Under the deal terms, GSK will acquire Maxinutrition''s brands, including Maximuscle, Maxifuel and Maxitone.

GSK noted that the acquisition would extend its reach into wider categories, complementing its existing Nutritional Healthcare business.

Gainers & Losers

Airsprung Group PLC rose 2.70% to 19.00 pence after the company engaged in manufacturing, importing and supplying of beds, mattresses and upholstery reported first-half sales fell 12.8% to £20.15 million from £23.1 million in the same period last year.

Profit in the period rose 9.1% to £346,000 or 1.4 pence per share, from £317,000 or 1.2 pence per share last year.

British American Tobacco Plc fell 0.08% to 75.33 pence after the tobacco company said that it is proposing to reduce the number of regions in its management structure to four from the current five, with effect from January 1, 2011.

The company said it will form a new region - Eastern Europe, Middle East & Africa or EEMEA, which will include all the previous Africa & Middle East or AME business units in addition to Russia, Ukraine, Moldova, Belarus, Caucasus and Central Asia. Andrew Gray, currently regional director of AME, will be the regional director for the new region.

Capital Shopping Centres Group plc increased 0.97% to 393.80 pence after the real estate investment trust while responding to a letter from Simon Property Group, Inc. said that it considers Simon Property''s offer to fund the acquisition of Trafford Centre in cash rather than shares as ""completely impracticable"".

De La Rue plc dropped 0.30% to 832.00 pence after the security printer and papermaker appointed Tim Cobbold as Chief Executive Officer with effect from January 1, 2011. He will also be an Executive Director of the company.

First Artist Corporation PLC surged 30.23% to 14.00 pence after the media, events and entertainment management group said Jeremy Barbera will join the Board as Chief Executive Officer and Shirley Stapleton as Finance Director. Jon Smith will remain an executive Director of the Company and assume the role of Executive Vice Chairman.

Merchant Securities Group Plc soared 9.78% to 24.70 pence after the financial services firm reported first-half revenues grew 17% to £3.84 million from £3.27 million in the year-ago period. Loss attributable to equity holders for the period was £242,000 or 0.52 pence per share, compared to a profit of £123,000 or 0.24 pence per share in the same period last year.

ReNeuron Group plc plunged 13.99% to 5.90 pence after the stem cell company stated revenue for the six months ended September 30 climbed 29% to £18,000 versus £14,000 in the comparable period. Pre-tax loss in the period widened 35% to £2.73 million from £2.03 million last year.

SEGRO plc declined 0,49% to 286.60 pence after the provider of flexible business space in Europe said that it completed the sale of the Westcore Industrial Portfolio to fund manager Hermes Real Estate, acting on behalf of the British Telecom Pension Scheme for a total consideration of £79.25 million.