UK Indexes Up; Seagate and Samsung in $1.38 B Deal

Arthi Gupta
19 Apr, 2011
New York City

The UK indexes rose after strong global economic data. WPP agreed to buy Germany-based Commarco. Vedanta

[R]3:45 PM London – The UK indexes rose after strong global economic data. WPP agreed to buy Germany-based Commarco. Vedanta’s unit acquired 10.4% stake in Cairn India. Seagate agreed to buy Samsung''s hard disk drive unit in a $1.38 billion cash and stock deal.[/R]

UK stocks edged higher a day after sovereign debt worries overshadowed the trading sentiment. Stocks gained despite the out of control U.S. debt and rising possibilities of Greece’s debt restructuring and weak domestic jobs market.

In London, FTSE 100 Index gained 20.22 or 0.71% to 5,911.24 and the pound edged higher to close at $1.6298.

WPP Buys Commarco GmbH

WPP Plc, the advertising firm agreed to acquire the entire issued share capital of Commarco GmbH, a German-based marketing services network for an undisclosed sum.

The Hamburg-based group is the parent company of more than 25 agency brands, including the Scholz & Friends marketing services network.

Rolls-Royce Wins PetroChina Contract

Rolls-Royce Group plc won a $65 million contract from PetroChina, the largest oil and gas producer in China.

Rolls-Royce will provide more gas compression equipment for the West East Pipeline Project, the world''s longest natural gas pipeline, taking the number of Rolls-Royce RB211 gas turbine compressor packages installed on this pipeline and associated feed and branch lines up from 39 to 45.

Vedanta Unit Buys Stake in Cairn India

Vedanta Resources PLC said that its subsidiary Sesa Goa Ltd., acquired 200 million shares amounting to a 10.4 % stake in Cairn India Ltd., from Petronas International Corp. Ltd., at Rs 331 a share in a block deal.

The board believes that the Cairn India acquisition will deliver significant value to Vedanta and will be immediately earnings accretive.

Seagate Buys Samsung''s Hard Disk Drive Unit

Seagate Technology Plc agreed to buy Samsung Electronics Co. Ltd.''s hard disk drive operations as part of a $1.38 billion cash and stock alliance, aiming to significantly expand its customer access in China and Southeast Asia.

Samsung will provide its semiconductor products for use in Seagate''s products under a NAND flash memory supply deal, while Seagate will supply disk drives to Samsung for PCs, notebooks and consumer electronics. The companies would also continue to co-develop enterprise storage solutions.

As part of the transactions, Samsung will receive consideration consisting of 50% Seagate ordinary shares and 50 % cash. The cash portion would be $687.5 million and 45.2 million Seagate shares, or about 9.6% stake in Seagate.

Gainers & Losers

Burberry Group Plc surged 6.81% to 1,224.00 pence after the luxury company said its total revenue for the second-half grew 31% to £860 million from £657 million in the prior year. Retail revenue surged 43% to £596 million.

Royal Bank of Scotland Group PLC fell 0.79% to 41.48 pence after the holding company of a global banking and financial services group said that at group level, the company posted £1.9 billion of operating profit in 2010 compared with a loss of £6.1 billion in 2009.

SABMiller Plc rose 1.35% to 2,220.00 pence after the brewing and bottling company reported a 5% rise in group revenue for fiscal 2011 on an organic constant currency basis and said that overall financial performance is in line with its expectations.

Organic revenue per hectoliter was up 3% in constant currency terms for the fiscal year ended on March 31.

All divisions other than North America recorded volume growth during the second half of the year, the company noted.

Seagate Technology Plc declined 2.97% to $17.31 after the Ireland-based computer hard disk maker reported third quarter revenue declined 11.5% to $2.70 billion from $3.05 billion a year ago. Net income in the quarter plunged 82% to $93 million or $0.21 per share from prior year''s $518 million or $1.00 per share mainly due to lower revenues.

Tesco plc fell 1.24% to 395.05 pence after the department stores operator reported for the fiscal year ended February 26, Group sales, including VAT, increased 8.1% to £67.6 billion.

Profit during the period increased 14.2% to £2.66 billion or 32.94 pence per share from £2.33 billion or 29.19 pence per-share last year helped by significant business improvement in Asia and Europe.