IMF Lowered UK Outlook, GSK in Hostile Offer for Human Genome

Arthi Gupta
16 Jul, 2012
New York City

The UK indexes dipped after home prices fell in July. The International Monetary Fund cut UK growth outlook. GlaxoSmithKline agreed to acquire Human Genome for $14.25 per share. G4S failed to fulfil Olympic contract.

[R]3:30 PM London – The UK indexes dipped after home prices fell in July. The International Monetary Fund cut UK growth outlook. GlaxoSmithKline agreed to acquire Human Genome for $14.25 per share. G4S failed to fulfil Olympic contract.[/R]

The UK indexes dipped after home prices fell. The IMF lowered growth forecast for the UK. Two economic outlooks painted different pictures for the UK economy in the in the next two years.

The UK can expect that the economy will return to growth over the next six months, boosted by falling inflation and a pick-up in consumer spending, a report from Ernst & Young ITEM Club showed today.

The club forecasts 1.6% growth in gross domestic product in 2013 and 2.6% in 2014.

In London, the benchmark index FTSE 100 declined 23.83 or 0.4% to 5,642.42 and the pound edged higher to $1.5608.

IMF Cut UK Growth Forecast

The International Monetary Fund slashed its 2013 growth forecast for the global economy to 3.9% from 4.1% predicted in April. The outlook for this year was left unchanged at 3.5%.

The IMF also cut its growth forecast for the UK next year to 1.4% compared with a previous forecast of 2% in April. The institution doubts if the 0.8% growth forecasted for this year will be met and GDP is likely to rise by 0.2% in 2012.

UK Home Prices Fall

The UK home prices fell 1.7% on a monthly basis in July to £242,097, following a 1% rise in June according to a survey by Rightmove published today. This was the largest price drop since 2008.

Annually, prices at national level rose 2.3% in July.

In London, prices fell 3.6% from a month ago to £432,641 in July.

GSK to Acquire Human Genome

GlaxoSmithKline plc will acquire Human Genome Sciences Inc. for $14.25 per share in cash. The transaction values HGS at approximately $3.6 billion on an equity basis or approximately $3 billion net of cash and debt, and represents a premium of 99% to the HGS closing price of $7.17 per share April 18.

Gainers & Losers

G4S plc plunged 9.2% to 253.30 pence after the private security firm said it would incur up to £50 million charge in the current financial year on its inability to deliver the promised security staff for the London Olympics.

The Sage Group plc declined 3.2% to 276 pence after the software supplier said its trading performance since April 1 remains broadly in-line with its expectations.

Smiths Group plc rose 1.2% to 1,049 pence after the technology company announced the disposal of its minority stake in Cross Match Technologies Inc. for up to $77 million.

Rio Tinto slumped 1.7% to $46.17 and Anglo American dropped 1.4% to $15.70 on growth worries in China.