Below are the key morning headlines from today’s papers, featuring the Financial Times, The Times, The Telegraph, The Daily Mail & more - see the full Press section here.
Energy and tech sell-off wipes out 2018 gains. Cash is good alternative to stocks, Goldman Sachs warns. Wall Street surrendered its 2018 gains last night as a sharp fall in the oil price prompted investors to dump energy companies and as big technology stocks suffered another day of heavy selling. The S&P 500 and Dow Jones industrial average fell into the red for the year as fears grew that a long-running bull market is nearing an end. All 30 Dow companies closed down. The S&P 500 closed at 2,641.89, a fall of 1.8% for the day and 1.2 per cent since January, while the Dow dropped by 2.2%, or 551.80 points to 24,465.64, down 1% on the year. The technology-focused Nasdaq index lost 1.7% to 6,908.82, flat on the year to date.
Greek crisis returns as Italian banks enter the danger zone. Greece’s financial crisis has come back to the boil as Athens draws up emergency plans to stabilize the banking system, raising concerns that the country may ultimately need a fourth EU rescue to escape its depression trap. Global risk aversion and contagion from Italy’s parallel banking drama has lifted a lid on the festering legacy of bad debts, and exposed the implausible methods employed by Greek regulators and the EU-led troika to camouflage the problem. Greek bank shares slumped a further 6% on Tuesday after five days of falls. They are now down by 60% since May, chiefly on fears of drastic state intervention to shore up thinning capital buffers.
Indivior loses half its value as court backs copycat drug. Hundreds of millions of pounds were wiped off the value of a UK-listed pharmaceuticals company yesterday after an American court ruling allowed a rival to launch a key copycat product. In one of the biggest one-day sell-offs on the FTSE 250 index, shares in Indivior (INDV) slumped by almost half, closing down 46.7% at 110p in London. The collapse was triggered by the US court of appeals lifting a preliminary injunction blocking Dr Reddy’s Laboratories, an Indian rival, from selling a generic version of Indivior’s blockbuster treatment for opioid addiction.
‘Strong’ EasyJet poised to prosper in airline survival of the fittest. The boss of easyJet (EZJ) has issued a Darwinian call, saying larger airlines are poised to prosper as weaker rivals “disappear”. With airlines facing rising costs over the traditionally lean winter months, Johan Lundgren warned weaker airlines “are heading into difficult times”. Mr Lundgren, who took over as easyJet chief executive a year ago, said Brexit had led to “no drop in demand” in bookings next year. His comments came as annual pre-tax profits rose 15.6% to £445m, in line with City expectations. “The year has been particularly successful if you look that it is against a backdrop of a number of airlines that have struggled,” he said.
Ei Group defends City windfall despite landlord ‘struggles’. Britain’s biggest pub company has defended plans to hand out tens of millions of pounds to investors despite anger among “struggling” landlords. EI Group (EIG) , formerly known as Enterprise Inns, said on Tuesday that it would return excess cash to investors through a fresh share buyback programme. Chief executive Simon Townsend said he was “pleased with the progress” over the last year as Ei posted annual pre-tax profit of £87m – up 50% on the prior year. Revenue rose 7.2% to £695m, even though around 4% of the company’s pubs were closed.
Brussels adds its backing to Shire deal. One of the global pharmaceuticals industry’s biggest takeovers cleared another hurdle yesterday when officials in Brussels conditionally approved the multibillion-pound deal. Takeda struck a £46 billion agreement to acquire Shire Plc (SHP) , the FTSE 100 drugs company, in May and has been seeking clearance from competition regulators. The Japanese company said yesterday that it had received clearance from the European Commission for the proposed cash-and-shares deal. As expected, Brussels made its approval conditional on Takeda and Shire divesting a compound in Shire’s portfolio that could overlap with Takeda’s product for inflammatory bowel disease.
Entertainment One takes £57m hit from declining DVD sales. Canadian TV and film group Entertainment One Limited (ETO) has suffered a £57m blow to its bottom line as DVD sales decline amid what it called “ongoing evolution” in the industry. The FTSE 250 firm, which is behind the hit cartoon Peppa Pig, swung to a £40.1m pre-tax loss in the six months to Sept 30, compared to a £2.3m profit a year ago, as it impaired some of its film distribution assets and spent money restructuring the business. Revenue fell almost 2% over the period to £404.9m as growth in its family division was offset by a 7% decline in its film and television arm.
Rival US firm makes offer for snake bite drugs group. The directors and biggest shareholders of BTG (BTG) have recommended a £3.3 billion takeover by a bigger American rival. The British healthcare company and Boston Scientific revealed that they had agreed terms on an all-cash offer, which values BTG’s shares at 840p. The offer represents a 36.6% premium to the stock’s closing price in London on Monday. Directors, who include Dame Louise Makin, BTG’s chief executive, hold 0.3% of the shares and have recommended the offer to shareholders. The deal also has been supported by BTG’s largest investors, Invesco Asset Management, Woodford Investment Management and Novo Holdings, which hold a third of the shares.
Catering giant Compass draws up Brexit contingency plans for goods and workers. Compass Group (CPG) has begun stockpiling food and put in place plans to help European workers stay in the UK ahead of the country’s exit from the European Union. Dominic Blakemore, chief executive, said the company, which is the world’s biggest catering firm, had drawn up contingency plans to make sure that it could continue supplying its clients with meals in the event of problems importing goods from Europe. He said Compass was making “sensible increases to our inventories” which would happen “gradually over time”, with trigger points between now and Brexit day on March 29, if the prospect of a no-deal becomes more likely.
Investor stirs pot by stating opposition to Wagamama deal. One of Restaurant Group (RTN) biggest institutional investors has come out against the proposed £559 million acquisition of the Wagamama chain. James Thorne, UK equities fund manager at Columbia Threadneedle Investments, said that he would be using its 7.7% stake in the Frankie & Benny’s and Chiquito operator to vote against the deal at next week’s shareholder meeting. “The strategic appeal of combining two good businesses may be understandable, but the size and price of the deal at this point in the cycle throws up too many red flags,” he said. “The share price plunge reflects the depth of concern there is.” However, in a sign of how the deal is dividing opinion in the City, Glass Lewis, the proxy advisory group, recommended yesterday that shareholders vote in favour of both the proposed acquisition and the £315 million rights issue to fund it. Glass Lewis argues that the risks associated with the higher debt are “acceptable relative to the expected benefits of the transaction”. It deems the transaction and the rights issue to be “generally reasonable and in the interests of shareholders”.
Counting the cost of a viewing revolution. The independent film and television producer best known for the Peppa Pig and PJ Masks childrens’ cartoons slumped into the red as viewers switched from DVDs to internet streaming more rapidly than expected. Entertainment One Limited (ETO) took a £57 million financial hit after the migration from physical ownership “accelerated at an unprecedented level”. The company wrote down the value of its home entertainment division by £23 million, and took a £17 million charge in its content business. The write-offs pushed Entertainment One to a £40 million pre-tax loss in the six months to the end of September, compared with a reported profit of £2.3 million a year ago. Its shares fell 18¾p to 365½p yesterday.
No alarms as Halma revenues rise. Strong growth in the United States has underpinned a 23% rise in pre-tax profits at Halma (HLMA) . The specialist in fire alarm and security technology said that pre-tax profits had reached £94.5 million in the six months to September 30, while revenues had risen by 16% year-on-year to £586 million. The interim dividend was lifted from 5.71p a share to 6.11p. Halma shares rose 39p, or 3%, to £13.50 yesterday. The shares, which touched a peak of £15.04 last month, have doubled in less than three years and quadrupled over the past six years. It is trading on more than 28 times this year’s expected earnings.
Schneider’s extra spark in Aveva Group (AVV) results. Aveva was yesterday measuring the success of its merger with Schneider Electric, of France, in a notable boost to profit margins. The industrial software developer, whose tools are used by manufacturers, mine owners and ship designers, reported a 54% rise in adjusted pre-tax earnings to £60.5 million in the six months to the end of September. Revenues increased by 11% to £343 million over the period, with profit margins rising by almost five points after Aveva cut costs in the wake of this year’s £3 billion tie-up with Schneider. Craig Hayman, chief executive, said that the company was on track to achieve its merger targets. Growth was said to be strong across all regions.
Oil slumps on fears of global slowdown: Brent crude sinks to $62 a barrel – its lowest level in 11 months. The price of oil slumped 7% last night to its lowest level in 11 months amid fears of a global economic slowdown. Brent crude sank to little more than $62 a barrel, its lowest level since last December. It has now dropped 28% from the highs hit four months ago.
