FTSE 100 Rises, Led by GSK After Unilever Bid For its Consumer Healthcare Arm

The FTSE 100 index rises 0.6% to 7589.44, led by pharma giant GlaxoSmithKline, whose stock increases by 4.5% after it received a GBP50 billion bid from consumer-goods company Unilever for its consumer-healthcare business. "GSK is thought to be holding out for GBP60bn, Unilever is expected to return with an improved offer," Marc Kimsey, equity trader at Frederick & Oliver says. Unilever shares fall 6.5%, while fellow consumer-goods group Reckitt Benckiser gains 2.8%. Taylor Wimpey rises 2.4% after the homebuilder said its 2021 performance met its expectations and it intends to start a share buyback at its full-year results. Heavyweight commodity and oil stocks are broadly higher. Kimsey cites "demand for base metal and energy stocks after Chinese GDP data confirmed strong economic growth in 2021."

 
Companies News: 

Oxford BioMedica CEO to Step Down

Oxford BioMedica PLC said Monday that Chief Executive Officer John Dawson will retire from the company.

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M.P. Evans 2021 Crop, Production Increased; Announces Special Dividend

M.P. Evans Group PLC said Monday that crop and production increased in 2021 and it has announced a special dividend.

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Tavistock Investments to Buy Morgans for GBP3.7 Mln

Tavistock Investments PLC said Monday that it has agreed to buy independent financial advisory group Morgan Financial Group Holdings Ltd. for 3.7 million pounds ($5.1 million).

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Forward Partners Appoints Lloyd Smith as CFO

Forward Partners Group PLC said Monday that it has appointed Lloyd Smith as chief financial officer with effect from March 21.

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Clean Power Hydrogen to Raise GBP50 Mln in AIM Float

Clean Power Hydrogen PLC said Monday that it plans to raise 50 million pounds ($68.4 million) and float on London's junior AIM, with trading expected to start early next month.

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Yourgene Health Raises Guidance Again

Yourgene Health PLC said Monday that it expects to beat upgraded market revenue forecasts for the year, its third upgrade since October.

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Hurricane Energy Production Met Views, Revenue Rose in 2021

Hurricane Energy PLC said Monday that production met expectations and revenue rose in 2021, and it expects to soon pay off its bond debt.

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Leeds Group Swung to 1H Pretax Loss, Shares Fall

Shares in Leeds Group PLC fell Monday after the company said it swung to a pretax loss in the first half of fiscal 2022 as its performance was hurt by restrictions across Europe to curb the Omicron coronavirus variant.

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H&T Group Expects 2021 Revenue in Line With Market Views

H&T Group PLC said Monday that it expects 2021 revenue to be in line with market expectations, and that its performance in the second half of the year was consistently strong.

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Angus Energy Shares Rise on Six Approaches to Buy Company

Angus Energy PLC shares rose Monday after it said that it has received at least six approaches to participate in its formal sales process, or making offers for the company and its assets.

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Clinigen Group Agrees to New, Higher GBP1.3 Bln Takeover by Triton Funds

Clinigen Group PLC said Monday that it has agreed an improved and final 1.3 billion pound ($1.78 billion) takeover by Triton Funds.

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Unilever Looking to Reposition Portfolio After GSK Consumer Healthcare Approach

Unilever PLC said Monday that it has decided to expand its presence in higher-growth categories after it made an approach for GSK Consumer Healthcare over the weekend that could potentially be worth $68 billion.

 
Market Talk: 

GSK Consumer Health Arm May be Worth More on its Own

0957 GMT - A potential sale of GlaxoSmithKline's consumer healthcare business to rival Unilever holds positives and negatives for the drug company's shareholders, says AJ Bell. While GSK management would probably welcome being paid a high price for the division, some long-term GSK investors may not want a sale as they might have been looking forward to the consumer-goods unit being de-merged later this year, the brokerage says. "De-mergers can be beneficial as management are able to run the business with more freedom, rather than simply being a division of a bigger company and having to follow group protocol," Bell's investment director Russ Mould says. "Therefore, the consumer goods arm could be worth a lot more in time." GSK shares rise 4%.

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Taylor Wimpey's 2021 Update Should Reassure Investors

0930 GMT - Taylor Wimpey's 2021 update was reassuring, reiterating 2021 performance will meet expectations on the back of a support backdrop, and committing to return excess cash, Citi says. The house builder's outlook remains positive, though the update is unlikely to significantly change market consensus, the U.S. bank says. "[The] group's reassuring update--on track to deliver on its medium-term guidance and committed to return excess cash by way of share buyback--should support sentiment on the shares and drive a re-rating in our view," Citi says, adding that the stock's price looks relatively cheap given Taylor Wimpey's 2022 targets. Citi retains its buy rating and 225 pence price target on the stock. Shares are up 2.6% at 158.0 pence.

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Unilever Bid for GSK Consumer Healthcare Leaves Questions

0916 GMT - While Unilever's approach for GSK Consumer Healthcare has its attractions, Jefferies says it still would need a lot more convincing on the strategic and economic logic. The U.S. bank sees the benefit of a combination in oral care as well as vitamins, minerals and supplements, but OTC remains a risk, it notes. Unilever's approach should also encourage other OTC participants like Procter & Gamble and Reckitt Benckiser to pay attention. Any auction would be a test of the Anglo-Dutch consumer-goods group's resolve, Jefferies adds. Shares in Unilever trade down 6.7% at 3,672.5 pence. GlaxoSmithKline trades up 4.6% at 1,716 pence.

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Unilever Deal for GSK Consumer Healthcare Would Give It Rev Growth Stream in Developed Markets

0840 GMT - A Unilever deal for GSK Consumer Healthcare would give the Anglo-Dutch consumer-goods group what it has been missing over the past few years: a steady stream of revenue growth in developed markets, Citi says. After three rejected offers, Unilever could come back with a bid of around GBP55 billion, Citi says. However, it says it is very doubtful this will be sufficient to persuade the GSK board or the company's investors. Further, Citi questions whether such a deal is necessary given its implications surrounding financing and integration at a time when the group is facing significant headwinds in its core business. Shares in Unilever trade down 6% at 3,698 pence. GlaxoSmithKline shares trade up 5.1% at 1,726 pence.

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Unilever's GSK Consumer Healthcare Approach Raises Questions on Current Portfolio

0830 GMT - Unilever's approach for GSK Consumer Healthcare raises questions on its conviction about being able to accelerate growth with its current portfolio, Berenberg says. The German brokerage says that some might point to a food & refreshment disposal funding the transaction, however, it thinks the unit offers some of Unilever's most attractive categories such as ice cream and cooking ingredients. Competitive bids from Procter & Gamble or private equity also can't be ruled out, it says. Berenberg expects a GBP55 billion offer to secure the asset, after a GBP50 billion offer was rejected. Shares in Unilever trade down 6.4% at 3,688 pence.

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Omicron's Toll on Economic Activity in U.K., Eurozone Expected to Be Mild

0827 GMT - The Covid-19 pandemic's drag on economic activity has lessened from wave to wave, Berenberg says. Even if most people who are infected don't fall seriously ill, they still need to be in quarantine. Against the backdrop of the Omicron variant, staff shortages may be a major factor for about four to six weeks, shaving around 0.5 percentage point off 1Q GDP in the U.K. and the eurozone, according to Berenberg's estimates. Together with restrictions and more-cautious consumer behavior, this suggests that economies may roughly stagnate in 1Q, Berenberg says. However, if supply shortages start to ease in early 2022, gains in manufacturing output could still underpin GDP growth of around 0.7% in 1Q in both the U.K. and the eurozone, Berenberg forecasts.

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Sterling Expected to Remain Unmoved by UK Political Uncertainty

0822 GMT - Sterling has been little moved by U.K. political uncertainty amid calls for Prime Minister Boris Johnson to resign and that is unlikely to change, ING says. "We think that even in the event of a change in leadership, the downside risks for the pound (which is currently being supported by aggressive Bank of England tightening expectations) should be contained," ING analysts say. Meanwhile, a slew of U.K. economic data this week including labor market figures on Tuesday and inflation on Wednesday should support sterling, although mostly against non-dollar currencies as the U.S. currency is likely to rise, they say. GBP/USD is flat at 1.3679 and EUR/GBP rises 0.1% to 0.8350.

 

Contact: London NewsPlus, Dow Jones Newswires; Write to Sarka Halas at sarka.halas@wsj.com

(END) Dow Jones Newswires

January 17, 2022 05:16 ET (10:16 GMT)

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