Reckitt Strikes USD4.2 Billion Deal To Sell Food Unit

LONDON (Alliance News) - Reckitt Benckiser and Aviva both announced significant asset disposals on Wednesday morning, while pressure on US President Donald Trump over his connections to Russia continues to mount.

Reckitt Benckiser said it has struck a USD4.20 billion deal to sell its Food business to US spice-maker McCormick & Co, while insurer Aviva has sold its Friends Provident International business for GBP340.0 million to International Financial Group.

Elsewhere, President Trump and Russian President Vladimir Putin had a second, undisclosed meeting during the G20 summit in Hamburg, according to news reports. The one-hour long meeting comes amid an ongoing investigation into the connections between Trump's administration and the Russian government during the election campaign last year.

Here is what you need to know at the London market open:

 

MARKETS

• FTSE 100: seen up 24.08 points at 7,414.30

• Hang Seng: up 0.5% at 26,656.66

• Nikkei 225: closed up 0.1% at 20,020.86

• DJIA: closed down 0.3% at 21,574.73

• S&P 500: closed up 0.1% at 2,460.61

• GBP: firm at USD1.3033 (USD1.3027)

• EUR: firm at USD1.1532 (USD1.1574)

• GOLD: down at USD1,239.73 per ounce (USD1,241.96)

• OIL (Brent): firm at USD48.62 a barrel (USD48.68)

(changes since previous London equities close)

 

ECONOMICS AND GENERAL

Wednesday's Key Economic Events still to come (all times in BST):

• 1000 EU construction output

• 1200 US MBA mortgage applications

• 1330 US building permits

• 1330 US housing starts

• 1330 Canada manufacturing shipments

• 1530 US EIA crude oil stocks

US President Donald Trump denied responsibility for the current US health insurance system enacted by his predecessor as Congress failed to muster the votes to pass legislation to repeal or replace the so-called Obamacare law. Trump told reporters Tuesday at the White House that his Republicans in Congress should "let Obamacare fail." "I'm not going to own it," he said. Trump, who promised during his presidential campaign to repeal and replace the health insurance reforms enacted under president Barack Obama, said he was "disappointed" by the Senate's inability to produce a health care measure similar to what the lower House of Representatives passed in May.

President Trump and Russian President Vladimir Putin had a second, undisclosed meeting during the G20 summit in Hamburg, news reports said Tuesday. The second meeting lasted about one hour and took place after the more than two-hour meeting that had previously been disclosed and widely described in news reports, according to the Washington Post and other US news media. The second meeting between Trump and Putin during the summit took place at a couples-only dinner for G20 leaders on July 7, a senior administration official said, according to the news reports. The only other person present was Putin's official interpreter. There was no information on what they discussed.

The White House said Trump intends to nominate veteran diplomat and businessman Jon Huntsman as US ambassador to Russia in a late statement on Tuesday.

US sanctions against Venezuela could be announced at any time and all options are on the table, the Trump administration officials said on a background call to reporters Tuesday. The officials said possible actions the US could take include banning oil imports and sanctions on individuals and companies, adding that the administration is looking for whatever would have the desired effect of restoring democracy in Venezuela. Trump threatened economic sanctions on Monday if Venezuelan President Nicolas Maduro holds the constituent assembly and goes ahead with plans to rewrite the South American country's constitution.

 

BROKER RATING CHANGES

• S&P GLOBAL RAISES BHP BILLITON PRICE TARGET TO 1400 (1300) PENCE - 'BUY'

• HSBC RAISES BERKELEY GROUP PRICE TARGET TO 3789 (3481) PENCE - 'BUY'

• GOLDMAN CUTS ROYAL MAIL PRICE TARGET TO 510 (530) PENCE - 'NEUTRAL'

• GOLDMAN RAISES WEIR GROUP PRICE TARGET TO 2400 (2200) PENCE - 'BUY'

 

COMPANIES - FTSE 100

Reckitt Benckiser said it has struck a USD4.20 billion deal to sell its Food business to US spice-maker McCormick & Co. The division contains the brands French's mustard and Frank's hot sauce. Reckitt said the proceeds of the deal will be used to reduce its net debt, after its USD17.90 billion purchase of US baby formula maker Mead Johnson in February. The company said the sale is another step towards focusing on "consumer health and hygiene".

Aviva said it has sold its Friends Provident International business for GBP340.0 million to International Financial Group. Aviva said it will book an accounting loss of around GBP130.0 million on the sale, primarily due to intangible assets. However, the insurer said the deal will boost its cash dividend paying capacity and its Solvency II capital surplus.

BP is considering spinning off certain US pipeline assets in the US Gulf and Midwest in an initial public offering, the Telegraph and others reported late Monday. The plan, first considered about five years ago, was shelved when oil prices declined sharply in 2014, according to one person familiar with the earlier talks. Both BP and its underwriters have retained advisors to explore the sale, the person said, according to the Telegraph. If successful, the deal would be one of the largest initial public offerings of the year, the person said according to the Telegraph, speaking on the condition of anonymity as the talks were private.

BHP Billiton late Tuesday said production of petroleum and iron ore met expectations in the financial year to the end of June. The Anglo-Australian miner warned that it expects to record exceptional items of USD546 million in the second half of the 2017 financial year related to idle capacity and other strike-related costs incurred as a result of the Escondida industrial action and Chilean withholding tax on a one-off dividend paid while a concessional tax rate was available. Annual iron ore production increased by 4% to 231 million tonnes. Western Australia Iron Ore, or WAIO, production is expected to increase to between 239 million and 243 million tonnes in the 2018 financial year.

Sky News reported that Adam Crozier, former ITV chief executive, is to become chairman of cinema chain Vue as the group examines plans for a "blockbuster" sale or stock market flotation. Vue is the sixth-biggest cinema group in the world, operating in over 200 sites in countries including the UK, Germany, Poland and Taiwan. If he does agree to join, Sky said Crozier's transition would put Vue within sight of a transaction expected to value it at more than GBP1.50 billion.

 

COMPANIES - FTSE 250

Wizz Air Holdings said revenue in the quarter to the end of June rose 29% year-on-year to EUR469.3 million to deliver profit of EUR58.1 million, up over 50% from the previous year. Wizz Air also said it has appointed Stephen Jones as executive vice president and deputy chief executive. Jones is to take up his role in the latter part of 2017. The airline also promoted two members of management to the executive team. Iain Wetherall has been promoted to chief financial officer from head of financial planning & control and investor relations from the start of August, while current head of technical services Heiko Holm will become chief technical officer.

 

COMPANIES - INTERNATIONAL

Technology giant IBM released results late Tuesday that said its profits dropped 7% year-on-year to USD2.3 billion in the second quarter of 2017 as it reported a 5% drop in sales to USD19.3 billion. The IT firm has seen a drop in profits from its core software business for 21 quarters in a row but has shown strong growth in other areas.

AkzoNobel announced that its Chief Executive Ton Buchner has stepped down with immediate effect due to health reasons. Thierry Vanlancker has been appointed as the company's new CEO, having most recently been head of AkzoNobel's Specialty Chemicals division.

Wednesday's Shareholder Meetings

• Severn Trent

• Advanced Oncotherapy

• Lombard Risk Management

• Renold

• Biffa

• QinetiQ Group

• MS International

• TalkTalk Telecom Group

• BP Marsh & Partners

• The People's Operator

• RPC Group

• British American Tobacco (re acquisition of Reynolds American)