GlaxoSmithKline (GSK) and America’s Pfizer are creating a giant consumer healthcare joint venture in a deal that will lead to the break-up of the British pharmaceutical company. The proposed new business will be the biggest in the world in the “over-the-counter” healthcare market, with annual revenue of £9.8 billion. Within three years of closing of the deal Glaxo intends to separate and float the joint venture in London, which will be one of two separate companies: one focused on consumer healthcare and the other on pharmaceuticals and vaccines. Glaxo will own 68% of the joint venture, with the American company holding the rest. It will put the smoking cessation products Nicotinelle, the cold and flu treatments Night Nurse and Beechams and the hayfever treatment Piriton. Pfizer’s products include Advil ibuprofen, Robitussin cough medicine and Centrum vitamins.
Competition and Markets Authority has pledged to tackle an issue that angers consumers across the country: that loyal customers of services such as broadband and insurance frequently end up with worse deals than new customers. The CMA said this morning that there was a “loyalty penalty” of £4 billion a year in five key markets: cash savings, mortgages, household insurance, mobile phone contracts and broadband. These loyalty penalties are enforced through continual year-on-year “stealth” price rises, automatic renewals, costly exit fees and time-consuming processes to cancel contracts or switch providers. The competition watchdog has announced a series of recommendations to stop the practices, including a consumer law enforcement investigation into the anti-virus software sector, setting out principles that businesses must follow; regulators in each market publishing the loyalty penalties for each supplier every year; and targeted price caps to protect vulnerable households. The CMA launched an investigation into loyalty penalties after a “super -complaint” by Citizens Advice.
Royal Bank of Scotland Group (RBS) has picked an internal candidate, Katie Murray, as its new finance chief, raising the prospect that it could become the first big UK bank to have an all-female executive leadership team. She will work alongside Alison Rose, 49, who was promoted to deputy chief executive of RBS’s high street lending division last month. Ms Rose is expected by many to replace Ross McEwan as chief executive when he retires, which is likely to be in 2020.
New York regulators have fined Barclays (BARC) $15 million after concluding an investigation into the attempted unmasking of a whistleblower by Jes Staley, the bank’s chief executive. The New York State Department of Financial Services said that it had found “shortcomings in governance, controls and corporate culture” in Barclays’ whistleblowing programme. British regulators concluded in May that Mr Staley improperly directed Barclays’ security team to identify a whistleblower who raised concerns about the bank’s appointment of a particular executive. Mr Staley was fined £642,430 and had £500,000 docked from his pay by Barclays, but kept his job.
BT has moved to pacify shareholders after it suffered a revolt over the £2.3 million pay package for Gavin Patterson, its departing boss. More than 34% of voting shareholders voted against the company’s remuneration report at its annual meeting in Edinburgh in July. The rebellion prompted BT Group (BT.A) to vow to “engage further” with its shareholders and proxy advisory groups and to consider changes. The protest followed a downturn in BT’s performance which led to the company ousting Mr Patterson shortly before the annual meeting.
The City regulator has widened its investigation into stock market statements made by Telit Communications (TCM). The Financial Conduct Authority has expanded the scope of its inquiry to “consider the accuracy” of earlier statements made by Telit, the company said. They include its trading update in April last year and details of a £39 million placing announced the following month. Telit had revealed in March that the FCA was investigating the “timeliness of announcing certain matters included in the interim results” in August last year.
Glencore (GLEN) subsidiary has paid C$30 million to settle with Canadian financial regulators after mis-stating its copper production in the Democratic Republic of Congo. One of the mining group’s long-serving executives and major shareholders, Telis Mistakidis, was also barred from being a director in Canada for four years and was ordered to pay C$2.5 million (£1.47 million) for his role in the scandal at Katanga Mining.
Contingency plans have been drawn up by Indivior as part of attempts to protect the embattled drugs company’s cash position and debt covenants. Indivior (INDV), whose major market is the US, said that it planned to launch a generic version of its blockbuster opioid addiction treatment Suboxone Film if rival drug companies succeeded in marketing their own copycat versions. The plans are designed to help Indivior hold a cash balance of at least $250 million to comply with its banking covenants. Indivior said it had about $910 million at the end of November.
The largest specialist fishing gear seller in the UK has bucked the retail downturn and boosted sales at its shops and online. Sales at Angling Direct (ANG) rose by nearly a third in the four months to November. The Aim-listed company said that group revenue rose by 31.5% to £14.6 million while its like-for-like store sales increased by 7.2% to £4.9 million. Ecommerce sales went up by 24.3% to £6.7 million and the group said the division had recorded its best Black Friday week performance. The online improvement was also boosted by Angling’s new German language website. Darren Bailey, chief executive, said the company was encouraged by the performance in a difficult trading environment.
Bosses in ASOS (ASC) snapped up shares in the fashion retailer yesterday in a show of confidence after a profit warning on Monday wiped £1.3 billion from its stock market value. Nick Beighton, chief executive and Adam Crozier, chairman, spent about£100,000 each buying shares in the online-only fashion retailer. The shares, which fell by 37.5% on Monday, rallied by more than 4% in morning trading after the share purchase and after an upgrade to “outperform” from analysts at Credit Suisse.
Randgold Resources Ltd. (RRS) topped the premier index after announcing it would pay a dividend of $2.69 per share in the gold miner’s last payout before its takeover of Canada’s Barrick Gold on January 2. The miner had previously guided a dividend of $2 per share. The shares were also boosted by a rise in the gold price as the dollar came under pressure before the US Federal Reserve’s decision on whether to raise interest rates.
Utilities weren’t such a safehaven. Seen traditionally as a less risky investment because of their track record of paying a regular dividend. They were sent lower by tighter financial restrictions proposed by Ofgem, the energy regulator. National Grid (NG.) tumbled 76½p to 758¾p and SSE (SSE) dipped 13½p to £10.41½.
Dechra Pharmaceuticals (DPH), a British vet supplier crept higher after announcing it had completed the acquisition of a big food and animal products supplier in Brazil, the world’s fourth largest animal products and vaccines market. has bought the share capital of Laboratorios Vencofarma do Brasil, which has more than 200 product registrations.
Tempus: In a recent sector note, analysts at Berenberg made the case that trading for the companies that they cover — Fevertree, Britvic, AG Barr and Nichols — should stand up well again over the coming 12 months, recommending that their clients buy shares in the first two and hold those of the others. Fevertree Drinks (FEVR) is the most highly rated by a country mile, largely because it is perceived as a high-growth stock with plenty of room to grow in the United States. Founded in 2004, it produced its first product, Indian Tonic Water, that was sold in Selfridges and Waitrose. Listed on the AIM market a decade later, the modern Fevertree sells a range of 14 different mixers in more than 70 countries and generates about half of its sales outside the UK. Britvic (BVIC) breadth of product exposure, from squashes for all ages to high-profile, and inexpensive, fizzy drinks, makes Britvic look as if it would be far more resilient than Fevertree if consumer confidence hit the wall. Although it doesn’t have the same growth potential, at £1.5 billion Britvic’s annual revenues are not far short of ten times those of Fevertree, although its profit margin, at about 13.7% against 30% or more, is considerably thinner. Barr (A.G.) (BAG) and Nichols (NICL) trade at a premium to Britvic, despite making lower revenues and profits, though they operate with higher margins and have their own growth stories to tell, Scandinavia for the former and the Middle East and Africa for the latter. Tempus view is Hold Britvic, avoid Fevertree, AG Barr and Nichols. Britvic is the most diverse share in the sector, has stable growth potential and is the most sensibly rated
