Pfizer deal paves way for Glaxo break-up. Consumer division will be split off after merger. Britain’s biggest drugs company struck a landmark deal yesterday with a leading American rival that prepares the way for the break-up of GlaxoSmithKline (GSK). In a surprise move, Glaxo agreed to merge its consumer healthcare division with Pfizer’s through a joint venture which will be the world’s biggest over-the-counter medicines business. It will create a company with £9.8 billion of sales and bring together brands such as Panadol and Advil pain relief, Centrum and Caltrate supplements and Sensodyne toothpaste.
Unilever (ULVR) has snapped up a vegetarian brand set up by a meat farmer in an attempt to cater for growing numbers of vegetarians and vegans. The Anglo-Dutch company, which makes Dove soap, Knorr stock cubes and Marmite, said that the purchase of the Dutch brand “fits with Unilever’s strategy to expand its portfolio into plant-based foods that are healthier and have a lower environmental impact”. The purchase price has not been disclosed. The Vegetarian Butcher was founded in 2007 by Jaap Korteweg, who became a vegetarian after witnessing swine fever and mad cow disease. Some of the key products include “nochicken” nuggets and vegan hotdogs. Fans claim that the products have the same taste and structure of meat. Its products are sold in 17 countries. In the UK they are available at Waitrose and in health food stores.
Flybe could still land deal with Virgin. Flybe Group (FLYB) could become part of the aviation partnership between Air France-KLM, Delta Air Lines and Virgin Atlantic after Virgin confirmed that talks about a takeover of the struggling airline are continuing. A deal for the lossmaking Flybe would give Virgin and its partners access to take-off and landing slots at Schiphol in Amsterdam as well as key positions at London City airport, Manchester and Birmingham. Flybe also has a small operation at Heathrow, Europe’s busiest hub. Flybe put itself up for sale a month ago. Shares in Britain’s leading regional airline remain close to lows but hopes of a rescue did lead to the stock ticking up 10.5% to 16¾p yesterday.
Suppliers fear blow to trade if Sainsbury’s merger goes ahead. A survey of British suppliers has shown that 94% believe that a merger between Sainsbury (J) (SBRY) and Asda will hurt their business. Some grocery suppliers even said they believed the merger presented more of a risk than a no-deal Brexit in a survey conducted by the Food and Drink Federation. The findings of the survey have formed part of the FDF’s submission to the Competition and Markets Authority, which is investigating whether the merger should go ahead.
RSM chosen as Patisserie Holdings (CAKE) auditor. Patisserie Valerie has appointed a new auditor as the troubled café chain contends with a Serious Fraud Office investigation into a £40 million black hole in its accounts. RSM, the seventh largest auditing firm in the UK, will be tasked with restating Patisserie Valerie’s prior accounts over the coming months before the company reaches a deadline to relist its shares in April. The chain, which was floated on the Aim market in 2014 by Luke Johnson, one of Britain’s best known entrepreneurs, suspended trading of its shares in October after the discovery of “significant, potentially fraudulent accounting irregularities” which brought it to the brink of collapse.
Mears boss standing down early. Bob Holt, a veteran of the smallcap sector of the London stock market is downing tools on a 23-year career heading Mears Group (MER), the council and social housing maintenance group. In an unexpected statement, Mears Group said Mr Holt will be standing down as chairman of the company he once majority-controlled. Mr Holt, 64, had indicated that he planned to step down at Mears’ annual meeting next spring. However, his departure has been hastened under pressure from SVM, the activist shareholder group, which had complained that he lacked the will for change at the company and had been demanding an independent chairman.
Asos pledges more shares to back loan. The founder and former chief executive of ASOS (ASC) has had to pledge more shares as security on a Credit Suisse loan after a plunge in the online retailer’s share price this week. Asos said that Nick Robertson had pledged more than 3.7 million shares, 4.53% of the company’s share capital, “as security”. Asos was founded in London in 2000 and listed on Aim the following year for 20p a share. Today it has 18.4 million customers. However, this week, Asos halved its full-year profit forecast after very poor trading in November.
No shareholder wants to be nursing a loss at the outset but that is exactly the fate of those investors who backed Kier Group’s rights issue. The construction and outsourcing group closed down 29½p at 385p ahead of the results of its rights issue today. The FTSE 250 company was forced to carry out a heavily discounted rights issue this month to pay down its debt after some of its banking partners withdrew from the sector. The closing price is well below the 409p at which the new shares have been issued, raising fears that the company’s underwriters will be left with stock and will soon be adding supply to the market. The banking syndicate could be left holding roughly £75 million worth of Kier Group (KIE) shares, according to Sky News, leaving some of the biggest names in finance, including Citigroup, HSBC and Santander, with a hefty loss. Existing major shareholders, including Aberdeen Standard Investments have pledged their support for the group’s strategy, which they say will make it strongly enough capitalised to win new contracts.
Royal Mail (RMG) received a nasty package in the post as its American rival Fedex slashed its forecast for next year amid worries over fewer deliveries caused by a global economic slowdown. Fedex, which is considered a bellwether for global trade, cited concerns over a Brexit-led slowdown in Britain as well as slowing demand in China caused by its trade dispute with the United States, protests in France and Germany’s fall in economic growth. The Fedex downgrade sent shivers across the sector.
Betting that the US central bank would choose to slow the pace of interest rate rises, in a decision due after UK markets closed yesterday, boosted the price of copper and lifted miners. Rio Tinto (RIO) gained 91½p, or 2.5%, to £38.24; Antofagasta (ANTO) advanced 16p, or 2.1%, to 786p.
Melrose Industries (MRO) rose almost 3% after three directors spent more than £1.5 million together buying shares. It was seen by the market as a vote of confidence by management in the business, with shares down almost 25 per cent since the start of the year following the company’s £8 billion hostile takeover of GKN.
Versarien (VRS), the advanced materials engineering company, rose 5½p to 120p after announcing it has signed a memorandum of understanding with a large Chinese aerospace company.
Litigation funder boosts coffers. Burford Capital (BUR), a company that specialises in providing money for commercial disputes, has secured funding for $1.6 billion of new litigation investments. The extra money includes a partnership with an unnamed sovereign wealth fund, which will deploy $667 million while Burford puts up $333 million. After the recovery of the capital invested, Burford will receive 60% of investment profits, despite only putting in a third of the capital. Burford has also raised a new private fund of $300 million with backing from institutional investors.
Tempus – Just Eat (JE.): Avoid. The market will have no clarity about costs until March and shares could fall further
Tempus – Edinburgh Worldwide Inv Trust (EWI): Hold long term. Smart stock pickers with strong record in generating capital growth
