Market report

Meggitt in £6.3bn takeover | HSBC restores dividend


5pm: London leaps on Meggitt news

Melrose Industries, owner of aerospace and automotive engineer GKN, posted a 5.18% gain after defence firm Meggitt unveiled an agreed bid from Parker-Hannifin Corporation worth 800p in cash per share (see below). Meggitt soared 59% to 745.8p in early trade before closing 56.7% higher.

Another riser was aircraft engine maker Rolls-Royce Holdings, up 3.78% as travel corridors opened.

Russ Mould, investment director at AJ Bell, said: “The bid for Meggitt, together with well-received numbers from HSBC [see below] and chatter about a potential counterbid for Morrisons, helped to push up the FTSE 100 by 0.9% to 7,096.

“UK stocks have long been considered cheap and this year’s M&A spree shows that overseas investors have finally got enough confidence to pounce on opportunities after years of showing little interest in the market.”

The FTSE 100 closed 49.42 points higher (0.7%) at 7,081.72.

7am: Meggitt recommends £6.3bn takeover

Defence and aerospace technology firm Meggitt has agreed an 800p per share takeover offer from US company Parker-Hannifin, valuing the company at £6.3 billion.

The FTSE 250 listed firm, based in Coventry, employs more than 9,000 people at 39 manufacturing facilities and regional offices worldwide.

Parker-Hannifin said it was “committed to being a responsible steward” of Meggitt and pleased it had the full support of Meggitt’s board.

The price reflects a 70% premium on Meggitt’s closing share price on Friday, which was 469.1p.

7am: HSBC hikes bonuses


HSBC has restored its dividend and hiked bonus payments to senior staff after posting a doubling of first half profit.

In the six months to 30 June, pretax profit leapt to $10.84 billion from $4.32bn in the corresponding period last year. The UK-based bank said all regions had been profitable in the period.

The bank has reinstated dividend payments to shareholders. It has declared an interim dividend of seven cents a share.

In February last year it announced plans to cut 35,000 jobs and achieve cost savings of between $5bn and $5.5bn between 2020 and 2022, but it has only generated $2bn of these savins so far. 

Even so, HSBC increased global bonus accruals in its investment bank by $300m in the first half of the year compared to the same period of 2020. About $100m of this seems to have gone to bankers and traders in London.

Group chief executive Noel Quinn said in a statement: “I’m pleased with the momentum generated around our growth and transformation plans, with good delivery against all four pillars of our strategy. In particular, we have taken firm steps to define the future of our US and continental Europe businesses”,

The lender highlighted that its UK bank had reported profit before tax of more than $2.1bn in the period.

It said it would target wealth management and commercial banking to drive “double-digit growth” and has singled out Asian markets such as Singapore, China and Hong Kong. HSBC already generates the bulk of its revenues from Asia.

7am: SSE gas deal

SSE, the Perth-based energy group, is selling its entire 33.3% stake in gas distribution operator Scotia Gas Networks (SGN) to a consortium comprising existing SGN shareholder Ontario Teachers’ Pension Plan Board and Brookfield Super-Core Infrastructure Partners.

The £1.225 billion transaction is expected to complete within the current financial year and is conditional on certain regulatory approvals.

Full story here

7am: Herbal products firm Voyager opens store

Voyager, the health and wellness company established to supply high-quality  Cannabidiol (CBD) and hemp seed oil products , has opened its first retail store in St. Andrews.

Full story here

Global markets

Blue chips were expected to recover from a difficult week with risk sentiment moving into more positive territory. Spread betters were forecasting a jump of about 37 points at the open.

The mood has improved after Chinese authorities partially backtracked on tough new market regulations which saw big falls in Asian markets. Japan’s Nikkei 225 traded near to its lows this year and Hong Kong’s Hang Seng at a nine-month low.

Stocks were higher this morning. The Shanghai Composite in China surged 1.40% and Hong Kong’s Hang Seng index lifted 1.04% 

The Nikkei 225 jumped 1.89% while South Korea’s Kospi gained 0.55%.

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