BAT launches bid for rest of Reynolds American, Playtech swallows up ECM Systems

London open

The FTSE 100 is expected to open 9 points higher on Friday, after closing up 0.07% at 7,026.90 on Thursday.

Stocks to watch

British American Tobacco launched a $47bn cash and shares take-over offer for the 57.8% of Reynolds American which it did not already own. London-listed BAT had not held prior negotiations with Reynolds, the company said in a statement. The offer valued Reynolds at $56.50 a share, for a 20% premium over the closing price of its shares on 20 October. Combined, the two companies would enjoy a leading position in the US tobacco market and hold a significant presence in high-growth emerging markets across South America Africa, the Middle East and Asia. BAT expected the transaction to be accretive to earnings in its first full-year.

Playtech announced on Friday that it has acquired bingo software and hardware solutions provider ECM Systems. The FTSE 250 company said ECM supplies software and support services to the UK retail bingo market, including major operators Gala Leisure, Mecca Bingo and the leading independent bingo operators. Playtech has paid approximately £14.9 million for 90% of the issued share capital of ECM. “This is a significant step in strengthening and expanding our Playtech ONE offering within the bingo sector and we look forward to working with Allen and the whole ECM team,” said Playtech chief executive Mor Weizer.

FTSE 100 firm Intercontinental Hotels Group reported on its third quarter on Friday morning, with increased revenue and a strong performance in China - though it was affected by the strength of dollar and the volatile foreign exchange market. In a trading update, revenue per available room for the third quarter grew 1.3%, compared to the previous quarter, and up 1.8% for the year-to-date.

Newspaper round-up

Theresa May received a polite but cool welcome on her European summit debut on Thursday, with France and Germany warning of a rough ride for Britain as it makes its break from the EU. At her first Brussels gathering of EU leaders, the British prime minister made a confident first intervention on migration, exchanged some sharp words with the chair and turned her hand at drafting a compromise text on Russia policy. Finally, well after midnight, she made a short presentation on Brexit that ran for little more than five minutes and elicited no response. – Financial Times

MPs have voted to strip Sir Philip Green of his knighthood in a symbolic move that adds to the pressure on the retail tycoon over the BHS scandal. The businessman’s reputation was dealt a further blow following a debate in which he was labelled a “billionaire spiv” who should never have received his honour in the first place. – Guardian

Tax experts warned that HM Revenue & Customs was underestimating the size of Britain’s tax avoidance problem after the agency claimed that Britain’s annual tax shortfall was only £36bn – a figure that ignored controversial structures used by multinationals such as Google, Apple and Starbucks. Top HMRC officials will face questions from MPs next week over their refusal to challenge tax avoidance by multinational corporations. Members of the public accounts committee are also expected to further investigate HMRC’s claims that its compliance team generated record revenues of £26.6bn by chasing down tax dodgers. – Guardian

Brazilian prosecutors have charged 26 people in connection with the Samarco mine disaster last year which killed 19 people. Of those charged, 21 have been accused of qualified homicide. BHP Billiton, which part-owns the iron ore site where the tailings dam collapsed, has rejected the charges and said it would defend the individuals in question. – Telegraph

Two former traders at Investec in London have lost an appeal in a long-running, £6m legal battle with the Anglo-South African bank over bonuses. Andrew Brogden, who had led the structured equity desk at Investec, and his deputy Robert Reid had claimed that the bank had failed to keep to a verbal agreement regarding bonuses for 2010-11, which they had said was made when they joined the firm in 2007. – Telegraph

Fears that workers’ savings have been put at risk in unsustainable and potentially fraudulent pension schemes have prompted the government to rush through tougher rules designed to tackle rogue operators. After revelations by The Times, the Pensions Schemes Bill has been introduced to address concerns that the biggest change to workplace pensions in generations could be undermined by a mis-selling scandal. – The Times

US close

US stocks closed in the red on Thursday as oil prices fell and investors weighed a slate of corporate earnings.

The Dow Jones Industrial Average shed 0.23% to 18,161.12 points, the S&P 500 slid 0.14% to 2,141.34 points and the Nasdaq slipped 0.09% to 5,241.83 points

Oil prices retreated on a stronger dollar and profit taking following a rally in the previous session when data from the US Energy Information Administration showed a surprise drawdown in crude inventories last week and Saudi Arabia said countries outside OPEC would be willing to join the cartel’s plan to curb production.

West Texas Intermediate crude dropped 2.6% to $51.33 per barrel and Brent dipped 2.4% to $50.57 per barrel at 2044 BST.

The dollar

Shares in drugstore giant Walgreens Boots Alliance gained as it reported fourth quarter adjusted earnings that beat analysts’ estimates.

The Bank of New York Mellon Corp’s rallied after it reported better-than-expected quarterly profit due to lower costs and a rise in net interest revenue.

Dunkin' Brands Group slumped as the owner of Dunkin’ Donuts reported mixed third-quarter results with earnings slightly topping expectations but revenue falling for the first time in nearly four years.

Verizon Communications was on the back foot as it reported a worse-than-anticipated drop in third quarter revenue.

Elsewhere, Tesla Motors Inc. edged lower after the electric car maker revealed new self-driving hardware that it said will not be ready for consumers to purchase immediately due to regulatory issues.