BBA agrees to sell ASIG to Menzies, Dechra to buy antipodean Apex

London open

The FTSE 100 is expected to open 11 points lower on Friday, after closing up 0.85% at 6,730.30 on Thursday.

Stocks to watch

Aviation support and aftermarket services company BBA Aviation announced on Friday that, after a number of approaches and a formal review, it has reached agreement with John Menzies on the terms of the sale of commercial aviation services subsidiary ASIG for $202m cash. The FTSE 250 firm said Menzies is funding the acquisition through raising additional debt and equity and, in addition to customary approvals, the transaction will require the approval of its shareholders. As a result of that process, the disposal is expected to close around the end of 2016.

Veterinary product manufacturer Dechra Pharmaceuticals agreed to buy the business and assets of Apex Laboratories, which sells branded animal products in Australia and New Zealand, for AUS$55m (£31.3m). The acquisition, to be finalised on 14 October, will be funded from cash and debt resources, and is expected to be earnings enhancing in the first 12 months.

Phoenix Group has confirmed it is evaluating the possibility of acquiring Abbey Life Assurance following Bloomberg and Reuters reports on Thursday that Deutsche Bank was nearing a deal to sell its UK insurance business to Phoenix. “As stated at the time of the interim results on 25 August 2016, Phoenix continues to explore further acquisition opportunities in the UK closed life sector. In this context, Phoenix is in advanced discussions with Deutsche Bank in relation to a possible acquisition of Abbey Life,” the FTSE 250 company said on Friday. It added that there can be no certainty the discussions will lead to a transaction.

Newspaper round-up

Deutsche Bank must pay $14bn to settle a US investigation into its selling of mortgage-backed securities, Germany’s flagship lender has said. The US Department of Justice claim against Deutsche, which the bank said it would dispute strongly, far outstrips the bank’s and investors’ expectations for such costs. – Guardian

Eight British overseas territories and crown dependencies, including Jersey, the British Virgin Islands and Cayman Islands, could face EU economic sanctions after Brussels identified them as having low or no corporation tax. Experts have published a scorecard showing red flag warnings set against a list of the 81 countries that may attract companies or individuals seeking to avoid or evade European taxes. - Guardian

The South African giant behind the New Look clothing chain and Virgin Active gyms has signalled it has its eye on more British companies after it revealed it is planning a stock market listing in London and wants to build-up its war-chest. Brait, the £3.1bn investment vehicle backed by retail billionaire Christo Wiese, is seeking to join the prestigious FTSE indices by moving its primary listing the London Stock Exchange. – Telegraph

Strange does not even begin to describe it. The economy has bounced back from its July wobble, and yet the Bank of England seems firmly set on its course of cutting interest rates ever lower. I find its thinking and reasoning to be well-meaning but flawed on a number of levels. Let us take each in turn. The good news is that the Bank has admitted that its forecasts of post-Brexit Armageddon have turned out to be grossly exaggerated and it has revised up its growth forecasts. – Telegraph

European officials have pushed back against British attempts to test secretly what terms are feasible in a Brexit deal, raising fears in London that its opening divorce demands will be set without any realistic guidance from the bloc. Top British diplomats have been sounding out European allies since August on issues including the potential for post-Brexit Britain to curb EU migration while remaining part of the single market, according to several senior officials approached. – Financial Times

Theresa May has signalled the UK will take a tougher approach to the rules governing mergers and acquisitions by examining whether the sale of “critical infrastructure” should be overseen by ministers. The prime minister, announcing that theHinkley Point nuclear power station would go ahead, launched a review of the Enterprise Act 2002. - Financial Times

Interest rates are on track to be cut for a second time before Christmas despite the economy’s surprising resilience since the EU referendum, the Bank of England has signalled. The Bank’s message that stronger growth may not dissuade rate-setters from a second post-Brexit vote cut was made in the minutes to this month’s meeting, when they decided to leave policy unchanged. – The Times

US close

US stocks closed higher on Thursday after weak data on retail sales and industrial production fuelled bets against an interest rate hike by the Federal Reserve at next week’s meeting.

The Dow Jones Industrial Average increased 0.99% to 18,212.76 points, the S&P 500 edged up 1.01% to 2,147.28 points and the Nasdaq grew 1.47% to 5,249.69 points.

Oil prices also gained with West Texas Intermediate crude up 0.63% to $43.86 per barrel and Brent up 1.4% to $46.51 per barrel.

US retail sales fell 0.3% in August, more than the 0.1% drop expected by analysts and following an upwardly revised 0.1% increase a month earlier, the Commerce Department revealed. It marked the first decline since March.

Excluding autos, retail sales last month decreased 0.1%, compared to forecasts for a 0.2% rise and July’s 0.3% dip.

Separately, US industrial production fell a touch more than expected in August, according to the latest data from the Federal Reserve.

Industrial output was down 0.4% after rising a revised 0.6% in July. Economists had been expecting a 0.2% decline.

Manufacturing output was also down 0.4% in August, reversing its increase in July, while the index for utilities fell back 1.4%.

“The weakness in retail sales and industrial production in August underline that the rebound in third-quarter GDP growth could be weaker than previously hoped, which is another reason for the Fed to pass on raising interest rates next week,” according to Capital Economics.