Tesco and Booker propose massive merger, BT earnings down
London open
The FTSE 100 is expected to open 17 points higher on Friday, after closing down 0.04% at 7,161.49 on Thursday.
Stocks to watch
The boards of food retailer Tesco and wholesaler Booker Group announced on Friday that that they have reached an agreement on the terms of a recommended share and cash merger to create the UK's leading food business. In their joint statement, the boards said the combined group would bring benefits for consumers, independent retailers, caterers, small businesses, suppliers, and colleagues, as well as delivering significant value to shareholders. Under the terms of the merger, each Booker scheme shareholder would receive 0.861 new Tesco shares and 42.6p in cash, representing a value of £3.7bn for Booker’s ordinary share capital.
BT’s third quarter revenue increased but earnings were down as the telecoms giant deals with an accounting scandal at its Italian business, while it also faces a “challenging” outlook in the UK. For the quarter ended 31 December 2016, revenue was up 32% to £6.12bn, compared to the previous year, while pre-tax profit fell 37% to £526m and basic earnings per share was down 59% to 3.8p.
Newspaper round-up
More than one in seven free-to-use cash machines across the UK could start charging or be shut down if the simmering row about the Link network cannot be resolved, an industry lobby group has warned. After a crucial meeting of the more than 30 members of the Link cash machine network failed to reach an agreement over a new charging system, the ATM Industry Association said 8,000 ATMs were at risk of being removed or starting to charge for withdrawals. – Guardian
Britain’s wealthiest people appear to get preferential treatment from HM Revenue & Customs and are not being properly pursued for outstanding tax bills, parliament’s spending watchdog has concluded. HMRC’s failure to clamp down on rich tax dodgers is undermining confidence in the whole system, the public accounts committee said. – Guardian
The new wave of British nuclear power stations was in jeopardy after the government announced it would pull out of a Europe-wide nuclear co-operation organisation. Ministers sneaked out the news that the UK would leave the European Atomic Energy Community, known as Euratom, within the notes accompanying the bill published yesterday to trigger Article 50, the process for leaving the European Union. – The Times
Verizon and Charter Communications are exploring a near-$300 billion merger to create the largest telecommunications company in the world, it emerged yesterday. The companies have hired advisers to explore a potential deal, a banking source said. It was unclear whether or not the companies had met for formal or informal talks. Verizon is one of the world’s largest telecoms companies, with a market capitalisation of about $200 billion. About 114 million customers subscribe to its mobile phone network in the US, making it the largest wireless operator in the country. It also operates Fios, the largest fibre optic network in America, which has 5.6 million subscribers. – The Times
US close
US stocks finished mixed on Thursday, slowing from Wednesday’s gains as investors raked through another batch of earnings and data releases, while the dollar rose.
The Dow Jones Industrial Average finished up 0.16% at 20,100.91, with the Nasdaq 100 adding 0.11% to 5,156.92 and the S&P 500 falling 0.07% to 2,296.68.
On Wednesday, the Dow powered through the 20,000 mark for the first time, closing up 0.8% at 20,068.51, buoyed by some well-received corporate news and optimism over Donald Trump’s policies, including lax regulation, increased infrastructure spending and tax cuts.
Michael Hewson, chief market analyst at CMC Markets, said: “After yesterday’s record breaking session US markets opened in a somewhat mixed manner today with company earnings taking centre stage as weekly jobless claims surprisingly jumped to 259,00 from last week’s 237,000.
“Despite this we’ve still managed to put in new record highs on both the Dow and S&P 500.
“The dollar has enjoyed a bit of a rebound after hitting eight week lows against a basket of currencies, with the Japanese yen amongst the bigger losers today, as yield differentials widen out in the dollars favour.”
Oil prices advanced, with Brent crude up 1.85% at $56.12 a barrel and West Texas Intermediate 1.81% firmer at $53.72.