FTSE 100 set to fall slightly but global shares set to end month on record surge. Traders eye fallout of Arcadia and Debenhams collapses


he FTSE 100 was set to fall slightly today as traders awaited Wall Street’s return after the long Thanksgiving Holiday break.

London shares were being called down 42 points by the IG Index spread betting platform.

That would follow on from a quiet session in Asia this morning, where Japan and South Korea both slipped back. Futures markets suggested the US S&P 500 would slip 0.2% when US markets open this afternoon.

Despite the modest falls today, global shares are close to finishing the month with their best ever month after Covid vaccine breakthroughs and Joe Biden’s victory in the US presidential elections.

Shares in AA will be in focus after its biggest shareholder, the fund Albert Bridge Capital, rejected its £219 million takeover as being “derisory” and fundamentally undervaluing the debt-laden company. 

AA has received an offer for 35p a share from US private equity giants Warburg Pincus and TowerBrook Capital Partners.

The AA is one of many British companies to have received foreign takeover offers as Brexit concerns have meant UK stocks trade at a discount to the rest of the world and the cheap pound make assets here more attractive.

Some shareholders, London-based Albert Bridge being one, have become increasingly alarmed at UK assets being bought for a steal by opportunistic bidders. The firm owns 20% of AA and is now set for a battle to win over other shareholders. AA’s second biggest owner, Davidson Kempner of the US, is backing the bid.

Shares in UK telecoms companies including BT may take a beating after the government surprisingly accelerated the timeline on kicking Huawei’s kit out of the UK telecoms infrastructure.

Originally, to help UK companies cope with the transition away from the Chinese manufacturer, they were given until 2027 to stop installing it, but that has now been brought forward to next September after backbench Conservative MPs complained.

It means the expected £2 billion extra bill for telcos from the ousting of Huawei will probably be even higher. Companies have stockpiles of the kit which will now go to waste.

The decision to oust Huawei on national security grounds is expected to delay Britain’s 5G network by several years, and the industry agrees with Huawei that it is totally unnecessary.

Industry players have been frustrated by repeated changes to guidance on the issue from government.

The Telecoms Bill which pushes the move through parliament, gets its second reading in the Commons today.

JD Sports could see its shares rise after some weekend reports that it was unlikely to bid for the entirety of Debenhams. 

The idea of the successful sports retailer buying the struggling department stores chain had concerned shareholders who fear the company is still digesting a big US acquisition.

However, it could also snap up certain brands from Arcadia if Sir Philip Green’s retail giant goes into administration today. 

The Debenhams-Arcadia saga is developing fast, with bidders including Boohoo, Marks & Spencer and Next apparently sniffing around the troubled company with a view to snapping up parts of it when it goes under.

Insurance companies were braced for a headache as it emerged that the European Union was still to agree to allow British motorists to drive to the continent after Brexit transition ends without the old-fashioned Green Card proof of third party insurance cover.

If insurers have to issues millions of the old documents, it will create a costly addition to their administrative burden just as the industry has largely gone digital. Unless the EU grants a waiver, online proof is currently not acceptable after January 1.

London Stock Exchange shares will come into focus after it emerged that S&P is close to buying UK-based IHS Markit for $44 billion, creating a powerful rival in the data industry to Refinitiv, which the LSE is currently in the process of buying.

The deal, which the Wall Street Journal reported could be announced later today, would also create a strong rival to Bloomberg, although monopoly concerns could throw a spanner in the works.

Also in the world of “M&A”, Standard Life Aberdeen should see its shares rise after its new chief executive Stephen Bird announces today that he is to sell one of its advisory businesses, Parmenion.

Bird is to shake up the group formed from the merger of Standard Life and Aberdeen Asset Management three years ago. Since that deal was announced, the shares have fallen 45%.

Parmenion is an investment platform and fund manager providing ready-made investment portfolios for financial advisers to sell to the public. It has £6.5 billion assets under management but is far smaller than the £61 billion other platforms run by the group, Wrap and Elevate.

Codemasters, the stock market quoted video games designer, is coming under pressure from shareholders over its sale on concerns that three of the non-executive directors who approved it are set to trouser £2 million from the deal.

A sale to Take-Two of the US would accelerate share option payouts for the trio, meaning they could not be considered independent judges on the transaction, an unnamed large shareholder told The Times.

Shareholders have been increasingly concerned that the bid undervalues the company. It is priced at 485p a share, only 12% higher than it was trading the day before the bid was announced.

EasyJet shares could fall after reports in The Mail on Sunday that it would have to tap shareholders for more funds to resume its flying schedule after Covid. This month it reported a £1.3 billion loss.

The company already raised £450 million in a rights issue with existing shareholders but analysts at HSBC said they “would not be surprised” if it had to go back for more.

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