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Business - Need to Know

Morning Edition

Good morning. Pfizer is poised to seal its acquisition of Dublin-based Botox maker Allergan later today. The $150 billion mega-deal would propel the combined company to the top of the “big pharma” league table - creating the world’s biggest drug maker.

It will also be the biggest so-called tax inversion deal, allowing the American drugmaker to make considerable savings on overseas earnings by moving its base to Allergan’s home base - a move that could well draw political ire in the US.

The US Treasury introduced new rules to clamp down on inversions last week, but analysts believe that the deal could be structured to avoid contravening those regulations. Alexandra Frean, our US business editor, has a full story here. We’ll have more analysis later.

At the other end of the M&A scale, Playtech has announced this morning that it is walking away from a deal to buy PLUS500, a controversial spread-betting firm. Playtech says it does not believe it can resolve “certain concerns” raised by the Financial Conduct Authority by a December 31 deadline. Ouch. We’ll have a full story shortly on www.thetimes.co.uk/business.

Meanwhile Just Retirement and Partnership Assurance have extended their merger timetable as they await sign-off from regulators. It has certainly been a busy weekend for the investment bankers.

Elsewhere on the corporate front we have also got an update this morning from Mitie. The outsourcing group has reported that operating profits fell in the first half, as local government cuts weighed on demand for its healthcare division.

Oil is on the slide again. Brent Crude is down almost 2 per cent in overnight trading amid renewed worries about China’s economic fate and a strengthening dollar.

Please do keep sending me any thoughts or observations about The Times business coverage - richard.fletcher@thetimes.co.uk.

And finally, don't forget to follow me for on Twitter for regular updates throughout the day - @fletcherr.

Have a great day.

Richard Fletcher
Business Editor
The Times
richard.fletcher@thetimes.co.uk

Japan's government plans to raise the minimum wage and introduce other steps to revitalise the economy, according to a draft document seen by Reuters. Prime minister Shinzo Abe's government will also offer some financial support to people living off their pensions to bolster consumer spending. But the draft didn't provide any specifics and analysts say the government will need to do more to foster durable growth.

Warren East, the new chief executive of Rolls Royce will refuse to bow to investors demanding a demerger of its Derby-based aeroengine business. However, Mr East, the former head of ARM Holdings, could indicate that some of the group’s marine operations could be sold alongside its less high-technology engines when he updates the City on his strategy tomorrow.

Marconi is synonymous with one of the most sensational corporate collapses. Now, the name is set to rise again after a small British phone maker announced plans to revive it in the digital radio market. Bullitt Group, a Reading-based company, has struck a licensing deal with Ericsson, which bought the remnants of the failed company to use the brand for a range of consumer electronics devices. It plans to begin by launching a digital radio early next year that will bear the group’s historic spiral logo. It will be the first Marconi-branded radio to hit the shelves since the 1920s.

“The lynch mob was in full cry after publication of the Bank of England/Financial Conduct Authority report into the collapse of HBOS last week.” Andy Hornby has suffered enough. To disqualify him now would be vindictive,” Ian King writes.

The Nikkei is closed for a public holiday. The FTSE 100 is forecast to open 25 points lower this morning when the market opens shortly.

The FTSE 100 edged higher on Friday and recorded its best weekly gain since early October. The benchmark index closed 4.70 points higher at 6,334.63, ending the week on a positive note, extending gains for a fifth-straight day and taking the weekly rise to 3.54 per cent, its biggest since October 9. The broader FTSE 250 rose 44.39 points to 17,189.11.

Wall Street ended a solid week on a positive note. The S&P 500 gained 0.38 per cent to close on Friday at 2,089.17, up 3.3 per cent over the week, its strongest week in almost a year. The Dow Jones Industrial Average erased its year-to-date loss rising 0.51 per cent to end at 17,823.81 points, up 3.4 per cent over the week.

Sterling approached a three-month high against the euro on Friday, amid speculation that the European Central Bank is set to announce further easing. The euro fell as much as 0.5 per cent to 69.85 pence , just above a three-month low of 69.82 pence hit on Wednesday. Against a dollar that was trading more strongly across the board, sterling fell 0.6 per cent to $1.5197.

Brent crude ended Friday up 48 cents at $44.66 a barrel, have risen as high as $45.50 during a late rally. Over the week, Brent was up 2 per cent.

Today

Adam Cohen, Google’s head of competition and economy policy for Europe, the Middle East and Africa, is scheduled to give evidence to a Lords inquiry into online platforms. He is set to be questioned on a range of areas, including market dominance, search ranking transparency and regulation.
Interims: Mitie, Bonmarché AGM/EGM: Just Retirement Group

Tomorrow

Revised GDP data for the third quarter is released in the United States. Last month’s advance data showed that real gross domestic product increased at an annual rate of 1.5 per cent in the third quarter, compared with a 3.9 per cent increase in the second quarter.
Interims: De La Rue, Pets at Home, AO World, Signet Jewelers, Babcock International, Severfield, Creston, Sepura, Telecom Plus, CML Microsystems Finals: Arcadia, Mitchells & Butlers, Compass, Shaftesbury, Greencore, Paragon Group, Renew Group AGM/EGM: Ladbrokes, Dunelm Trading statement: Kingfisher, Intertek, Drax, Cape, Cineworld Economics: UK: CBI distributive trades; US: GDP

Wednesday

George Osborne delivers a dual autumn statement and spending review, setting out how the government will “invest in priority public services and deliver the £20 billion further savings required to eliminate Britain’s deficit by 2019-2020”.
Interims: Betfair, United Utilities, Hogg Robinson Finals: Thomas Cook, Daily Mail & General Trust, Britvic AGM/EGM: Hogg Robinson, Mysale Trading statement: John Menzies, Chemring

Thursday

Quindell shareholders meet to vote on resolutions to authorise a proposed reduction of the company’s share capital and a proposed return of capital to shareholders. They will vote, too, on a resolution to change the company name to Watchstone.
Interims: Torotrak, Severn Trent, LondonMetric Property, Charles Stanley, First Property, Helical Bar, PayPoint, Hardy Oil and Gas Finals: Marston’s, SSP Trading statement: Anglo Pacific

Friday

The Office for National Statistics publishes second estimate figures for economic growth in the third quarter, after last month’s preliminary estimate showed that GDP had increased by 0.5 per cent in the period compared with the previous quarter.
Interims: Pennon Finals: Patisserie Holdings AGM/EGM: Filtronic Trading statement: SVG Capital Economics: UK: GDP, index of services

The Times
Rolls-Royce will fly into the City for the second time in a fortnight tomorrow to avert a crisis that has caused investors to lose confidence in the group and prompted an American activist to demand a say in how the company is run. The company, which makes engines for the Airbus A380 superjumbo and the Boeing Dreamliner, as well as for the Eurofighter Typhoon and Britain's nuclear submarines, has issued five profit warnings in 20 months, prompting a £12 billion crash in the value of the company. Warren East, the new chief executive who has had to explain the past two profit warnings, is to front up in the City with a plan to assuage investors and analysts angry at the group's failures.
read full update
Daily Telegraph
Business leaders have urged George Osborne to "hold his nerve" on reducing Britain's deficit in this week's Autumn Statement, even as the Chancellor himself hints that plans for a budget surplus may need to be scaled back. The plea from the UK's two largest business lobby groups comes despite official data on Friday which showed the widest October deficit in six years.
read full update
Financial Times
David Cameron will today pump an extra £12bn into strengthening Britain's defences against Isis and Russia, but the bill will be met by spending cuts elsewhere with police, welfare and business grants in the line of fire. Mr Cameron will set out a five-year defence review with a focus on tackling Isis, including a 30 per cent increase in the counter-terrorism budget, £2bn on special forces and a new emphasis on cyber defences.
read full update
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