The Morning Call - Capita jumps 2% on the back of £888m sale of admin service

Highlights of the Day

Asian Markets

Asian shares flatlined but remained on track for a weekly gain, while crude oil prices pulled away from this week’s 10-month lows.

U.S. Markets

U.S. shares ended higher as gains in tech and energy stocks more than offset weakness in the financial sector, while a slide in Home Depot kept the Dow in check.

Today's News

Theresa May will offer to give Europeans living in the UK the same residency, employment, health, welfare and pensions rights as British citizens, but demand that “serious and persistent” criminals may be more easily deported than at present. The prime minister’s 15-page package, which will be published alongside a statement to parliament, will be designed to give people who arrived in Britain before an agreed cut off date settled status.

The UK growth over the next few years is forecast to remain anaemic, the British Chambers of Commerce said. Nonetheless, in its Economic Forecast, the BCC upgraded its growth outlook for 2017 to 1.5% from 1.4%, citing strong global growth outlook. Moreover, lower sterling is likely to boost short-term export activity this year, the business lobby said. For the second quarter of 2017, the BCC projected 0.4% growth. Its expectations for 2018 and 2019 remained unchanged at 1.3% and 1.5%, respectively.

Capita said it has sold Capita Asset Services to Link Administration Holdings for £888m. The transaction is subject to certain regulatory and other approvals and completion is expected in the fourth quarter of 2017. Upon completion, Capita will use the proceeds to reduce debt, including its receivables financing facility. It expects to incur transaction expenses and separation costs of £72m.

Rupert Murdoch is about to learn whether the government has cleared his latest bid to buy Sky or whether concerns about competition could yet derail the deal. The culture secretary, Karen Bradley, will this week deliver her verdict on whether to greenlight 21st Century Fox’s proposed £11.7bn takeover of the satellite broadcaster, or refer the deal to the competition authorities for further scrutiny.

The Co-operative Bank said it has abandoned its formal sale process in order to focus on discussions with existing investors over an equity capital raise and recapitalisation. The lender, part of the Co-op Group, put itself up for sale in February, after admitting it would not be able to meet regulatory capital targets before 2020. However, Co-op Bank now appears to be more likely to raise capital from its current shareholders, with the lender being 80% owned by US hedge funds. The bank said Monday that “a majority of the key commercial aspects” of a recapitalisation have been agreed, which would allow it to continue as a stand-alone entity.

Hikma Pharmaceuticals detailed a restructuring of its US business, including key management changes, as it said Michael Raya, chief executive officer of the US business, will retire at the end of the year. Raya has headed the US business for more than 25 years, Hikma said. Hikma plans to split its US business into two entities, both reporting to group Chairman & Chief Executive Officer Said Darwazah, from the beginning of July.

Amec Foster Wheeler said it has completed the sale of its circulating fluidised bed boiler business to Sumitomo Heavy Industries for $170m, which will be used to reduce net debt. The CFB boiler business is the largest part of Amec’s GPG unit. The remaining GPG steam generator businesses include the heat recovery steam generator and industrial boilers businesses and these are also expected to be sold during 2017, Amec said. The North American aftermarket services business, originally part of GPG, is being retained and since the beginning of 2017, has been operating as part of Amec Foster Wheeler’s power & process business.

Oil prices rose early this morning on a weaker dollar, but an increase in U.S. drilling activity stoked worries that a global supply glut will persist despite an OPEC-led effort to curb output.

Gold edged lower as investors remained cautious ahead of a flurry of U.S. data due this week, with firmer Asian stocks also weighing on the market.

Companies Reporting this week

Day	Companies
Today:	D4T4 Solutions * Sirius Real Estate Ltd.
Tomorrow:	BCA Marketplace * Carpetright * Findel * IG Design Group * Northgate * Photo-Me International * Polar Capital Holdings * ULS Technology
Wednesday:	Creightons * Dixons Carphone * Hansa Trust * Hayward Tyler Group * IMImobile * NextEnergy Solar Fund Limited Red * Stagecoach Group * Xafinity
Thursday:	Cohort * Greene King * Purplebricks Group * Redcentric * ReNeuron Group * Smith (DS)
Friday:	ECO Animal Health Group * SerVision * TLA Worldwide

Early Market Movements

Market	Index	Change	% Change
UK 100	7,460.8	+36.7	+0.5%
UK 250	19,759.2	+74.1	+0.4%
GER 30	12,800.3	+66.9	+0.5%
FRA 40	5,314.7	+48.6	+0.9%
U.S. 30	21,394.76	-2.53	-0.0%
U.S. 500	2,438.3	+3.8	+0.2%
OIL (BRENT)	45.96	+0.42	+0.9%
GOLD	1,254.08	-2.63	-0.2%

UK Risers & Fallers (8:15am)

Company	Price	Change	% Change
Capita	716.5	+25	+3.6%
Associated British Foods	2987	+55	+1.9%
Reckitt Benckiser	7980	+124	+1.6%
Petra Diamonds	111.35	-3.65	-3.2%
Provident Financial	2389	-51	-2.1%
BAE Systems	646.5	-3.5	-0.5%

Latest Broker Views

Company	Broker	Recommendation	Price	Target
Berkeley Group Holdings	Jefferies International	Buy	3,323.50	3,958.00
Capita Group	Jefferies International	Buy	712.75	750.00
Domino’s Pizza Group	Peel Hunt	Buy	283.60	400.00
Inmarsat	Jefferies International	Buy	790.25	1,245.00

Forthcoming Economic Data

Time/Date	Previous	Forecast	Outcome
8:30am: U.K. BBA Mortgage Approvals	40.8K	40.3K	–
12:30pm: U.S. Core Durable Goods Orders m/m	-0.5%	0.4%	–
12:30pm: U.S. Durable Goods Orders m/m	-0.8%	-0.5%	–
5:30pm: ECB President Draghi Speaks	–	–	–