The Morning Call – M&A continues to run riot as GKN is the latest beneficiary.

Asian Markets

Major Asian markets clawed back slight gains after finishing slightly lower in the last session, with most major indexes in the region tracking the strong lead from Wall Street.

U.S. Markets

U.S. stock benchmarks resumed their climb to close at records, a day after the U.S.500 and Nasdaq suffered the first down day of the year on anxieties about appetite for Treasurys from the world’s second-largest economy, China.

Today’s News

Canada is preparing for the possibility that the US will pull out of the North America Free Trade Agreement, government officials said on Thursday. President Donald Trump has said the US would scrap NAFTA if the sixth round of negotiations, due to start on January 23 in Montreal, fails to yield results. “Our approach from the start has been to hope for the best, but prepare for the worst, so Canada is prepared for every eventuality,” Canadian Foreign Minister Chrystia Freeland said, according to local media.

GKN has rejected a preliminary and unsolicited proposal from Melrose Industries and described it as ‘entirely opportunistic’ The 405p per share proposal – which was received on 8 Jan – comprised 80% in new Melrose shares and 20% in cash. GKN said the board considered the proposal together with its financial advisers, Gleacher Shacklock, J.P. Morgan Cazenove and UBS, and had unanimously rejected it, having concluded that it was entirely opportunistic and fundamentally undervalued the company and its prospects.

Bovis Homes expects full years to be in line with forecasts after a significant improvement in customer satisfaction. The group said it delivered total completions of 3,645 in a controlled and disciplined manner and expected profit before tax, exceptional and one-off items for the year ended 31 Dec to be in line with management forecasts. It said excellent progress had been made with balance sheet restructuring resulting in a £145m year end net cash balance and it had a strong forward sales position to support controlled growth in 2018.

Mitchells & Butlers said trading through the three-week festive season was “strong”, with like-for-like sales growing by 3.9% on-year. Christmas Day was a record taking day, the company said, with like-for-like sales growing by 5.4% and 225,000 meals sold. However, adverse weather conditions in the lead up to Christmas limited sales growth to 1.6% over the full seven-week period since the company’s last update.

Smiths Group said the net impact of new US tax legislation on the company would be favourable over the medium term. For the current financial year, it anticipated a headline effective tax rate of 27.5-28.5%, which included a one-off adverse revaluation of its deferred tax asset position. For the 2019 financial year and beyond, its headline effective tax rate was estimated to be in the range of 23.0-25.0%, it added.

BGEO Group said that in light of the proposed demerger, the board had approved the renaming of the group’s investment business to Georgia Capital. BGEO said the new name better reflected the company’s focus to capitalise on Georgia’s fast-growing economy by investing its capital solely in Georgia. As a result, following the completion of the group’s proposed demerger into a London-listed banking business (Bank of Georgia Group) and a London-listed investment business (Georgia Capital PLC), the group expects to retire its current holding company name of BGEO Group. Georgia Capital’s management and staff will relocate to a new head office by the end of February.

Sirius Minerals said its Woodsmith mine project in North Yorkshire remained on track to deliver first polyhalite and commercial production on time and on budget. Current diaphragm walling activities are about two months behind schedule following some delays commissioning equipment and adverse weather conditions. The company, however, said it was confident the “small loss of time” would be recovered over the remainder of the project schedule.

B&M European Value reported a strong quarter of growth in the pre-Christmas period, helped by 22 new store openings and keeping prices low in the UK and Germany. For the 13 weeks to Saturday 23 December, the company generated £969.8m of revenues, up 22.7 % at constant currency. UK business sales of £837.3m were up 12.9% on the prior year thanks to 19 new shops being opened and the acquisition of Heron stores, or 3.9% increase on a like-for-like basis even against a strong comparative period the year before.

Gold rose for a third straight session to their highest since September as the slumping dollar drew investors to buy the yellow metal. Bullion is on track for its fifth weekly gain.

Oil Prices slipped away from December-2014 highs reached the previous day.

Early Market Movements

Prices supplied by Saxo Capital Markets UK Limited, part of the Saxo Bank A/S Group of companies.