The Morning Call - GlaxoSmithKline completes deal for Novartis consumer healtchare stake

Highlights of the Day

Asian Markets

Asia-Pacific stocks added to their start-of-week rebound, following a 3% surge on Wall Street as worries about global trade fights eased.

U.S. Markets

Stocks closed sharply higher, bouncing back from strong losses in the previous session as trade tensions between the U.S. and China appeared to ease.

Today's News

GlaxoSmithKline said it will acquire Novartis’s 36.5% stake in their consumer healthcare joint venture for $13bn, or around £9.2bn. The UK listed pharmaceutical giant also said it will initiate a strategic review of Horlicks and other consumer nutrition products to support funding of the stake acquisition. The review will include the company’s 72.5% shareholding in Indian subsidiary, GlaxoSmithKline Consumer Healthcare Ltd.

Ferguson has proposed to hike its interim dividend 10% to 57.4 cents per share and add a $4 per share special dividend and effect a share consolidation on top of ongoing share buybacks as it sells its Nordic business. The group, formerly known as Wolseley, reported headline EPS up 16.6% to 202.1 cents on profits up 15% to $698m and revenues up 10.3% to $10.03bn in the half year ended 31 January.

Stagecoach Group kept its annual earnings per share guidance unchanged, amid rising revenue at its train business offset by falling revenue at its bus business. Like-for-like revenue at its UK rail division, excluding South West Trains, had grown by 3.2% in the 44 weeks to 3 March, the company said. Revenue at the Virgin Trains joint venture, meanwhile, had grown by 2.8% over the same time period.

United Utilities said it expected to post a ‘moderately’ higher underlying profit for the year through March, in line with its expectations. Revenue was expected to be ‘slightly lower’ than last year, which the company said reflected regulatory revenue changes, partly offset by a one-off accounting gain from its Water Plus retail joint venture.

Melrose Industries pledged to devote a certain amount of capital to R&D spending at GKN, amid a number of post-offer undertaking related to its hostile bid for the engineering firm. Melrose said that R&D spending at GKN from 1 January 2019 to 31 December 2023 would be at least 2.2% of the aggregate of GKN group sales.

AG Barr said profit before tax increased 4.2% to £44.9m for the year to 27 January, while revenue rose 8% to £277.7m. The company’s core brands performed well, with underlying sales of Irn-Bru up 8%, Rubicon rising 5.3% and Funkin sales up 2.5%. Gross margin increased by 20 basis points to 47.1%. AG Barr proposed a final dividend of 11.84p per share, taking the total dividend for the year to 15.55p, up 8%.

Gold Prices rose for a third session as the dollar languished near a five-week low, as investors eyed rising tensions between Russia and the West even as a U.S.-China trade spat appeared to ease.

Oil Prices rose, pushed up by concerns that tensions in the Middle East could lead to supply disruptions.

Companies Reporting this week

Day	Companies
Monday:	None of Note
Tuesday:	A.G. Barr
Wednesday:	None of Note
Thursday:	CMC Markets
Friday:	None of Note

Early Market Movements

Market	Index	Change	% Change
UK 100	6,978.1	+89.4	+1.3%
UK 250	19,364.0	+176.9	+0.9%
GER 30	11,984.6	+197.4	+1.7%
FRA 40	5,134.3	+68.0	+1.3%
U.S. 30	24,202.60	+669.40	+2.8%
U.S. 500	2,658.6	+70.3	+2.7%
OIL (BRENT)	70.18	+0.06	+0.1%
GOLD	1,355.77	+2.27	+0.2%

UK Risers & Fallers (8:15am)

Company	Price	Change	% Change
Ferguson	5380	+246	+4.8%
Anglo American	1704.8	+51.2	+3.1%
Kaz Minerals	887.8	+29.4	+3.4%
Diageo	2353.5	-1	-0.0%
Allied Mind	99.75	-2.45	-2.4%
Galliford Try	927	-10.5	-1.1%

Latest Broker Views

Company	Broker	Recommendation	Price	Target
Smiths Group	Goldman Sachs	Buy	1465	1830
G4S	Goldman Sachs	Neutral	238.5	290
Next	CFRA	Hold	4875	5000
Wood Group	RBC Capital	Outperform	553.2	725