Carlyle steps back from Vectura bidding war with Philip Morris – as it happened

Graeme Wearden

from on 2021-08-10 18:51 (#5N4Y0)

Rolling coverage of the latest economic and financial news

Takeover battle for Vectura will not go to auction
Carlyle: Our offer is final....
Nile Pratley: Vectura board needs to see through the smoke

Earlier:

7.51pm BST

And finally... here's our news story on Carlyle's decision to step back from a bidding war with Philip Morris to own Vectura, by Rupert Neate:

The Carlyle Group and PMI's intense bidding war for Vectura, which was founded by academics at Bath University almost 20 years ago, had been due to be decided by an unusual Takeover Panel-run auction beginning on Wednesday.

7.05pm BST

The new low-cost long-haul Norwegian airline Norse Atlantic Airways has announced plans to fly between Europe and the US from early 2022, as it aims to fill the gap in budget transatlantic air travel left by Norwegian's departure from long-haul routes.

Norse, which was formed in March by Norwegian airline industry veterans, will initially fly from Oslo, London and Paris to New York, Los Angeles and Fort Lauderdale.

6.56pm BST

The world's major economies have seen their rapid recovery after easing Covid restrictions begin to run out of steam in the last month as a resurgence in the virus depressed consumer spending, according to the Organisation for Economic Cooperation and Development.

There are signs that the recovery in the US and Japan is losing momentum, the OECD said, while parts of Europe and China have slowed as consumers remain reluctant to eat out, visit attractions and shop as they did before the pandemic.

6.55pm BST

No auction for Vectura as Carlyle declares $1.3 bln takeover bid final https://t.co/1L4Eb5akQ6 pic.twitter.com/UsYcnclxPm

6.30pm BST

Here's Sky News' Sharon Marris on Carlyle's decision not to increase its takeover offer for Vectura, in the battle with Philip Morris.

Vectura has not yet announced its next move - it could accept PMI's higher offer, or it could still go with the lower offer from Carlyle.

Shadow health secretary Jonathan Ashworth said earlier on Tuesday: The Vectura board should exercise their duty of care to all stakeholders and not give in to big tobacco (PMI). If not, ministers should block this take over."

So having spent a good chunk of the afternoon writing an explainer on how the auction process would work, the auction is now off.
Here's why and what it could mean - because this isn't just any old 'potential takeover story': https://t.co/zHCIQKPUfB

5.11pm BST

Just in: Private equity firm Carlyle has declared that its offer for UK inhaler maker Vectura is final.

That means that the takeover tussle with cigarette firm Philip Morris will not go to a five-day auction process tomorrow, as had been expected.

Carlyle Bidco has always made it clear that it believed its offer provided a full and fair value as well as wider benefits to Vectura and its broader stakeholders. Carlyle Bidco remains fully supportive of Vectura's existing strategy to build an independent leading CDMO with genuine global reach, credibility and involvement in the market for inhaled and respiratory medicines and devices.

Carlyle Bidco believes that partnering with Carlyle would offer significant opportunity to Vectura's many employees (particularly Vectura's leading scientists), suppliers, customers and research partners.

Carlyle believes its offer is in the best interests of the business and its stakeholders, including its employees, partners and customers, as well as, most importantly, the patients it serves and helps to provide with effective and accessible medicines."

3.59pm BST

Back in London, the FTSE 250 index of medium-sized companies has hit a new record high too.

The domestically-focused FTSE 250 is up 125 points in late trading at 23578, a gain of around 0.5%.

3.29pm BST

Over on Wall Street, stocks have hit fresh record highs in early trading.

BREAKING:

*DOW, S&P 500 HIT NEW RECORD HIGHS pic.twitter.com/eaN5bRzBRR

2.50pm BST

Today's ZEW survey also showed that investors are less worried about rising prices in the eurozone, with inflation expectations dipping.

ZEW survey inflation expectations dropped sharply. First time a survey now too views inflation as transitory pic.twitter.com/AFXT9Rcd2O

2.27pm BST

Beijing's regulatory crackdown against its tech sector means SoftBank will cut back on investing in China, chief executive Masayoshi Son said on Tuesday as he presented the Group's latest results.

Until the situation is clearer we want to wait and see," Son told a news conference. In a year or two I believe new rules will create a new situation."

When the Japanese conglomerate posted record annual profit in May executives pointed to further upside from Vision Fund investments such as Chinese ride-hailing firm Didi Global Inc and Uber for trucks" startup Full Truck Alliance Co Ltd.

2.17pm BST

1.51pm BST

The possible tightening of pandemic curbs in Germany and ongoing supply chain problems both hit investor confidence this month, says Bloomberg:

Although more than half of Germany's population is fully vaccinated, coronavirus infections in Europe's largest economy are on the rise. The government has already tightened some travel rules and is set to discuss additional steps during a summit on Tuesday.

On top of that, German manufacturing -- a key part of the economy -- continues to suffer from global supply shortages and unprecedented delivery delays. Both have pushed up price pressures over the past months.

ZEW's gauge of expectations for the German economy declined to 40.4 in August from 63.3 the previous month https://t.co/eMhaSmx7hx

1.07pm BST

The pound has hit its highest level against the euro since the early days of the pandemic, following the drop in German investor morale.

Sterling has risen 0.25% to 1.1825, its highest since late February 2020, as the weaker-than-expected ZEW survey weight on the euro.

Current conditions remain strong but it would appear that concerns around slowing Chinese growth and the anticipated next wave of Covid is responsible for the downbeat expectations, despite high vaccination numbers. Not to mention the belief that growth will be softer due to the level already achieved.

As you can see from the numbers, this survey can be volatile which may explain why the euro has only seen a modest dip, albeit enough to make it an underperformer on the day.

We've had soft ZEW data that just keep the pressure on the euro, after yesterday's strong JOLTS [showing record US job openings].

1.06pm BST

Alex Kuptsikevich, senior financial analyst at FxPro, says the ZEW survey highlights that economic sentiment in Europe continues to deteriorate:

The release said the risk to Germany's economy is increasing both from the 4th wave of covid-19 and the slowdown in China.

Current assessment continues to improve, hitting the highest levels since the end of 2018. However, market participants are paying more attention to sentiment indicators as it reflects future conjuncture.

12.16pm BST

Confidence among German investors has fallen to its lowest level since last year, amid worries that rising COVID-19 infections or a slowdown in China could hurt the recovery.

The ZEW economic research institute said its survey of investors' economic expectations for Germany fell for the third month running in August.

Expectations have declined for the third time in a row. This points to increasing risks for the German economy, such as from a possible fourth COVID-19 wave starting in autumn or a slowdown in growth in China.

The clear improvement in the assessment of the economic situation, which has been ongoing for months, shows that expectations are also weakening due to the higher growth already achieved.

ZEW: Expectations down for a third month in a row; notes increasing risks for the German economy (COVID, China slowdown)

RE: that German Zew data, @PantheonMacro says "the increase in the current situations index indicates that economic growth, and conditions for earnings, remained robust midway through Q3, but the now-clear reversal in the expectations gauge suggests that momentum is peaking"

German Investor Confidence Plunges Amid Virus Variant Concerns

The government has already tightened some travel rules and is set to discuss additional steps during a summit on Tuesday.

ZEW's gauge of expectations declined to 40.4 in August from 63.3 the previous month. pic.twitter.com/JiwByIICHa

12.06pm BST

InterContinental Hotel Group has also announced it will launch a new brand targeting the luxury leisure market in the coming weeks.

IWG (whose brands include Holiday Inn, business-focused Crowne Plaza, and luxury brands like Kimpton and Regent) hopes to attract independent hoteliers to sign up to this new Luxury & Lifestyle collection brand.

The addition of a collection brand will provide high quality independent hotels access to the many benefits of IHG's system, whilst retaining a property's distinctive identity.

There are currently around 1.5 million independently run rooms in the market segments we are targeting, and we expect the collection to attract more than 100 hotels within 10 years.

InterContinental's plans to launch a new luxury brand coming out of the pandemic suggest it reckons regular foreign travel might be dominated by wealthier holidaymakers in the future amid the extra costs and complexity of jetting overseas.

InterContinental's model should in theory leave it well positioned to rebound as the economy recovers, given it does not have lots of capital tied up in owning hotels. Instead operating an asset-light model with most of its premises managed on a franchise basis.

: @IHGhotels announces plans for new luxury and lifestyle "soft brand" collection of hotels, but Barr notes the company will keep a tight lid on the new brand's name and design features "for just a few weeks longer." $IHG Story to come later this AM post-earnings at @skift

11.38am BST

US small business owners grew less optimistic about the recovery last month, amid supply chain disruptions and a struggle to find workers.

That's according to the National Federation of Independent Business, whose Small Business Optimism Index dropped by 2.8 points in July to 99.7, from June's 102.5.

Out this morning: In this month's #SmallBusiness Economic Trends report, the @NFIBResearch #Smallbiz Optimism Index dips to 99.7. The labor shortage remains #smallbiz' biggest challenge and unfilled job openings hit a 48-year record high. Read more: https://t.co/v0snzBCBZE pic.twitter.com/TtOUANy1uq

Small business owners are losing confidence in the strength of the economy and expect a slowdown in job creation."

As owners look for qualified workers, they are also reporting that supply chain disruptions are having an impact on their businesses.

Ultimately, owners could sell more if they could acquire more supplies and inventories from their supply chains."

NFIB "job openings hard to fill" make a new record high in July.. pic.twitter.com/MdlvtdxNvS

US @NFIB small business optimism falls to 99.7 in July. Details of the report: Net percentage of firms anticipating higher selling prices falls to 46%. A net 27% plan to raise compensation in the next three months, a 48-year record high reading. #Smallbiz pic.twitter.com/RxmmaZ0HnQ

11.13am BST

Demand for luxury watches remains strong as wealthier consumers splash out on new expensive models (even though mobile phones tell the time perfectly well....)

The retailer, behind brands including Watches of Switzerland, Mappin & Webb and Goldsmiths, said it has seen a strong performance in both the UK and US, and online sales have climbed 15.9%.

Total revenue in the quarter to August 1 was 297.5m. That was up 101.9% and 45.8% respectively at constant currency levels from the same periods in 2020, when shops were closed for a chunk of the time for lockdowns, and 2019.

Good times: Sales more than double for Rolex seller Watches of Switzerland - Evening Standard https://t.co/Vc9zkqOJXx

10.50am BST

The battle for Vectura between a tobacco company and a private equity firm shouldn't simply come down to price.

Our financial editor Nils Pratley argues that the company must heed the concerns of health experts. Once the auction battle between Philip Morris and Carlyle is over, Vectura can still say which offer is best, not simply the highest.

The amusing line in the unfunny saga of a tobacco giant trying to buy a company that develops inhalers to treat lung diseases came last Friday when the board of Vectura, the target, switched its allegiance from Philip Morris to the rival bidder, the private equity firm Carlyle. The directors said it wasn't only Carlyle's higher offer they liked. They also noted the reported uncertainties" for Vectura's stakeholders if the Marlboro men were to win.

Those reports - everything from fury on the part of medical groups to threats to Vectura employees' membership of scientific bodies - were entirely predictable. But, it seems, the board had failed until that point to spot the problem in a healthcare company accepting Big Tobacco's dollar. Up until then the directors were prepared to swallow Philip Morris's pitch that it wants to be a wellness" company and will quit the fags one day, honest.

10.41am BST

The battle for UK asthma treatment maker Vectura has taken another twist this morning.

Malcolm Clark, senior cancer prevention policy manager at Cancer Research UK, said: It's clear there's more at stake in the outcome of this deal than the share price. It's unethical for big tobacco to be allowed to profit from treating diseases made far more prevalent because of its products."

Sarah Woolnough, chief executive of Asthma UK and the British Lung Foundation, said: Every year in the UK, 90,000 people die from conditions such as chronic obstructive pulmonary disease (COPD), which are linked to smoking.

10.12am BST

Inquiries for office space bounced back to pre-Covid levels in the second quarter, according to IWG, as the world's biggest workspace provider benefitted from the boom in demand for hybrid working solutions, my colleague Mark Sweney reports.

The company, formerly known as Regus, added a record 900 new clients in the first half and experienced a very strong recovery" in meeting room and day office usage in the second quarter as the company begins to see a recovery from the pandemic.

10.10am BST

Figures released overnight have shown that the growth in UK retail spending has slowed, putting more pressure on the high street.

Our economics editor Larry Elliott explains:

The end of lockdown has come too late to prevent fresh store closures on Britain's high streets as businesses count the cost of 18 months of pandemic disruption, the latest update on consumer spending has shown.

Despite a boost to activity after the lifting of restrictions, the trade body for the sector, the British Retail Consortium, said the pace of recovery was slowing and more town centre sites were falling vacant.

10.00am BST

Top UK #StocksToWatch

#Flutter beats expectations

#IHG starts to see demand bounce back

#IWG confident hybrid working can drive demand

#Bellway sales close to pre-pandemic levels

#WatchesofSwitzerland shares hit new all-time highshttps://t.co/bb0yai1EjP

10.00am BST

Betting company Flutter is topping the FTSE 100 risers, after predicting its US operations will reach profitability in 2023.

In the last 12 months to 30 June, FanDuel acquired 1.7 million new sportsbook and gaming customers, equating to over three times the total existing base acquired up to that point.

In the US, we remain the number 1 online sports betting operator by some distance thanks to the quality of our products and the extensive reach of the FanDuel brand. The customer economics we are seeing in the US bode very well for the future, with early FanDuel customers generating positive payback within the first 12 months of acquisition.

We remain absolutely focused on extending our sports product advantages and replicating our market share success in further states as they regulate. In gaming we see an opportunity to grow our market share and look forward to further enhancing our product offering in the coming months.

We remain entirely focused on growing the embedded value of the business by acquiring as many customers as we can for as long as we can generate attractive returns on that investment.

It is important to note that our projection assumes that none of California, Florida or Texas launch online sports betting/gaming before 2024. Should one of these large states regulate sooner, our level of investment in new player acquisition would be higher and profitability could therefore be delayed.

9.15am BST

UK housebuilder Bellway is also benefitting from the recovery, but expects to set aside more money to fix legacy fire safety problems at some of its developments.

Further evidence from #Bellway that the #housing market recovery is built on firm foundations, sales rates were good, forward sales are good and the landbank is growing. It had a strong FY21; is having a strong FY22 and FY23 is looking stronger still. pic.twitter.com/dTqN4xDJA0

This is a complex area where cost estimates are subject to change as on-site works progress and further investigative works are undertaken, or, if the scope of Government legislation further widens.

Bellway continues to actively pursue recoveries from suppliers, subcontractors, and professional advisors where they have fallen short of the standards required.

Bellway completes 10,138 homes in year to July generating 3.1bn in revenue, due to 4.4% increase in sales price to 306k, giving a net margin of 17%. Land enough for 19,800 units bought. Warning that 131m cladding provision is set to rise. See below. Subbies being pursued. pic.twitter.com/kd1exVkdcD

8.35am BST

Shares in Intercontinental Hotels have gained 0.3% in early trading, while IWG are up around 1.4%.

8.18am BST

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Demand for hotels and office space is picking up as economies reopen from pandemic lockdowns, according to two companies this morning... but worries over the delta variant continue to weigh on markets.

Trading improved significantly during the first half of 2021, with travel demand returning strongly as vaccines roll out, restrictions ease, and economic activity rebuilds.

It has been great to see our teams welcome more and more guests back into our hotels, with domestic leisure bookings leading the way, particularly in the US and China.

UK stocks today #2 -

Listening to the IHG CEO on BBTV - excited about growth of the business but won't pay an interim dividend. 'Still have way to go'. Still think restrictions will be in place next year, '23 = '19. Places like London, San Fran, NY more of an issue for them pic.twitter.com/57d7xAmGkQ

The month-on-month improvements in our key operating metrics as we came into the summer months are encouraging and we anticipate this momentum continuing into the second half of 2021.

The significant move to hybrid working has created unprecedented demand for our flexible work products. This fundamental shift in the way people work is clearly a positive tailwind for IWG over the medium to longer term and we are seeing increasing levels of interest from enterprises wishing to transform their working practices.

UK stocks today #5 -

IWG - may talk about 'continue to make progress with our franchising and partnering agreements...pace of recovery remains dependent on the continuing easing of pandemic restrictions across our markets'. Hopes re '22 but still well below pre Covid level pic.twitter.com/jyYEZryutq

#Tuesday #markets drift as #deltavariant cases rise. #COIN up 8% ahead of #earnings #crypto. #USD holds gains on #taper talk. #AUDUSD near 9mth lows on drop in biz conf. #Gold retraces recent drop. For more: #EarlyMorningCall @IGcom 07:30amUK - https://t.co/t7xbaLPqC7 pic.twitter.com/nWEfbKCXr3

Very much back to August norm.....

European Opening Calls:#FTSE 7131 -0.02%#DAX 15752 +0.04%#CAC 6816 +0.04%#AEX 773 +0.12%#MIB 26136 -0.01%#IBEX 8857 -0.10%#OMX 2385 +0.00%#STOXX 4180 +0.07%#IGOpeningCall

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