UK house prices fall; Takeover drama at Shire and Virgin Money - as it happened

All the day's economic and financial news, including the latest on two takeover deals

• Halifax: UK house prices down 3.1% (!) in April
• Japan's Takeda has agreed to buy FTSE-100 listed Shire
• Shire shares rise, but doubts linger
• Virgin Money has received a takeover offer

5.54pm BST

And finally..... our Money editor Patrick Collinson explains how Sir Richard Branson could make a large profit, if CYBG succeed in taking over Virgin Money:

Virgin Money traces its origins back to the 1995 launch of Virgin Direct, an investment business, but it was the takeover of Northern Rock in 2011 that propelled it into a large-scale operation.

As chancellor, George Osborne nearly four years after nationalising the bank at the height of the financial crisis. The price paid by a consortium of investors, led by Branson, was the UK taxpayer had injected into bank. Osborne said at the time that the deal represented value for money for UK taxpayers.

Related: Richard Branson set for large profit if CYBG and Virgin Money merge

Related: Iran deal: Trump reportedly to withdraw US from nuclear agreement - live

5.52pm BST

Despite Shire's best efforts, the FTSE 100 has ended the day down 1 point at 7565, a most underwhelming result.

3.51pm BST

Here's our news stories on the main business events of the day so far:

Related: UK house prices fall at fastest rate in nearly eight years

Related: Adderall maker Shire agrees 46bn takeover by Takeda

3.51pm BST

Nick Field, Director at corporate finance adviser Livingstone, reckons that merging Virgin Money into Yorkshire Bank and Clydesdale would make sense:

'Creating a 'challenger' bank of real scale with total assets in excess of 80 billion clearly has attractions. As both parties have relatively strong retail deposit franchises, the realisation of synergies on the asset side of the balance sheet and in operational costs will be key to drive value for shareholders in the merged group.'

'The Virgin Money team have a great track record of execution having turned a legacy mortgage portfolio into a strong, growing consumer brand covering a range of financial products. The value of that strong brand and management is tangibly expressed by the price reaction to the offer, with Virgin Money enjoying a considerable premium whilst CYBG has slightly declined.'

2.33pm BST

Wall Street has opened cautiously, with the main indices dipping ahead of president Trump's announcement tonight....

Stocks open lower ahead of Trump's Iran deal announcement https://t.co/kcT9ADNwed pic.twitter.com/1MMd7UyiCi

2.27pm BST

The oil price is likely to move sharply at 7pm UK time, when Donald Trump reveals his decision on Iran.

Ole Hansen, Saxo Bank's Head of Commodity Strategy, says:

There are multiple options available to President Trump which makes this such a binary event where the price could move sharply in either direction. The three most likely options currently being mentioned are:

1) Waiver the sanctions again while allowing time to renegotiate the deal

2.21pm BST

The financial markets are becalmed today, with very little action to report.

In London, the FTSE 100 is up a mere 9 points at 7576 this lunchtime, as City traders abandon their terminals to sunbath.

BREAKING: President Trump is expected to announce he will allow sanctions to go forward on Iran, a first step toward withdrawing from the Iran nuclear deal https://t.co/hdLGwtqMO9 pic.twitter.com/Ulq6PqtLei

As Trump gears up to make his much anticipated decision on the Iran Nuclear Deal there is a palpable sense of anxiety in Iran. People fear the reaction and fall out from both sides and what the end of the deal will do to the already fragile economy.

Trump's complaints about the Iran deal include its sunset provisions, the fact that it doesn't cover Iran's increasingly robust ballistic missile program - or its support (financially and arms) of regional terror groups like Hezbollah, which represent a threat to Israel

2.07pm BST

If Takeda can win shareholder support, then it will acquire Shire for 64.4% more than its value back in March.

Such a whopping premium shows that the Japanese firm is desperate for Shire's pipeline of rare drugs, and its established sales in America.

Shire gives Takeda a larger presence in the U.S. and expertise in rare diseases, an increasingly important area for pharmaceutical companies as patents on established drugs expire.

Even though Shire's headquarters are in Dublin, it earns more than two thirds of its revenue in the U.S. on drugs like Adderall, which is used for ADHD.

1.58pm BST

In other banking news, Royal Bank of Scotland is refusing to abandon plans to close 50 branches in Scoland.

C EO Ross McEwan told MPs on the Scottish Affairs Committee that the decision was the "best way of going forward", despite public anger over the plan.

"I do recognise that customers are very disappointed that their local branch is closing".

"What we've done here with a package of different ways of operating with this bank is, I think, the best way of going forward, that we can keep those services to our customers as well as moving away from physical distribution when it's just not being used."

In concl. RBS's McEwan tells @PeteWishart granting a reprieve to 10 Scottish RBS branches is "not an olive branch", and that usage stats at these will be genuinely assessed before their fate is decided. He insists, however, that the other 52 closures are a fait accompli pic.twitter.com/Qlz4Z1lIGu

12.48pm BST

Back in the City, Shire's share price has dipped below the 40 mark.

Shares in Shire have been given a nice boost in recent weeks after Takeda made two unsuccessful bids for the company.

On the other side of the coin, Takeda's share price has dropped over 30% since the January high, and given the negative market reaction to their pursuit of Shire, there may be some investors who are sceptical about the offer.

Japan's Takeda agrees to buy Irish-domiciles Shire in 46bn pharma deal. Now the hard part: convince 2/3rds of its shareholders to vote in favour of Shire acquisition at a time when its shares have been tanking. This is not a done deal by any means.
https://t.co/I54pzr3bO5

12.16pm BST

Another 35 workers have lost their jobs following the collapse of construction and outsourcing group Carillion.

The Official Receiver, which took control of Carillion after its liquidation in January, announced the bad news this morning. It means that almost 2,300 of the company's 20,000 workers have been laid off, while 11,489 have been saved.

It's not a failure of the outsourcing model.

I don't know about a single hospital floor that been left uncleaned or a school meal that's not been delivered, because the government did its contingency planning.

.@rsoames says the degree of transparency that Government gets of the performance of private contractors is vastly greater than it gets of its own performance when it is doing work. Watch live at https://t.co/4oevKiWMeV pic.twitter.com/qjahE7269y

David Walker @guardian tells the Committee that the Government needs to know who are the owners of the companies who deliver public services. He says that knowledge base across contracting is inadequate. Watch the session live at https://t.co/OQCSzZnLLF pic.twitter.com/8GDlPk2jyP

11.46am BST

With the UK housing market looking weak, there's every reason for the Bank of England to resist raising interest rates at its monetary policy meeting on Thursday.

A few weeks ago, the BoE was widely expected to hike borrowing costs this month -- having dropped heavy hints that a rise was coming.

So, having raised expectations (not for the first time either!), the BoE now find themselves in an unenviable dilemma of "damned if they do and damned if they don't...", a horrible predicament for any central bank to find themselves in. The situation in the UK precisely highlights the difficulty global central banks face with signalling rate hikes in the post-GFC era. Remember, it took twelve months before the US implemented its second rate hike in December 2016.

Patience is key for the BoE at this stage and I'd argue there are lessons to be learned from the US, where the Fed, despite the long pause, has subsequently raised interest rates a further four times with their credibility remaining intact. We think a pause from the BoE is appropriate, given the domestic backdrop and signs that the frothiness in global GDP may well have stalled, which should provide a supportive backdrop for UK fixed income assets.

10.56am BST

Here's Bloomberg's take on the UK hosing market:

Britain's housing market has been cooling for the past two years, with London seeing the sharpest slowdown. Monthly mortgage approvals have slipped and reports point to waning interest from potential buyers.

"Housing demand has softened in the early months of 2018, with both mortgage approvals and completed home sales edging down," said Russell Galley at Halifax.

U.K. home prices post the biggest monthly drop in almost 8 years https://t.co/kZ6Wu24iV0 pic.twitter.com/R66n9i2PsP

9.43am BST

The news that UK house prices fell last month has sent a shiver through the sector:

Jeremy Leaf, a north London estate agent, says Halifax's figures are a blow - the housing market should be enjoying a spring revival, not subsiding.

Although a little historic, these figures are disappointing as there is a market of sluggish growth and transactions, despite still showing modest price rises. And yet we are entering what is supposed to be the busy spring buying season, which tends to set the tone for the rest of the year.

'More recently, activity and listings have picked up but we are finding the market still quite sensitive and only those prepared to negotiate hard are moving on.

The property market is a mirror of the economy, lacking any real momentum and simply idling along.

While inflation has fallen and wages have been edging up, this will take time to filter through so it's no surprise transaction levels remain low.

We expect house price gains over 2018 will be limited to a modest 2%. At this stage, we expect prices to rise by 3% in 2019

The fundamentals for house buyers are likely to remain challenging. Consumers have faced an extended serious squeeze on purchasing power, which is only gradually easing. Additionally, housing market activity remains hampered by relatively fragile consumer confidence and limited willingness to engage in major transactions.

UK House Price Indices
big monthly % fall in Halifax's April price just corrects last month's big % rise. Halifax is always more volatile so best to ignore monthly changes pic.twitter.com/U5W7TL2te3

9.41am BST

9.19am BST

Newsflash: UK house prices took a nasty tumble last month, fuelling concerns that consumer confidence is weakening.

Prices fell by 3.1% during April, according to the latest Halifax house price survey -- the biggest monthly decline since September 2010.

Latest @askhalifax reports house prices plunged 3.1% last month after rising 1.6% in March. Annual house price inflation slowed to 2.2% in 3 months to April. pic.twitter.com/cFVOlbjjLk

The Halifax house price data (-3.1% MoM) in context: It followed a 1.6% MoM increase in March so some mean reversion in the data but 1-month YoY now flat and in a steady downward trend. New buyer interest not signalling a rebound. pic.twitter.com/Liha5SVrD5

9.12am BST

If Virgin Money does fall to CYBG's takeover bid, it will lower the number of smaller banks trying to shake up British finance.

Sir Richard Branson created Virgin Money more than two decades ago. In 2011, the bank strengthened its position by buying the 'good' portion of Northern Rock for 747m.

If the deal goes through, it would mean Virgin Money's challenge to the UK high street banks comes to an end after just six years - having bought the old Northern Rock business after it was bailed out by the government during the financial crisis.

CYBG would certainly gain scale from Virgin's presence in the mortgage market and expand into credit cards. Virgin Money would gain access to current accounts and small business lending, which it has struggled to develop on its own organically

8.45am BST

Boom! Shares in Virgin Money have jumped by almost 10% in early trading.

Virgin's shares are trading at 338p, valuing the company at 1.5bn -- close to CYBG's takeover offer.

Interesting to note the share-price gains in Virgin Money last week ahead of today's announcement. Q1 sales statement on May wasn't that spectacular, was it? pic.twitter.com/3CK5eFJFpF

8.32am BST

City analyst Mike van Dulken of Accendo Markets has also spotted the gap between Shire's share price and the Takeda offer...

The 20%+ gap between Shire's 40 share price and Takeda's 49 offer (48.6 implied, with FX & TAK shares being moving parts) is a message of uncertainty in itself

8.24am BST

Shares in Shire have jumped by 5% in early trading, following the news that Takeda's takeover offer has been accepted.

That takes them to the top of the FTSE 100 leaderboard.

#Shire shares up 5% after #Takeda agrees 46B takeover bid. Still a long way short of the 49.01 offer price. pic.twitter.com/CRV7f2DMHx

8.15am BST

Shire's chief executive, Flemming Ornskov, says Takeda's 46bn deal is in the best interests of shareholders.

Ornskov also claims it could help create better drugs for patients too.

"I would like to thank the entire Shire team for all that we have accomplished over the last five years to transform Shire into the leading rare disease biotech company and a tenacious champion for patients in need.

"I am confident that this relentless focus will enable us to continue delivering against our priorities throughout this process.

7.54am BST

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

#BREAKING #Takeda offers 49.01 per #Shire share

Together, we will be a leader in providing targeted treatments in gastroenterology, neuroscience, oncology, rare diseases and plasma-derived therapies.

We are looking forward to the benefits this combination will bring to patients worldwide, the opportunities it will bring for our employees and the returns it will deliver for our shareholders."

Shire and Takeda agrees to 25 Apr proposal

Implied valuation at things stand pic.twitter.com/V0cFU2a5FY

Virgin Money Holdings (UK) plc ("Virgin Money") notes the press speculation, and confirms that on the evening of 7 May 2018, it received a preliminary and conditional proposal from CYBG to acquire the entire issued and to be issued share capital of Virgin Money. Under the terms of the proposal, Virgin Money shareholders would receive 1.1297 new CYBG shares for each Virgin Money share. The Board of Virgin Money is in the process of reviewing this proposal.

There can be no certainty either that an offer will be made nor as to the terms of any offer, if made. Accordingly, shareholders are advised to take no action in relation to this proposal.

European Opening Calls:#FTSE 7579 +0.16%#DAX 12933 -0.12%#CAC 5528 -0.07%#MIB 24523 -0.09%#IBEX 10134 -0.06%