IQE Share News (IQE)

LONDON (Alliance News) - Weir Group's takeover approach to Finnish rival Metso is the biggest of a flurry of deals and potential deals announced Tuesday, with GKN acquiring the William's Formula 1 team parent's hybrid engine unit and Capita bolstering its IT services division.

Weir has confirmed that it has made an all-share takeover approach to Metso, which its Finnish rival has separately said it is considering. According to The Times, which first reported the approach, Weir might be prepared to pay as much as EUR30 a share for Metso, which would value it at more than EUR4 billion.

Weir, which hasn't said how much its approach was worth, thinks it can get significant efficiencies and synergies out of a combination. Metso, which has seen its stock climb more than 20% in Helsinki, said the approach was unsolicited but it will consider it.

Support services company Capita, meanwhile, said it has acquired IT network services provider Updata Infrastructure (UK) Ltd for GBP80 million in cash on a cash free, debt free basis, a move that will bolster Capita's IT services division with a business it already works closely with.

Reigate-based Updata provides a range of networking and connectivity services to mainly public sector clients. It is forecasting an operating profit of GBP5.6 million on revenues of GBP41.8 million in its financial year to June 30, but Capita expects Updata to generate operating profits of about GBP12 million on revenues of about GBP74 million in calendar 2015.

Capita and Updata have had a strategic alliance in Scotland since October 2011, working together on contracts for local authorities, and recently started working together on the framework contract to deliver the Scottish Wide Area Network, a single public services network for the use of all public service organisations within Scotland.

GKN has also bought a business it has already been working closely with, paying an initial GBP8 million plus further payments based on a percentage of sales, for the hybrid business of Williams Grand Prix Engineering Ltd.

Williams bought the start-up business back in 2010, and it was initially engaged with developing its electric flywheel energy storage technology for the Williams Formula 1 car. However, the unit, which made a loss after tax of GBP1 million in 2013, it has recently worked with GKN on developing the technology for commercial markets, including for Go-Ahead Group buses and Alstom trams.

In the mining sector, BHP Billiton has confirmed it is considering shrinking its portfolio to focus on up to five commodities. It said is is thinking of concentrating on iron ore, copper, coal, oil and potash, as it seeks to generate more free cash flow and a better return on investment.

BHP Billiton's admission came after The Australian said the company is considering spinning off AUD20 billion of assets, including aluminium, manganese, thermal coal and nickel.

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FTSE 100: Up 0.6% at 6,638.22
FTSE 250: Up 0.4% at 16,341.15
AIM ALL-SHARE: Down 0.1% at 849.79
GBP-USD: Down at 1.6636
EUR-USD: Up at 1.3791
GOLD: Up at USD1,284.79 an ounce
OIL (Brent): Down at USD107.57 a barrel

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Key UK Corporate News

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FTSE 100: Aberdeen Asset Management estimates net outflows slowed to approximately GBP200 million in March, after it reported GBP3.9 billion in net outflows across its asset classes over January and February. Aberdeen also reported growth in its pipeline of new business, with mandates totalling about GBP3.6 billion awarded but not funded at the end of February. The asset manager also revealed that it has identified and implemented "significant additional costs savings". Babcock International Group has been named preferred bidder on a 21 year fleet management contract by The London Fire and Emergency Planning Authority to manage London Fire Brigade's vehicle fleet, just a day after Cavendish Fluor Partnership, its joint venture with Flour Corp of the US, was selected as preferred bidder for the decommissioning of 12 UK nuclear sites. WPP has acquired Paris-based digital marketing company X-Prime via its marketing communications agency JWT. X-Prime made revenues of EUR4.7 million in 2013. GlaxoSmithKline said a Phase III study of patients with advanced renal cell carcinoma showed that 70% of patients preferred Glaxo's Votrient treatment to Pfizer's Sutent. Old Mutual's deal to acquire a majority share in Faulu Microfinance Bank Ltd, the deposit-taking microfinance business in Kenya, has become unconditional.The National Audit Office said that the privatisation of Royal Mail did not achieve the best value for the taxpayer. The spending watchdog said the government's "deep caution" and emphasis on completing the sale within this parliament led to a sale price that short-changed the taxpayer.

FTSE 250: Rathbone Brothers has raised GBP24.4 million in a share placing to fund two acquisitions, one of which is the acquisition of Jupiter Fund Management's private client and charity investment management business in a deal that could be worth up to GBP53.9 million. The wealth manager also will pay GBP14.3 million buy part of the London private client wealth-management business of Tilney Investment Management Ltd. ICAP expects results for its recent financial year to be in line with current market expectations. According to a poll of 11 analysts conducted by ICAP, the current range of forecasts for the year ending March 31 is between GBP266 million and GBP280.0 million, with a GBP273.0 million consensus. Stagecoach Group has had its East Midlands rail franchise contract extended until October 2015 and is still in talks for a further extension until October 2017. John Wood Group has acquired Canadian pipeline engineering company, Sunstone Projects Ltd, in a CAD14.5 million deal. LondonMetric Property has exchanged contracts to develop a retail distribution centre in Northamptonshire.

AIM: Volga Gas is up after it said it swung to a pretax profit in 2013 as revenues jumped on increased gas prices and operational upgrades. IQE is up after it said it has been chosen as a supply-chain partner for NASDAQ-listed M/A-COM Technology Solutions Inc's Gallium Nitride on Silicon programme. Gallium nitride is a hard semiconductor material primarily used in light-emitting diodes. ZincOx Resources is a big faller after it conditionally raised GBP1.0 million in a placing of roughly 10.3 million shares at a price of 10 pence per share, and announced plans to raise a further GBP4 million by way of an open offer at the same price. The proceeds will be used for general working capital purposes, repairs to its refractory, and the purchase of equipment to complete the ramp-up of the company's first recycling plant, KRP in South Korea. Ashley House is another big decliner after it warned it was not likely to make a profit in the financial year ending April 30. It had previously said that, in order to reach market expectations for profit for the year, it would need to achieve planning and exchange legal contracts on four out of six of its extra care schemes. However, although this is likely to be achieved, completing legal agreements with prospective tenants and purchases has been slower than Ashley House had expected. Touchstone Gold is down after it said its pretax loss widened in 2013 as it a wrote down the value of assets including property and equipment, and it again warned that it faced defaulting on some payments if it can't get new funding. The company said it is continuing to review a number of options in order to secure financing and reiterated that if it cannot gain funding, it will be unable to meet its scheduled payments to vendors on its concession contracts. Getech Group is also down after it said its pretax profit declined 83% in the first half of its financial year as it was hit by a slowdown in spending by customers. Trafalgar New Homes is doing badly after the property developer said that its financial results for the year ended March 31 are now expected to be significantly below market expectations as a result of planning delays and the decision to reject an offer from an investor for eight of the twelve units at its Oakhurst Park Gardens in Kent.

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Top Economics And General

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UK manufacturing sector growth slowed unexpectedly to an eight-month low in March, survey data from Markit Economics showed. The seasonally adjusted Markit/Chartered Institute of Purchasing & Supply Purchasing Manager's Index fell to 55.3 in March from 56.2 in February, signaling a further cooling of growth from the peaks scaled towards the end of last year. The score was forecast to rise to 56.7 in March. Nonetheless, the above neutral 50 reading indicates expansion in the sector.
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The Eurozone jobless rate remained unchanged in February, data from Eurostat showed. The unemployment rate held steady at 11.9% after the January figure was revised down from 12%. Economists had forecast the rate to remain unchanged at January's originally estimated 12%.
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The Chief Executive of the Financial Conduct Authority Monday admitted the regulator faces "serious questions" over its handling of media coverage that resulted in "a clear reaction from the market" on Friday, when the FTSE 350 life insurance index fell by as much as 7.1%. Martin Wheatley, speaking at City Week 2014, said: "This was clearly not the FCA’s finest hour – but it does serve as a timely reminder of the importance to all parties involved in markets of the care and thought that is needed when handling the significant amounts of information we hold as a part of going about our day-to-day business."
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Federal Reserve Chairwoman Janet Yellen said Monday that the US central bank will maintain near-zero interest rates for the time being because there is "considerable slack in the economy and the labour market." Her remarks in Chicago at a conference on community investment followed Yellen's recent comments that the Fed could end its buying spree of government-backed bonds by late this year. A majority of Fed members do not foresee starting to tighten the central bank's benchmark interest rate before the first half of 2015.
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The Japanese government raised sales tax to 8% for the first hike in 17 years, amid growing concern that it could exacerbate an economic slowdown. The tax was raised from 5%, to help cover the nation's swelling social security costs as the elderly population grows. Analysts said the hike could make it more difficult to combat longstanding deflation in the world's third-largest economy.
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Russia is raising gas prices for neighbouring Ukraine by 30%, the head of energy giant Gazprom said, hours before NATO foreign ministers were set to consider further action in response to the crisis in the region. The international community has been outraged by Russia's annexation of the Ukrainian peninsula of Crimea and the ensuing pressure it has been accused of applying on its neighbour. Ukraine depends on Russia for more than half of its gas imports. Gazprom chief executive Alexei Miller justified the cancellation of a Ukrainian discount and the ensuing price hike by pointing to 1.7 billion dollars in bills that have gone unpaid by Kiev.
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Russia is withdrawing a battalion of several hundred troops near the border with Ukraine, the Defence Ministry said Monday in Moscow, easing fears that it could take over more Ukrainian territory. The US and European countries have repeatedly called for Russia to pull back the some 4,000 troops amassed at the border, as a first step to de-escalate the situation. The Russian announcement came as NATO foreign ministers were due to discuss the Ukraine crisis Tuesday in Brussels.
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French President Francois Hollande replaced his top lieutenant Monday, a day after his Socialist Party received a drubbing in municipal elections as voters vent frustration with his leadership. "I have heard your message - it is clear," Hollande said after scores of Socialist mayors lost their offices to opposition conservatives, centrists and the far-right National Front. Addressing the nation in a prime-time address, Hollande announced he had made popular Interior Minister Manuel Valls France's new premier, replacing Jean-Marc Ayrault, who tendered his resignation over the election losses. Hollande said 51-year-old Valls would lead a new, tighter, "combative" government, which had yet to be unveiled.
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Afternoon Watchlist (all times British Summer Time)

13:55 US Redbook index
13:58 US Markit Manufacturing PMI
15:00 US Construction Spending
15:00 US ISM Manufacturing PMI
21:00 US Total Vehicle Sales

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Wednesday's Key UK Corporate Events

office2office Full Year Results
Domino's Pizza Group Interim Management Statement
Cupid Full Year Results
ASOS Half Year Results

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Wednesday's Key Economic Events (all times British Summer Time)

All Day EU EcoFin Meeting
08:00 UK Nationwide Housing Prices
09:30 UK PMI Construction
10:00 EU Gross Domestic Product
10:00 EU Producer Price Index
12:00 US MBA Mortgage Applications
13:15 US ADP Employment Change
14:45 US ISM New York index
15:00 US Factory Orders
15:30 US EIA Crude Oil Stocks change

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By Steve McGrath; steve.mcgrath@alliancenews.com; @stevemcgrath1

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