Listen to this article
It’s been such a strong day for news today that we are even having to hold some scoops back for tomorrow, though happily not the strongest ones.
The newslist now is led by EMI, which this morning said it had received a takeover approach from Warner Music. The chances of a deal improved significantly this afternoon when it emerged that Warner had won the backing of Impala, the Independent Music Publishers and Labels Association. This group, which has been one of the leading critics of consolidation in the industry, has said it will support a deal if EMI and Warner agree to take certain measures which will help independent labels and a digital rights licensing platform set up by independent labels. EMI shares are up 8 per cent. Nothing, though, can happen until Brussels finishes examining the refiled Sony-BMG merger application, which it has said it will do by March 1. Impala continues to oppose this deal.
Barclays still looks like a strong story this afternoon. Pre-tax profits for 2006 are up 35 per cent, which is more than expected. Revenue growth across the group is a little lower than expected but so is cost growth. Peter Thal Larsen and Jane Croft have been to see the bank’s management and say Barclays believes it has turned the corner in its UK business. Barclaycard is past the worst, it says. We’ll look at this, of course, and also at the explosive growth at BarCap, even though some analysts were a little disappointed. Another good theme for us is the internationalisation of the group. More than half the bank’s profits came from outside the UK this time. But how much further can/will chief executive John Varley push this? He said he was looking “east not west”, which made BarCap and BGI boss Bob Diamond sit up a bit. I guess it rules out US acquisitions.
Shire Pharmaceuticals is shelling out $2.6bn in cash to buy New River Pharmaceuticals in the US with $800m being raised through a placing to fund the deal. This gives Shire control of Vyvanse, a drug for attention deficit and hyperactivity disorder, although I don’t know why they have to buy the whole company for this. It’s certainly a big day for Randal Kirk, New River’s founder and boss. He owns 50 per cent of the company.
Gloomy stuff in consumer industries. Cadbury Schweppes’s results look bad, having been hit by charges in Nigeria, a product recall in the UK and restructuring costs. The shares are down more than 2 per cent. Scottish & Newcastle looks worse, though. Its shares are off more than 4 per cent as investors worry about rising costs and the impact of the smoking ban in England and Wales.
InterContinental Hotels results are in line with expectations but it is joining the long list of companies handing back large amounts of cash to shareholders, £850m in this case. It still aims to open one new hotel a day.
Panmure Gordon has confirmed Sarah Spikes’ and Neil Hume’s great overnight scoop that it is buying ThinkEquity Partners, an investment bank in San Francisco. But hang on: by the time you add in earn-outs, Panmure is paying nearly $125m for a business which last year made a profit of $2.8m before interest costs of $2m and bonuses of $13.8m, payable in shares. Ouch. Incidentally, we’ll have details tomorrow of the new rules for nomads on Aim.