The big story we are working on this morning is that it seems as if Royal Dutch Shell has agreed to give up control of its Sakhalin-2 project to Gazprom. This follows months of government pressure but some of the reports out of Russia on this topic have been conflicting, as different Russian officials have different agendas. According to Reuters, both companies confirmed that their chief executives met in Moscow on Friday but wouldn’t elaborate. The wire says Shell has agreed to cut its 55 per cent to a blocking minority stake. We need more details but Shell shares are down 1 per cent. A lot of foreign companies active in Russia have a lot to fear from this news if it is correct, not least BP.
CSN’s decision this morning to trump Tata’s raised bid for Corus last night is also a great story. Tata attempted to pre-empt Brazil’s CSN yesterday by lifting its offer from 455p to 500p, valuing Corus at £5.5bn. But this morning, CSN responded by offering 515p a share. Having recommended Tata’s offer last night, the Corus board is now backing the Brazilian bid. Corus shares, up 5 per cent, are 524¾p this morning as the market bets the bidding will go higher.
Lloyds TSB says it will hit profit expectations for 2006 as it continues to cut costs and stabilise its bad debt level. In a pre-close trading update, Lloyds says it expects its bad debt charge at its retail bank to be no higher than in the first half, when a 20 per cent increase in bad debt held back profit growth for the retail division. The wholesale bank looks weak because of bad debts on asset finance, however.
Isoft made an interim pre-tax loss of £14.3m compared with a profit of £8m a year ago. It also says discussions with parties interested in acquiring it are continuing. We hope to have more on all this later.
Pearson, the UK media group that owns the Financial Times, says it has agreed to sell its Government Solutions arm to Veritas Capital, the private equity group, as it moves to strengthen its education and information businesses.
Rumour of the day: Hays shares up 3.8 per cent, the biggest riser on the FTSE 250. The company has a trading update on Thursday, which the market is betting will be strong, according to Neil Hume on our markets desk. The usual whispers of a private equity approach are also out there.