This post was originally published on this site
All eyes are on British regulators’ expected scrutiny of the deal to sell Arm to Nvidia.
Kazuhiro Nogi/Agence France-Presse/Getty Images
The U.K.’s FTSE 100 closed lower on Monday, as the pound strengthened and the earlier M&A-driven rally faded in the afternoon.
News that SoftBank has sealed the deal to sell Cambridge-based Arm for up to $40 billion, and optimism over a coronavirus vaccine, buoyed London markets in early trading.
The FTSE 100 UKX, -0.09%, the index of London’s top 100 stocks by market capitalization, rose 0.5% in Monday morning trading, before falling back later in the day.
The pound was up 0.6% against the dollar GBPUSD, +0.55% and up 0.35% against the euro GBPEUR, +0.38%, as opposition to the government’s controversial post-Brexit bill grew, and BNP Paribas claimed a so-called no-deal Brexit wasn’t inevitable. Sterling’s rise hurt the internationally-exposed FTSE 100, while the more domestically-focused FTSE 250 MCX, +0.69% rose 0.7%.
BP BP, -1.88% stock slipped 1.9%, as the company warned global oil demand may have already peaked. Under two of the oil major’s three scenarios in its 2020 energy outlook, global demand will never return to precoronavirus levels, and in the third the peak is reached around 2030.
Shares in British security services company G4S GFS, +25.05% rocketed 26%, after Canada’s GardaWorld said it had made an approximately £2.96 billion ($3.81 billion) all-cash offer for the group. G4S shares are down nearly 16% year-to-date.
SoftBank 9984, +8.95% announced late on Sunday that it has sold chip designer Arm after four years of ownership to U.S. graphics chip maker Nvidia NVDA, +4.79%. Arm, one of Britain’s most important homegrown technology companies, will be sold for $21.5 in stock and $12 billion in cash, with another $5 billion subject to Arm’s financial performance and $1.5 billion earmarked for stock to Arm employees.
All eyes are on British regulators’ expected scrutiny of the deal. “Any deal is likely to face significant regulatory obstacles, not only from U.K. authorities who have already been on the receiving end of broken promises from previous U.S. companies, circa Cadbury and the Kraft takeover, but also U.S. and EU regulators who may have concerns over the huge dominance this purchase would give Nvidia over the global chip market,” wrote Michael Hewson, an analyst at CMC Markets.
Optimism over a coronavirus vaccine helped stocks earlier in the day. The University of Oxford announced over the weekend that it would be resuming its trial with AstraZeneca AZN, -0.34% after it was halted last week due to an “unexplained illness” in a participant. U.S. drug giant Pfizer’s PFE, +3.54% chief executive, Albert Bourla, said in an interview on Sunday that a successful vaccine could be distributed in the U.S. as early as the end of this year.
The biggest gainer on Monday was online grocery company Ocado OCDO, +3.92%, which rose 3.9%. Ocado will release its third-quarter results on Tuesday, which should give investors an update on its new joint venture with Marks & Spencer, which it sold half of its retail business to for £750 million last year.
Other gainers included Informa INF, +1.89%, GVC Holdings GVC, +1.25%, and BAE Systems BA, +2.40%.
Precious metals miner Fresnillo FRES, -3.58% plunged as much as 6.6% in Monday trading, leading the FTSE’s list of losers. British telecom Vodafone VOD, -0.54% dipped as much as 0.9%, as the group remains in talks to complete selling its Egyptian unit to Saudi Telecom.
