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Reports UK

UK stock market morning note (April 22, 2014)

April 22, 2014, Tuesday, 07:29 GMT | 02:29 EST | 10:59 IST | 13:29 SGT
Contributed by SVS Securities

The FTSE 100 is called to open higher this morning after the Easter holiday with M&A in focus after newspaper reports over the long weekend of potential corporate action involving AstraZeneca on speculation of talks with Pfizer. However, according to these press reports there is no current dialogue between the two companies. In other big pharma news, Glaxo is to buy the Novartis global vaccines business for an initial cash consideration of USD5.25bn (see below). The economic diary today focuses on the US with the release of existing home sales data. Commodity prices are generally lower and on the foreign exchanges, the major currencies are range bound.


Company Announcements

GlaxoSmithKline

The company has announced a major three-part deal with Novartis whereby they will create a Consumer Healthcare business with 2013 pro-forma revenues of GBP6.5bn with Glaxo to have an equity interest of 63.5%. It will acquire the Novartis global vaccines business for an initial cash consideration of USD5.25bn with subsequent potential milestone payments of up to USD1.8bn and ongoing royalties. Glaxo is to divest its marketed Oncology portfolio, related R&D and commercialisation partner rights for future oncology products to Novartis for an aggregate cash consideration of USD16bn (of which up to USD1.5bn depends on the results of the COMBI-d trial). Glaxo shareholders are to receive a GBP4bn capital return from the net proceeds with the transaction expected to be accretive to core EPS from the first year. The deal is expected to complete during H1 2015 subject to approvals.

Genel Energy

IMS reports that 2014 production and revenue guidance are unchanged at 60,000-70,000 boepd and revenue of USD500-USD600m. Capex guidance for the year remains at USD550-USD600m with cash balances at the end of March 2014 standing at around US600m.

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