Friday, January 12: The FTSE 100(+0.20%) was lifted higher by a proposed GKN takeover, industrials and a bounce in select consumer stocks. The rally in industrials came courtesy of Smiths Group announcing a lower tax rate on the back of US tax reform, as optimism spread that other companies will enjoy greater profits.
GKN was lifted by 27.92% after news of a takeover attempt from Melrose industries emerged. GKN rebutted the attempt as it “would dilute upside opportunities that the Board believes are present within the company”, branding the £7bn(405p per share including stock and cash) proposal entirely opportunistic with terms that fundamentally undervalue the company and its prospects. Despite the takeover snub, Melrose Industries rose 8.84% on the news. Further detail was also provided regarding GKN group strategy after a listing 2017 under Project Boost. Under the aforementioned programme, GKN plans to improve its cash and profit by sharpening productivity, capital allocation and procurement activity. The company also plans to differentiate product segments into core and non-core, subsequently expecting to divests its non-core product segments. It was also announced that Anne Stevens has agreed to become the company’s permanent CEO with immediate effect, putting an end to the CEO saga following the retirement of Nigel Stein.
US CPI data was indicative of a +0.1% increase over the prior month to 2.1% for the month of December, easing slightly from November’s 2.2% annual gain. The small gain was in line with economists’ expectations, though some have raised concerns that deflationary aspects in the measure may be more of a mainstay in the data, as opposed to short-lived transitory phenomena.
Across Europe, indices were lower at the close with the FTSE 100 +0.25%, the DAX 30 +0.32% and the CAC 40 +0.52%.