BUSINESS LIVE: S&P cuts BP credit outlook; BATS hit by illegal vapes; Checkit swoops on Crimson Tide

The FTSE 100 is down 0.3 per cent in early trading. Among the companies with reports and trading updates today are BP, British American Tobacco, Checkit, Wizz Air and London Metric. Read the Tuesday 4 June Business Live blog below.

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The future of Royal Mail should be a top election issue: ALEX BRUMMER

Of all the takeover battles on the table at present, there is none more significant to Britain than the proposed £3.6billion sell-off of International Distribution Services, the owner of the Royal Mail, to Czech billionaire Daniel Kretinsky.

The passive way in which the board agreed to the deal and feeble undertakings made by Kretinsky is disgraceful.

M&S bosses share £9m pay bonanza

Marks & Spencer bosses scooped more than £4million each last year after its recovery sparked the biggest pay day for more than a decade.

Chief executive Stuart Machin – who has spearheaded the High Street retailer’s turnaround and its return to the FTSE 100 – was paid £4.7million.

Market open: FTSE 100 down 0.3%; FTSE 250 off 0.6%

London-listed stocks are trading lower this morning after data showing faltering US manufacturing activity that could hurt corporate profits.

Energy stocks BP and Shell are down 2.3 and 1.9 per cent, respectively, after ratings agency S&P Global revised lower BP’s credit outlook while the latter fell as oil prices slipped 1 per cent.

Investors weigh the potential relief of a September rate cut by the Federal Reserve against the backdrop of a second consecutive dip in US manufacturing activity that could erode revenue for global companies listed on the benchmark index.

However, losses are capped as focus turns to the European Central Bank (ECB), which meets on Thursday and is anticipated to trim interest rates by 25 basis points.

Tritax Eurobox is the top gainer on the mid-cap index with a 5.7 per cent jump after Brookfield Asset Management said it is in early stages of a possible offer for the company.

Blackstone raises bid for Hipgnosis music fund to 103p a share

A private equity titan has sweetened its offer for Hipgnosis as it tries to get a takeover deal over the line.

Blackstone upped its offer to 103p a share – valuing the music group, which owns the rights to catalogues from the likes of Beyonce and Blondie, at £1.25billion.

Wall Street glitch sends shares tumbling 99%

Wall Street was rocked as a technical glitch appeared to send shares in some of America’s biggest firms down around 99 per cent.

In a dramatic session, the New York Stock Exchange said it was investigating a fault that led to trading in at least 60 companies to be halted.

Among them were Berkshire Hathaway – Warren Buffett’s giant conglomerate – restaurant chain Chipotle and mining group Barrick Gold.

Checkit swoops on Crimson Tide

London-listed Checkit has made a takeover bid for Crimson Tide professional services app maker Crimson tide worth £12million.

Checkit, which is an augmented workflow and smart sensor automation specialist, said the deal would see Crimson Tide investors recieive seven Checkit shares for every share they own – an equivalent valuation of 182p per share.

Crimson Tide shareholders would hold approximately 30 per cent of the enlarged group.

Checkits said the combination ‘presents a compelling strategic opportunity to create a scaled workflow software company and furthermore believes that a company of this increased scale would present a more attractive investment opportunity for all shareholders than either business as a standalone entity’.

‘The Checkit Board has long believed that the combination of Checkit and Crimson Tide is an obvious and positive strategic step for both companies. We believe it will position the enlarged entity as a market leader in workflow software solutions, leveraging the strengths of both organisations for enhanced profitability and competitive advantage whilst being more attractive to existing and potential new investors.

‘Most importantly, the Checkit Board believes that the combination of the two businesses has the potential to deliver value for both sets of shareholders.

‘Checkit’s stable management team and the Checkit Board has a track record of successfully integrating acquired businesses. I look forward to presenting the strategic rationale and benefits of this potential combination to Checkit and Crimson Tide shareholders.’

Legal firms set to pay £200k starting salaries as they battle for talent

The war for talent at leading law firms shows no sign of slowing as experts predict junior pay could soon top £200,000 a year – far more than the prime minister.

An elite group of US firms has increased pay for newly qualified staff in London to as much as £180,000 as salaries soar on both sides of the Atlantic.

And UK rivals in the so-called Magic Circle – five of the most prestigious London-based firms that historically dominated the legal scene – are offering junior lawyers up to £150,000 a year as competition intensifies.

BATS hit by illegal vapes

British American Tobacco expects a small decline in half-year revenue and adjusted profit from operations, with the group pinning the blame on the illegal vape trade in the US.

The maker of Dunhill and Lucky Strike cigarettes has been forced to temper its hopes for revenue and profit growth as it grapples with a tough environment in the US, one of its key markets.

There, both the company’s traditional tobacco business and its portfolio of newer products such as vapes are struggling as users switch out its more expensive brands for illegal disposable vapes or cheaper cigarettes.

The company said while the US was showing some early signs of recovery, consumers traditional cigarette volumes were down 9 per cent so far this year across the industry.

Boss Tadeu Marroco said: ‘We expect our performance to be second-half weighted, mainly driven by wholesaler inventory movements related to continued investment in our US commercial actions, as well as the phasing of new launches.

‘Our guidance also reflects ongoing macro-economic pressures, particularly in the US market and continued lack of effective enforcement against the growing illicit vapour segment.

‘As a result, we expect our H1 revenue and adjusted profit from operations to be down by low-single digits on an organic, constant currency basis.’

Shein closes in on £50bn London listing despite concerns over working conditions

Shein is set to launch its £50billion stock market listing in London in the coming days despite concerns over working conditions at the Chinese firm.

The online fashion giant, which was set up in Nanjing but is now based in Singapore, could file papers as soon as this week in a major boost for the City.

London has been vying with New York for the blockbuster float which would see Shein soar straight into th

e blue-chip FTSE 100 index.

S&P cuts BP credit outlook

S&P Global has revised BP’s credit outlook lower, with the ratings agency citing slower than expected debt reduction, in a blow to boss Murray Auchincloss who has sought to win back investor support following a turbulent year.

Auchincloss took the reins in January with a vow to take a pragmatic approach to steady the company after a bruising period that followed the abrupt resignation of predecessor Bernard Looney last September.

The former head of finances under Looney has sought to simplify BP’s operations and cut costs in the face of investor doubts over plans to reduce the company’s focus on oil and gas and expand a low-carbon business.

S&P downgraded the energy company’s credit outlook to stable from positive while affirming its ‘A-‘ long-term and ‘A-2’ short-term issuer credit ratings.

‘BP’s updated cash allocation strategy is less likely to result in meaningful further absolute debt reduction,’ S&P said in a statement.


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