BAE Systems’ largest shareholder will on Monday signal its “significant reservations” about the UK defence group’s proposed tie-up with EADS . Invesco Perpetual, which owns more than 13 per cent of BAE, will outline in a statement its concerns about the structure of the €35bn transaction and its likely impact on shareholder value. The fund manager has hired an M&A boutique, Ondra Partners, to advise it. Invesco has long been a critic of BAE’s acquisition strategy, and has urged the group’s management to return more capital to investors. In correspondence seen by the Financial Times, Neil Woodford, its head of UK equities, last year warned Dick Olver, BAE’s chairman, that the company’s “unacceptable” focus on dealmaking was responsible for the low rating of its shares, The Financial Times reports.
The Prime Minister is ready to hold talks with the French president, Francois Hollande, and the German chancellor, Angela Merkel, to settle an agreement between the three governments. Such a move would pave the way for BAE Systems to ask the Takeover Panel for an extension to the Wednesday deadline for a deal to be either agreed or abandoned. The political threat to the deal is being reinforced by complaints from some BAE investors that they are being kept in the dark about the merger. A number of shareholders have expressed concerns that BAE is negotiating from a position of weakness while some EADS investors feel the terms of the deal are too generous to the British company, The Telegraph reports.
George Osborne is set to be told this autumn by the Office for Budget Responsibility he will have to plug another large hole in the public finances, extending austerity until 2018 and throwing the coalition’s deficit reduction strategy into doubt. Higher borrowing in the years ahead make it probable the OBR will say that the government is likely to miss its supplementary target to see the burden of public debt falling by 2015-16 and if weakness in the growth of the economy continues, the target will also be under threat the following year in 2016-17, according to The Financial Times.
Chancellor George Osborne will today address the Tory Party conference amid calls from business leaders to focus on boosting growth and increasing dissatisfaction over his handling of the economy. A new survey published today from Britain’s manufacturing organisation, the EEF, sends a clear message to the Chancellor that he should prioritise kickstarting the recovery. Of more than 350 companies surveyed, just under 80% said they want to see new measures to promote growth, while just over 25% saw the reduction of the UK’s structural deficit as the main priority, The Telegraph says.
The site of what was once Europe’s largest cement works is to be turned into a giant, Hollywood-style theme park to rival Disneyland Paris. The brownfield land in Kent, close to where the remains of the 250,000-year-old “Swanscombe Man” were found, could rival the Olympic Park for the scale of its job creation and local regeneration. Plans for the £2bn “Paramount Pictures” park on the Swanscombe Peninsula have been assembled by a consortium of companies, including Lafarge, the French cement maker, Development Securities, a British developer, and the Canadian contractor Brookfield Multiplex. The trio have set up a development vehicle, London Resort Company Holdings, and signed a deal with the licensing division of Paramount Pictures, Hollywood’s oldest studio. The agreement gives LRCH the rights to create Britain’s first Paramount-themed entertainment resort on the 872-acre site owned by Lafarge.
Cristina Kirchner is facing revolt over an ailing Argentine economy, as her approval rating hits a record low and aides admit she is using the Falkland Islands as a smokescreen to mask domestic failings. The streets of Buenos Aires have been crammed with up to 200,000 people in recent marches against the Argentine president, deploring inflation, insecurity and alleged corruption. The economy has slowed dramatically. Growth was more than eight per cent in 2011 but is projected at 3.4% this year. Independent analysts, who say the government manipulates data, predict it will be as low as 1.5%, according to The Telegraph.
Business Secretary Vince Cable began a five-day visit to Africa today, which will include a trip to South Africa amid escalating tensions as industrial action sweeps through the country’s mining sector. Mr Cable arrived in Nigeria and will begin a two-day visit to South Africa on Wednesday. The issues in the mining industry are expected to be discussed. The timing of the trip is sensitive as a number of London-listed companies, including Anglo American and Lonmin, have been caught up in the violence which began in August.
