London midday: Footsie struggles despite M&A burst

22nd Jun 2009 12:22

Footsie is struggling despite the possibility of a mega mining merger between Anglo American and Xstrata.Anglo shares have shot forward on the confirmation of an approach from Xstrata. In a statement, Xstrata said a merger was "highly compelling" and would provide "enhanced scale and financial flexibility to fund future growth" but Anglo seems less than keen so far.Lonmin has taken a hit as Xstrata could be forced to sell its 24.9% stake in the platinum miner if it pursues its Anglo ambitions.Elsewhere, Mexican silver miner Fresnillo has withdrawn its offer for MAG Silver, saying it is no longer in the best interests of Fresnillo shareholders. The group said its decision reflects the fact that it has not been possible to conclude the independent valuation of MAG required under Canadian securities laws in order to permit the offer to proceed.Life group Aviva has sold its Australian business to National Australia Bank for £452m, boosting its capital surplus by £400m. Total cash proceeds of from the sale are A$925m (£452m) comprising A$825m cash on completion, a dividend of A$40m and A$60m for a net asset adjustment.Oil producers such as Tullow Oil, Royal Dutch Shell and BG Group are out of favour as the price of crude drifts back.Royal Bank of Scotland chief executive Stephen Hester is set to be awarded a £9.6m pay and incentives package. The terms have already been agreed by UK Financial Investments, the body that runs the UK government's 70% stake in RBS.British Airways is a faller on arch rival Richard Branson's comments that it should be allowed to go bust if its financial probelms worsen and should not get any UK state aid.There is also plenty of M&A activity on the secnd row. Brit Insurance has made a proposal to the board of Chaucer in relation to a possible all share offer for the underwriter. The terms of the proposal are 0.23 new Brit ordinary shares for every existing Chaucer share.Property group Segro has reached agreement with Brixton on the financial terms of a possible recommended all-share offer, which could be accompanied by the issue of new shares to raise up to £250m. The possible offer for each Brixton share is 1.750 Segro shares. Expectations that Centrica will use its 25% shareholding as the launch pad for a full bid are driving the price of oil and gas group Venture Production higher. Press reports suggest Centrica is pondering a bid at 850p a share, while Venture's board is said to be holding out for 950p. Centrica has been given until 13 July to make a full bid for Venture or waive the right to do so for a year.Independent News and Media, the Irish publisher of the UK's Independent newspaper, said it is considering a deeply-discounted rights issue in order to partly repay a €200m bond that was due to be paid back on 18 May. Great Portland Estates said it received 96.3% take-up on its fully underwritten 8 for 11 rights issue to raise gross proceeds of £175m. The group said it received valid acceptances in respect of 126.7m shares. Bookrunners Credit Suisse Securities and JP Morgan Cazenove will procure subscribers for the remaining 4.8m shares.Yellow pages publisher Yell has slumped on a warning that it could breach its bank covenants. "As a consequence of increasingly uncertain trading conditions, there is a risk that the group might need to reset its financial covenants with its lenders to avoid a breach of those covenants," it said in its annual report. Logistics software specialist Kewill Systems upped its dividend for last year by a third as underlying profits improved slightly, with the group expecting further growth in the current year.