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All eyes are on British regulators’ expected scrutiny of the deal to sell Arm to Nvidia.
Kazuhiro Nogi/Agence France-Presse/Getty Images
News that SoftBank has sealed the deal to sell Cambridge-based Arm for up to $40 billion, and optimism over a coronavirus vaccine, buoyed London markets as mergers and acquisitions news across Europe, Asia, and the U.S. have set a positive tone for trading in the week ahead.
The FTSE 100 UKX, -0.03%, the index of London’s top 100 stocks by market capitalization, rose 0.48% in Monday morning trading. There were 40 gainers and 60 losers.
Shares in British security services company G4S GFS, +24.43% rocketed over 24%, after the news broke that Canada’s GardaWorld intends to make an approximately £2.96 billion ($3.81 billion) all-cash offer for the group. G4S shares are down nearly 18% year-to-date.
SoftBank 9984, +8.95% announced late on Sunday that it has sold chip designer Arm after four years of ownership to U.S. graphics chip maker Nvidia NVDA, -1.19%. Arm, one of Britain’s most important homegrown technology companies, will be sold for $21.5 in stock and $12 billion in cash, with another $5 billion subject to Arm’s financial performance and $1.5 billion earmarked for stock to Arm employees.
All eyes are on British regulators’ expected scrutiny of the deal. “Any deal is likely to face significant regulatory obstacles, not only from U.K. authorities who have already been on the receiving end of broken promises from previous U.S. companies, circa Cadbury and the Kraft takeover, but also U.S. and EU regulators who may have concerns over the huge dominance this purchase would give Nvidia over the global chip market,” wrote Michael Hewson, an analyst at CMC Markets.
London markets were also nudged up by optimism about a coronavirus vaccine. The University of Oxford announced over the weekend that it would be resuming its trial with AstraZeneca AZN, -0.53% after it was halted last week due to an “unexplained illness” in a participant. U.S. drug giant Pfizer’s PFE, +1.17% chief executive, Albert Bourla, said in an interview on Sunday that a successful vaccine could be distributed in the U.S. as early as the end of this year.
The biggest gainer on Monday morning was online grocery company Ocado OCDO, +4.01%, which rose as much as 3.8%. Ocado will release its third-quarter results tomorrow, which should give investors an update on its new joint venture with Marks & Spencer, which it sold half of its retail business to for £750 million last year.
Other gainers included Informa INF, +1.76%, GVC Holdings GVC, +1.21%, and BAE Systems BA, +2.52%.
The pound was up 0.54% against the dollar GBPUSD, +0.60% and up 0.35% against the euro GBPEUR, +0.39%, as British currency markets brace for the coming Bank of England decision this week.
Precious metals miner Fresnillo FRES, -6.06% plunged as much as 6.6% in Monday trading, leading the FTSE’s list of losers. British telecom Vodafone VOD, -0.72% dipped as much as 0.9%, as the group remains in talks to complete selling its Egyptian unit to Saudi Telecom.
