Aviva agrees £3.6bn deal to buy Direct Line; new bid to buy Thames Water – business live
Key events
The eurozone economy grew by 0.4% in the third quarter of 2024, according to a third estimate of GDP.
That was an acceleration compared with the 0.2% growth in the second quarter, according to EU statistics office Eurostat.
However, despite the acceleration, the eurozone economy only grew by 0.9% compared with the same quarter of the previous year – a relatively meagre growth rate. Growth has been held back in particular by Germany, where economic growth lagged at 0.1% in the quarter.
Ireland (+3.5%) recorded the highest increase of GDP compared to the previous quarter – although Ireland’s economic figures are heavily caveated because of the infuence of tech companies’ offshore holding companies. It was followed by Denmark and Lithuania (both +1.2%). The highest decreases were observed in Hungary (-0.7%) and Latvia (-0.2%).
Household spending was a big contributor, increasing by 0.7% in the euro area.
However, exports decreased by 1.5% in the euro area in the quarter.
The UK may not retaliate if Donald Trump imposes tariffs on British goods imports, the business secretary has said.
Jonathan Reynolds said that the UK could be relatively sheltered from Trump’s ire because the US runs a goods trade surplus, exporting more goods to Britain than it imports the other way.
But if Trump does impose tariffs on all countries, the UK would not automatically respond, Reynolds said in an interview with the Financial Times. He said:
In this country there’s no political constituency for protectionism.
Increasing costs of goods or food for your constituents is not attractive.
Reynolds also cautioned that the prospects for a trade deal between the US and UK could be tricky, given the “very different regulatory regimes for agriculture and food”.
British trains able to run normally once underway says National Rail
National Rail has given an update on the rail disruption: it appears to be limited mainly to trains setting off for their first journey, although there could be knock-on delays through the day.
Its update said:
This issue is mainly affecting trains on some routes leaving the depot to start their service. However, trains can run normally once they are underway.
Short-notice cancellations and alterations are expected due to the knock-on effect on the timetables. Please check before you travel, allow extra time for your journey and monitor live departure boards.
Mike Ashley’s Frasers Group is in the market for another retailer: this time it’s Norwegian sporting goods retailer XXL ASA.
Frasers said that it is launching a hostile takeover of the brand because it disagreed with the company’s plan to issue new shares, which would dilute Frasers’ existing shareholding.
Frasers, the bulk of whose earnings come via Sports Direct, is XXL’s second largest shareholder, with about 32.5% of the voting rights and about 25.8% of the issued share capital.
It said that it opposed a share issue by XXL which would have sought to raise 600m Norwegian krone (£42m). It said in a statement to Oslo’s stock market:
We believe that the proposed alternative rights Issue is wrong, its legality is questionable and its implementation will be extremely detrimental to both Frasers and the other minority holders of XXL shares, who will be unfairly and significantly diluted by the commission shares to be issued under the terms of the Alternative Rights Issue.
In addition, we do not believe that shareholders, especially minority shareholders, should be asked to provide further funding to XXL when it has not articulated any clear plan to address and resolve the root causes of its persistent problems.
Michael Murray, Frasers chief executive (and Ashley’s son-in-law), said:
Our strategic vision and industry experience position us uniquely to help XXL navigate its current challenges. We are committed to ensuring that XXL reaches its full potential.
UK house prices hit new record high of £298,083 says Halifax
The average price of a house in the UK has hit a record high as homeowners experience a fifth successive month of increases in the value of their properties, Britain’s biggest mortgage lender has said.
Halifax’s monthly house price index found that the cost of an average home stood at £298,083 in November, up almost £5,000 on the previous record set in October.
Prior to the latest rise, the record average house price was set in June 2022, at 293,507.
House prices increased by 1.3% in November, the biggest increase this year and the fifth consecutive monthly rise.
On an annual basis property prices are up 4.8%, the highest rate of increase since November 2022.
Amanda Bryden, the head of mortgages at Halifax, said:
Latest figures continue to show improving levels of demand for mortgages, as an easing in mortgage rates boost buyer confidence. However, despite these positive trends, many potential buyers and movers still face significant affordability challenges and buyer confidence may be tested against a changeable economic backdrop.
As we move towards the end of the year and into 2025, positive employment figures and anticipated decreases in interest rates are expected to continue supporting demand. This should underpin further house price growth, albeit at a modest pace as borrowing costs remain above the average of a few years ago.
You can read the full story here:
Here is the full statement from Suez on the bid by Covalis for Thames Water:
In exclusive partnership with Covalis, Suez is submitting a non-binding offer to advise and assist Thames Water by leveraging Suez’s expertise in technical advisory and organizational optimization.
At this stage, Suez scope of work is limited to advisory mission to ensure the project’s success and address the specific challenges faced by Thames Water.
Suez attaches great importance to support Thames Water in its operational recovery and long-term sustainability in alignment with regulatory expectations.
The FTSE 100 in London has edged down in the opening trades by five points – less than 0.1% – to 8,344.
Direct Line Group has jumped by 7.6% to £2.53 – although it remains well off the £2.75 offer price, suggesting investors may have questions over whether the deal will be completed.
Here are the opening snaps from across Europe’s major stock indices:
-
EUROPE’S STOXX 600 FLAT
-
FRANCE’S CAC 40 UP 0.1%; SPAIN’S IBEX DOWN 0.2%
-
EURO STOXX INDEX DOWN FLAT; EURO ZONE BLUE CHIPS DOWN 0.1%
-
GERMANY’S DAX UP 0.1%
Trains across Great Britain could be disrupted by nationwide communications fault
Trains across Great Britain may be disrupted this morning because of a nationwide fault with the radio systems used by drivers to communicate with signaller, National Rail has reported.
National Rail, which is run by train operating companies, said that all National Rail routes may be affected, in a statement on its website. It said it was investigating the problem.
It said:
There is a nationwide fault with the communication system used between train drivers and signallers. As a result, services across the National Rail network may be subject to disruption this morning.
Trains across the network are having to start their journeys later because of this fault and some may also be subject to cancellations or alterations. Please check before you travel, allow extra time for your journey and monitor live departure boards.
The lines affected included London’s Elizabeth line – Britain’s most popular line – ScotRail, and services across England.
National Rail said the problem was with the GSMR system, or the Global System for Mobile Communications-Railway. The technology is designed to deliver “digital, secure and dependable communications between drivers and signallers” including within tunnels and deep cuttings, according to Network Rail, which runs the UK’s rail tracks.
Aviva agrees £3.6bn Direct Line takeover; Suez lined up to manage Thames Water in bid
Good morning, and welcome back to our love coverage of business, economics and financial markets (after a two-day break).
FTSE 100 insurer Aviva has agreed to buy rival Direct Line in a £3.6bn cash and shares deal after a sweetened offer.
Direct Line’s board said that it would be minded to accept the offer of £2.75 per share, up from Aviva’s first bid of £2.50 per share that valued its FTSE 250 rival at £3.3bn.
Direct Line had argued that it could turn its performance around, after slumping in recent years. It rejected the first offer, saying it substantially undervalued the company.
The latest offer is a 73% premium to the closing price before the first bid was announced, the companies said in a joint stock market statement on Friday morning. The companies said:
The Direct Line board believes that, in addition to the attractive headline value per share, the combination would provide the opportunity to deliver significant synergies, creating substantial additional value for both sets of shareholders.
Aviva has until 5pm on – ah – Christmas day to make a firm offer or walk away.
Another Thames Water bidder emerges
French utility Suez could reportedly be brought in to manage the struggling Thames Water as part of a new £5bn bid by an infrastructure investor.
Covalis Capital has submitted a bid to Thames Water, the Financial Times reported, as it looks for new owners and tries to agree an emergency debt package to avoid temporary nationalisation.
Thames Water provides water and sewage services to 16 million customers across London and the Thames Valley in south-east England. It has been on the verge of collapse for several months, labouring under its £19bn debt pile.
The investor plans to break up Thames Water and list the remainder on the stock market, while giving the UK government a seat on the board, according to people cited by the FT. It reported:
Covalis would provide about £1bn up front on agreement of the deal, the people added. The London-based investor would then raise another £4bn from asset sales, refinancing and the listing, which is expected in two to three years’ time.
Under the deal Suez would only function as a service provider. Suez said in a statement:
At this stage, Suez’s scope of work is limited to [an] advisory mission to ensure the project’s success and address the specific challenges faced by Thames Water.
The FT reported that other potential bidders for Thames Water could be Hong Kong-based firm CK Infrastructure Holdings, the owner of Northumbrian Water, and Castle Water, which is owned by Conservative party treasurer Graham Edwards.
The agenda
-
10am GMT: Eurozone GDP growth third estimate (third quarter; previous: 0.2% quarter-on-quarter; consensus: 0.4%)
-
1:30pm GMT: US non-farm payrolls (November; prev.: 12,000 jobs; cons.: 200,000)
