Britain’s plans for ‘no-deal’ Brexit have ground to a halt
Lack of preparations weakens May’s threat to walk out of talks
he UK government’s preparations for a “no deal” Brexit in March 2019 have largely ground to a halt, making it almost impossible for Theresa May to walk out of negotiations with the EU in the next 10 months, according to people with close knowledge of the situation.
As the prime minister prepares for what is arguably the trickiest phase of the Brexit talks, the government’s official position is that it is confident it can reach an accord with the EU — but that it is also preparing contingencies for “no deal” if Brussels tries to strike too hard a bargain.
However, Whitehall officials are privately conceding that preparations for a “cliff edge” Brexit next March are nowhere near the level they need to be if a threat by Mrs May to walk away from the talks were to be credible.
“Our preparedness for no deal is virtually non-existent,” said one senior British official working on Brexit. “Our ability to deliver a ‘no deal’ outcome recedes with every week that passes.”
Other officials preparing for the possibility of Britain leaving the EU without a deal say they are being discouraged from taking on projects that might only be needed should there be no agreement on customs and regulatory co-operation by next March.
Sir Ivan Rogers, the UK’s former ambassador to the EU, observed in a speech in Glasgow last week that the UK had still not set up the independent regulatory bodies that would be needed in the event of a “no deal” Brexit next year.
“If we want . . . genuinely to go it alone . . . then we have to be going full tilt in developing that regulatory capability at huge speed,” he said. “The fact that, in so many areas, we are obviously not doing that . . . is yet another reason why the EU side has long since concluded that the UK would not walk out.”
Another former mandarin indicated that the failure to set up independent regulatory bodies in the event of a no deal next year was causing most concern.
“How many years does it take to set up a medicines agency?” he said. “Or chemicals approval? Or civil nuclear-safety standards? Or a new state aid policy? Where is the legislation? Where are the skilled staff coming from?”
In last December’s Budget, Philip Hammond, the chancellor, allocated £1.5bn for “Brexit preparedness”, which covers all aspects of Brexit planning, including a “no deal” scenario.”
However, government officials concede that the new money only became available in the financial year starting in April and that it is still too early to make a judgment on how it might be spent.
A further £1.5bn has been set aside by Mr Hammond but this is only being earmarked for the financial year after March 2019 when the UK is formally due to leave the EU.
On Sunday, Jacob Rees-Mogg, the leading Conservative Brexiter, urged Mrs May to revive her threat to leave the EU without a deal if Brussels takes an uncompromising approach in the Brexit negotiations.
He told the BBC that Mrs May should threaten not to pay the £40bn “divorce bill” agreed with the EU in December. “We should say quite clearly: ‘If we don’t get the trade deal we want, you don’t get the money.’ That’s a very strong negotiating position.”
But hardline Brexiters, both in cabinet and on the Conservative backbenches, claim that Mrs May, Mr Hammond, cabinet secretary Sir Jeremy Heywood and Olly Robbins, the chief Brexit negotiator, have conspired to avoid serious “no deal” planning for next March to such an extent that it is no longer a realistic option.
Dominic Cummings, one of the masterminds of the pro-Brexit referendum campaign, wrote last week: “The Treasury argues . . . that given the actual outcome of the negotiations will be abject surrender, it is pointless wasting more money to prepare for a policy that has no future and therefore even the Potemkin preparations now under way should be abandoned.”
A Number 10 spokesman said: “The prime minister is committed to getting the best possible Brexit deal, one that works for the UK and the EU. The government is committing extensive resources as part of our preparations for leaving the EU — whether in the event of a deal or not, and at the autumn Budget the chancellor allocated £3bn specifically for our exit preparations.”
Smiths Group and ICU Medical in talks over healthcare merger
UK engineering business explores options for medical device unit
UK engineering business Smiths Group has held early-stage discussions with a US-listed company ICU Medical about a potential merger of their medical device businesses.
The FTSE 100 industrial conglomerate has for some time been exploring options for its medical unit, which makes healthcare products used in hospitals and played a role in the first successful test tube baby, according to two people close to the situation.
These have included talks about a potential combination of the unit with ICU Medical, a company based in California and quoted on Nasdaq with a market capitalisation of $5.6bn.
Other options have also been examined. One possibility was that Smiths Medical would be injected into ICU Medical and that Smiths Group would retain a stake in the new enlarged entity, one of the two people added.
However, one person close to the company cautioned that the talks with ICU, which were first reported by Sky News, were still at an early stage and there was no certainty of a deal happening. ICU makes intravenous pumps and devices used in oncology.
Smiths Medical generated revenue of £951m in its most recent financial year, against a figure of $1.29bn (£970m) at ICU Medical.
If any deal were to happen, it could go some way to reshaping the portfolio of one of the few remaining conglomerates listed on the London Stock Exchange. Smiths started out as a jewellery shop in 1851 and floated days before the outbreak of the first world war.
Today, it has five divisions that supply a range of products from airport X-ray scanners for the detection of explosives to mechanical seals used in crude oil pipelines.
Medical devices is its single largest business, with a portfolio of products that includes infusion pumps and mechanical ventilators. In 1978, its embryo transfer catheters played a vital role in the conception of Louise Brown, the first IVF baby.
The unit has been the subject of merger and acquisition speculation before. An approach by private equity group Apax to buy the division for about £2.45bn was rejected in 2011.
Over the past decade, Smiths has been viewed by analysts as a target for dismantling due to its collection of disparate businesses.
However, chief executive Andrew Reynolds Smith, in charge since 2015, previously insisted his mandate is to build rather than break up the company, while selling off smaller units that are not core.
Smiths reported disappointing half-year financial figures earlier this year, with pre-tax profits in the six months to the end of January down 12 per cent at £217m. Revenues fell 4 per cent to £1.55bn.
Even so, the stock has gained 15.4 per cent throughout 2018 to trade at £17.20.
Smiths Group declined to comment. ICU Medical could not immediately be reached for comment.
EI Towers looks to close acquisition of three targets by end of year (translated)
27 MAY 2018
Italian transmission tower company EI Towers [BIT:EI] is on course to acquire three transmission tower companies by the end of the year, Italian language daily Il Sole 24 Ore reported. The report cited chairman Guido Barbieri who said that the three companies owned a mixture of telecoms and radio towers and were situated in the Umbria region.
The report said that the contribution to extra EBITDA would be in the region of EUR 2m.
The report cited Barbier as saying that EI Towers made three purchases at the beginning of the year of three companies owning telecoms and radio towers across Italy. The companies were named as Highland, Airnet and Isatech.
The report said that the EBITDA contribution of these three companies plus a fourth acquisition about to be made would also be in the region of EUR 2m.
The report said that EI Towers subsidiary Towertel carried out the buys and would carry out the other acquisitions.
The report added EI Towers also intends to buy up radio transmission companies via its EITRadio subsidiary. The item cited Barbieri as saying that the sector was fragmented and thus ripe for consolidation.
The report added that the aim is for Towertel to contribute EUR 28-30m EBITDA to EI Towers while EITRadio will reach EUR 8-10m, or 4-8%, which would double EITRadio's share in terms of EBITDA margin from 4% to 8%.
The article also said that EI Towers is looking to grow in the antenna system (DAS) market with the acquisition of at least two companies. The report said that one company could be acquired in June.
Mediclinic CEO says not actively considering bid for Spire; bid speculation intensifies - report
27 MAY 2018
Mediclinic Corporation Ltd’s [LON:MDC] Chief Executive Danie Meintjes has said the FTSE-100 private hospital operator is not actively thinking about tabling a bid for UK-based rival Spire Healthcare Group [LON:SPI], The Mail on Sunday reported. The newspaper did not specify when Meintjes was speaking.
City sources cited by the newspaper said Spire and the group’s advisers were aware of growing bid speculation in the past few days.
Mediclinic initially offered GBP 2.986 per share for Spire in October before increasing its bid to GBP 3.155 weeks later. The bid valued Spire at GBP 1.2bn (EUR 1.37bn), the report said.
The six month prohibition on Mediclinic making a further offer has expired, leaving the South Africa-based group free to make a renewed offer for Spire, the report continued.
The report went on to cite a source who said a renewed bid was only a matter of time. Although Mediclinic’s last bid was only slightly short of what Spire’s board wanted, the source added.
Terms of Mediclinic’s offer for Spire last year, if applied to a fresh bid, would value Spire at GBP 1.3bn due to the rise in the South Africa-based company’s share price, the item noted.
Mediclinic booked a GBP 109m write-down on its shareholding in Spire, the article said, noting that Spire’s share price id down by 25% over the past year.
Spire refused to comment, the report said.
Spire Healthcare's share price closed 6.6p up at 250.0p in London on Friday, 25 May, giving the company a market capitalisation of GBP 1.00bn.
Background:
A Financial Times report on 22 February said Spire’s share price gained 5.84% the previous day on rumours that Mediclinic could sell its stake in Spire to a rival such as Tennessee-based HCA Healthcare [NYSE:HCA]. The newspaper’s market report section did not cite a source for the speculation.
However, a dealReporter article on 23 February cited a source familiar with, a source briefed on, and a person familiar with the matter who all downplayed talk that Mediclinic could offload its stake in Spire. DealReporter is published by Acuris, owner of this news service.
Link to original source
Weekly Comment
Investors opened the week bidding up risk assets on news that the Trump administration had at least for now, put on hold $150B in tariffs aimed at Chinese goods. The positive vibes were short lived though. Wednesday the administration revealed they were studying a plan for new tariffs on imported vehicles, based on national security grounds that could run as high as 25%. Then the next day Trump disclosed he had notified North Korean officials that the June summit was off for now, sparking speculation that China hawks would use the setback as ammunition to take a harder line in ongoing trade negotiations. Wednesday’s FOMC minutes were viewed in a more dovish light than many had expected and that along with the consternation surrounding geopolitics resulted in a significant decline in US Treasury yields sending the 10-year back below 3%. By Thursday risk off flows had gained momentum as uneasiness surrounding the incoming populist government in Italy continued to send Italian bond yields higher. By Friday the contagion had spread to Spain as questions around PM Rojoy’s government sent spreads to German government bond yields to some the widest levels seen since the European debt crisis early this decade. The Euro dropped below 1.17 for the first time since Dec. Crude prices were slammed late in the week, falling 4% on Friday alone, as oil producers all but confirmed they were likely to allow production rates to rise next month when they meet in order to keep markets balanced. For the week the S&P rose 0.3%, the Dow added 0.2% and the NASDAQ was up more than 1%.
In corporate news this week, Wabtec rose on plans to merge with GE’s Transportation unit, in a deal valued at $11B. Comcast shares fell after confirming it was readying a bid to rival Disney's for Fox assets. Micron surged towards all-time highs on a buyback announcement and a guidance raise. In the retail space, Tiffany beat consensus and reported 9% America comp sales growth; Best Buy shares were hurt by lackluster guidance; L Brands fell on a disappointing outlook; and Gap missed on its bottom line. Deutsche Bank said it planned to cut back its US and CEMEA equities groups, with overall job reductions that could reach 10,000 positions. Foreign automakers were weighed down by reports that the White House was looking into new tariffs on imported vehicles. And Fiat Chrysler dropped on Friday after announcing a 4.8M vehicle recall in the US due to malfunctions with its cruise-control software.
Macro :
- Italy May Be Cut by Moody’s on Concerns Over New Government
- Scholz Said To Rule Out Greek Loan Extension Beyond 3 Years: SZ
- Saudi Govt Is Said to Halt Orders from German Companies: Spiegel
- Germany Plans to Invest EU6 Billion in 1.5 Million New Homes
Keep an eye on :
- AF FP : Air France-KLM Must Remain United, Dutch Minister Tells Le Monde
- ATUS US : Altice’s U.S. Spinoff Looks Like a Winning Bet - http://bit.ly/2saEptD & attached pdf
- AAPL US : Apple Is Said to Develop Chip to Open Doors: The Information
- ASC LN : Asos Is Said to Seek New Chairman as McBride to Step Down: Sky
- BG AW : Bawag’s Suedwestbank to Cut 290 Jobs: Stuttgarter Zeitung
- BT/ LN : BT rejects offers for Openreach
- DAI GY : Daimler Faces Scrutiny on 120,000 Diesel Cars, Vans: Bild
- DTE GY : T-Mobile Says It Hired Lobbying Firm Tied to Lewandowski: WSJ
- DPW GY : Deutsche Post Plans to Increase Letter Prices by 10 Cents: Bild
- DIS US : Disney’s ’Solo’ at $83.3M for 3-Day Portion of Weekend: Comscore
- EDPR PL : EDP Renovaveis Calls Meeting to Vote on Board Appointments
- ERA FP : Eramet CEO Bories Says Company Looking Into Acquisitions
- FDR FP : Fonciere Des Regions Board Approves Merger W/ Beni Stabili
- GETIB SS : Getinge: Balloom Pump Pilot Study Showed Positive Trends
- INTO BB : Intervest O&W JV Buys Genk Site for EU150m Logistics Project
- ISS DC : ISS A/S Says Mondrian’s Direct Holding Increased to 5.25%
- MELE BB : Melexis to Gain BEL20 Index Entry at Quarterly Review: L’Echo
- OCDO LN : Barron`s : Amazon-Killer Ocado Needs to Execute - http://bit.ly/2J9cDY9 & attached pdf
- PSON LN : Pearson Exploring Options for Properties Including FT Building
- RR/ LN : Boeing Said to Embed Ex-737 Max Boss at Rolls to Fix Engine Woes
- SDIPB SS : Sdiptech AB Signs Pact to Acquire KSS Klimat- & Styrsystem AB
- SRG IM : Baker Hughes, Snam to Develop Plants to Liquefy Gas in Italy: FT
- SMIN LN : Smiths Is Said to Be in Early Talks on Healthcare Unit Deal: Sky
- SNH GY : S. African Fund Manager Wants Wiese Out of Shoprite: Sun. Times
- STOB LN : Stobart Says Director Tinkler to Oppose Chairman’s Re-Election
- TDSQ PL : Teixeira Duarte Signs Agreement to Sell Lagoas Park
- FP FP : Total’s Saft to Invest Over EU200m in Battery Project: Reuters
- VM/ LN : CYBG Set to Sweeten Virgin Money Offer, Sunday Times Says
- VNA GY : Vonovia CEO Says Germany’s Housing Plans ‘Too Ambitious’: WiWo
- VOW3 GY : Volkswagen Wants to Reinstate Lobbyist Steg Back at Post: Bild
- VOW3 GY : VW to Halt Some Diesel Output on Software Glitch: Automobilwoche
- WPP LN : WPP Chairman Contacts Top Holders to Secure Re-Election: Times