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What to watch: Garda sweetens G4S takeover bid, Tesco puts pressure on rivals, and vaccine approval fails to spur stocks

Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
·4-min read

WATCH: UK approves Pfizer-Biontech coronavirus vaccine rollout

Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:

Garda sweetens G4S takeover bid

Shares in G4S (GFS.L) surged on Wednesday after Canada’s Garda sweetened its takeover offer for the security firm.

Garda, which is mounting a hostile bid for G4S, said it would pay G4S shareholders 235p per share, valuing the company at £3.8bn ($5bn). Garda had previously offered 190p per share back in September.

Garda also reduced its acceptance level for the offer to just 50% of stock plus one share.

“Shareholders have a simple choice: remain invested in a company which has consistently failed them and the wider community for so many years, or realise their investment in cash, at a significant and highly attractive premium,” GardaWorld’s founder, chairman, president and chief executive Stephan Crétier said in a lengthy statement.

G4S said it was evaluating the new offer and would make a statement in due course. Shares in the company jumped 7.5% to 246p, making the company one of the fastest rising stocks on the FTSE 350.

G4S security staff at the Wimbledon Championships at the All England Lawn Tennis and Croquet Club, Wimbledon. Photo: PA
G4S security staff at the Wimbledon Championships at the All England Lawn Tennis and Croquet Club, Wimbledon. Photo: PA

Tesco puts pressure on rivals

Tesco (TSCO.L) has heaped pressure on rival supermarkets to hand money back to the government after announcing it would pay back over half a billion pound in tax breaks to the exchequer.

Tesco said on Wednesday it would pay the UK government £585m ($781m), reflecting the amount it saved under a business rate holiday for retailers during the pandemic.

Supermarkets have come in for criticism in recent weeks for benefiting from a blanket tax break on business properties introduced by the government at the start of the COVID-19 crisis. The tax break was meant to help struggling businesses but supermarkets have seen sales boom and paid out millions to investors through dividends.

Grocers like Tesco originally declined to pay back the savings they made, but Tesco made a surprise U-turn on Wednesday.

“We are financially strong enough to be able to return this to the public, and we are conscious of our responsibilities to society,” chairman John Allen said.

The decision puts pressure on rivals to follow suite.

“Clearly, Tesco’s decision will have a direct read across to the other British retailers that have remained open and received business rate relief in this challenging time,” said Clive Black and Darren Shirley, retail analysts at Shore Capital.

Sainsbury’s (SBRY.L) stock fell 3.3%, the biggest fall on the FTSE 100, and Morrisons (MRW.L) dropped 1%. Tesco’s stock dropped 1.2%.

WATCH: 800,000 doses of Pfizer/BioNTech vaccine ‘ready to go’

Vaccine approval fails to spur stocks

European stocks fell on Wednesday morning, as investors banked some of the gains made in the previous session.

Bourses opened lower across the continent. Germany’s DAX (^GDAXI) was down 0.5% shortly after the open, the CAC 40 (^FCHI) fell 0.3% in France, and the FTSE MIB (FTSEMIB.MI) shed half a percent in Italy.

The best performing index was the FTSE 100 (^FTSE) in the UK. Sentiment was helped by news that the UK has become the first major western nation to approve a COVID-19 vaccine and confirmation of the end of a month-long lockdown across England. Even still, the FTSE fell 0.1% in early trade.

The pullback came after a strong session on Tuesday and a bumper month. The FTSE 100 enjoyed its strongest rally in 30 years in November, with other indexes enjoying similar feats.

US futures were pointing lower. S&P futures (ES=F) were down 0.2%, Dow Jones futures (YM=F) were off 0.4%, and Nasdaq futures (NQ=F) fell 0.2%.

Asian markets were muted overnight after the New York Times reported that US president elect Joe Biden did not intend to immediately remove tariffs on China. Japan’s Nikkei (^N225), the Hong Kong Hang Seng (^HSI), and the Shanghai Composite (000001.SS) all traded flat, while the Shenzen Component (399001.SZ) rose just 0.2%. South Korea’s KOSPI (^KS11) was the notable exception, rising 1.6%.

Brexit deal ‘hangs in the balance’

The pound sold off sharply against the euro and the dollar on Wednesday, amid reports that UK and EU negotiators still remained at loggerheads in Brexit trade talks.

Michel Barnier, the EU’s chief Brexit negotiator, gave an update to the bloc’s member states on Wednesday morning. Barnier said differences remained on three key issues, according to Bloomberg — fisheries, a level playing field, and how the deal is enforced.

“A deal still hangs in the balance,” a senior diplomatic source told Reuters.

Sterling dropped sharply when headlines around Barnier’s briefing crossed the wires. The pound was down 0.3% against the euro to €1.1083 (GBPEUR=X) shortly after the news broke. Sterling was down 0.4% against the dollar to $1.3364 (GBPUSD=X). The pound had been positive against both pairings earlier in the session.

Additional reporting by Tom Belger.