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What to Watch: Estate agents eye £500m merger, stock markets tank, and profits rise at Express and Mirror owner

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
A view of a Barstow eves branch in London, which is owned by Countrywide. (PA)

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

Estate agents eye merger

Estate agent groups Countrywide (CWD.L) and LSL Property Services (LSL.L) are eyeing a potential merger, both companies confirmed on Monday.

Countrywide and LSL said in separate statements that they were in discussions about a potential all-share combination, following a report from Sky News on Sunday. Sky said the deal would be worth £500m.

LSL is in the driving seat in merger talks but cautioned there is “no certainty that any offer will ultimately be made for Countrywide”. LSL, which owns brands like e.surv and Your Move, said it may also change the terms of any deal if an offer is made.

Shares in Countrywide rose 1% in early trade, while shares in LSL dipped 0.3%.

Stock markets tank

European stocks sold off sharply on Monday, driven by fears about the spread of novel coronavirus on the continent.

The FTSE 100 (^FTSE) dropped 3.2%, the German DAX (^GDAXI) fell 3.7%, the French CAC 40 (^FCHI) dropped by 3.5%, and the Euronext 100 (^N100) dropped by 3.5%.

The sell-off came as Italian officials locked down 12 towns in the wake of more than 150 cases of COVID-19 and at least four deaths.

Some 50,000 inhabitants are thought to be affected by a series of “urgent measures” announced on Sunday, including restrictions on moving in and out of the affected areas in the northern Lombardy and Veneto regions.

Overnight in Asia, the Hong Kong Hang Seng (^HSI) closed down 1.7%, Japan’s Nikkei (^N225) closed down by 0.3%, and the Shanghai Composite (000001.SS) fell by 0.2%.

US markets were set to open sharply lower. S&P 500 futures (ES=F) were up down by 2.6%, Dow Jones Industrial Average futures (YM=F) were up 2.5%, and Nasdaq futures (NQ=F) were down by 3.2%.

Profits rise at Express and Mirror-owner

Reach PLC (RCH.L), the company behind the Express, Daily Star, and Mirror papers, has reported a rise in profits even as revenues declined.

Reach said profits rose by 6.1% last year to £150.6m, even as revenue declined by 3% to £702.5m. The company said it was boosted by £12m of cost savings and £16m of synergy costs stripped out as a result of the acquisition of the Express and Star titles.

Chief executive Jim Mullen said: “2019 was a year of good operational and solid financial progress with record growth in audience numbers, consistently good cash generation and a strong balance sheet.

“This, along with unparalleled scale, underpins our drive to build an intelligent, relevant and trusted content business for the long term whilst continuing to deliver for our stakeholders.”

Primark ‘well stocked’ despite coronavirus

Primark’s owner has warned continued disruption to Chinese factories from the coronavirus could threaten future supplies of some of its product lines.

Associated British Foods (ABF.L) said in a trading update it was “well-stocked” with supplies for several months, as it typically orders ahead of Chinese New Year.

The company said it did not expect any short-term impact from the outbreak. But it said the “risk of supply shortages on some lines” later this year would increase if current disruption to manufacturing in China was “prolonged.”

It said it was considering asking suppliers in other regions to raise production, with many Chinese factories currently shut down to help contain the virus.

Phone hacking scandal still costing The Sun millions

The company behind The Sun newspaper is still facing rising costs from the fallout of the phone hacking scandal almost a decade ago.

News Group Newspapers, which owns The Sun and The Sun on Sunday, said in recent accounts that it has set aside millions more to cover claims linked to phone hacking at the News of the World.

The News of the World was closed down in 2011 after revelations that it had obtained information for stories by hacking into the voicemails of celebrities. At the time, the paper was the Sunday sister edition to The Sun.

The scandal led to “a number of civil cases against the company,” News Group Newspapers said in its accounts, “most of which have been settled, or are in the process of being settled.”

However, the cost of settling the claims continues to rise and News Group said it had set aside £26.7m to cover the settlements, up from £14.7m in 2018.

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