12.7 C
New York
HomeBusinessMoneyMARKET REPORT: Omicron threat grounds IAG deal to buy Air Europa

MARKET REPORT: Omicron threat grounds IAG deal to buy Air Europa

British Airways owner IAG lost some altitude as the Omicron variant scuppered plans to buy rival airline Air Europa.

The FTSE 100 firm, which also owns Irish carrier Aer Lingus, fell 5.1 per cent, or 6.76p, to 125.8p after ending discussions to buy Spain’s third-largest airline.

It comes over two years after it first unveiled plans to buy Air Europa for £850million. The price was halved to £425million in January after the onset of the pandemic battered airlines across the world.

BA owner IAG, which also owns Irish carrier Aer Lingus, fell 5.1%, or 6.76p, to 125.8p after ending discussions to buy Spain’s third-largest airline Air Europa

The deal was also being probed by regulators in the UK and Europe amid concerns it could reduce competition in the British and Spanish airline markets.

In November, the Competition and Markets Authority said it was considering a probe.

A successful takeover would have increased IAG’s grip on the Spanish aviation market given that the company already owns the country’s flag carrier Iberia and budget airline Vueling.

Hargreaves Lansdown analyst Laura Hoy said: ‘Bringing Air Europa and the significant debt that came with it under [IAG’s] umbrella would have put further strain on the group’s balance sheet. 

Stock Watch –  Avon Protection

MARKET REPORT: Omicron threat grounds IAG deal to buy Air Europa

Avon Protection slid to four-year lows after a £27million annual loss, and said it would wind down its body armour business over the next two years.

The company, which makes helmets and gas masks, will honour remaining contracts but then exit the field.

It has struggled with delays and a new body armour product failed a crucial early test. 

A £35million writedown pushed Avon, whose shares fell 15 per cent, or 162p, to 916p, into the red.

It made a profit of £1.7million the year before.  

With concerns about new Covid variants looming over the industry at present, news that the deal is off the table isn’t all bad.

‘Right now caution, not bravery, seems the game plan.’

The FTSE 100 was down 0.66 per cent, or 47.89 points, at 7170.75 while the FTSE 250 declined 0.52 per cent, or 116.81 points, to 22433.88.

Higher than expected inflation hit markets amid worries the cost of living could be squeezed further.

The jump in prices by 5.1 per cent in November, the biggest increase in a decade, will also pile pressure on the Bank of England to raise interest rates today.

Irish conglomerate DCC shot up 9 per cent, or 494p, to 6000p after snapping up US firm Almo Corp in its largest acquisition to date.

Almo supplies electronics and appliances to businesses and consumers. DCC will pay £462million for the group, which is expected to double the size of its North American technology business.

Midwich Group, a provider of broadcast and audio equipment, rose 9.8 per cent, or 57p, to 637p after ‘stronger than expected’ trading despite product shortages.

It forecast a profit for 2021 of at least £30million, ‘materially ahead’ of its previous expectations.

Pharma giant GlaxoSmithKline saw its Covid-19 vaccine, which is being developed with French peer Sanofi, delayed into next year.

It accepted independent recommendations that a clinical trial should continue into the first quarter of 2022 to ‘accrue more data’, thus missing its target of releasing the jab this year. 

Shares lost 0.7 per cent, or 10.6p, to 1608.6p. Mid-cap gambling group 888 will sell its bingo business to a division of rival Broadway Gaming in a deal worth at least £38million.

The sale comes as 888 focuses on its core betting and gaming arms, and is expected to complete in the second quarter of 2022. It fell 0.1 per cent, or 0.2p, to 289.8p.

Russia-focused steel maker and miner Evraz, part-owned by Russian billionaire and Chelsea FC owner Roman Abramovich, will split off its coal assets, held under Moscow firm PJSC Raspadskaya, to pursue strategic, capital allocation and sustainability objectives. It fell 1.5 per cent, or 8.8p, to 597.8p.

Meanwhile, David Lufkin, the former head of sales at oiler Petrofac, had £140,000 confiscated by the Serious Fraud Office.

He had admitted 14 counts of bribery and admitted making corrupt payments between 2011 and 2018 to influence the awarding of contracts to the group. He was handed a two-year suspended sentence in October. 

Petrofac dropped 3.2 per cent, or 3.6p, to 108.6p.

Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.

Stay Connected
Must Read
You might also like


Please enter your comment!
Please enter your name here