THE END OF THE AFFAIR FOR FBD-EUREKO - A series of terse statements from listed insurance group FBD Holdings and its Dutch suitor Eureko brings to an end, or so it seems, the latter's plans to merge with the former. Eureko, which owns Friends First, had wanted to create a much larger financial player in the Irish market. Its approach, reported to be worth more than €1.2 billion, put a value of around €35 on FBD shares, which had already gained on the approach. Last night Eureko said it was withdrawing its invitation to consider what it described as its attractive proposal for all FBD stakeholders. FBD issued a follow up statement which more or less said good riddance.
The head of research at Dolmen Stockbrokers, Stuart Draper, says it would seem that there was little or no engagement between the two parties. The initial statement from FBD, confirming that it did receive an approach, did express some concerns about the lack of clarity with regard to any offer and the potential of different offers to different types of shareholders. He said that from the start, there was a high probability of this deal failing. In an announcement on Sunday, FBD said it had rejected the approach and then Eureko said it had withdrawn its offer.
He says what the approach from Eureko does highlight is the current major value in some of the Irish financial services companies after the approximate 40% fall in their share prices over the last 12 months. He points out if you add the different parts of FBD's businesses - insurance, property and financial services - you get a fair value of €39 a share. This compares to a current share price of €30 a share. Mr Draper says he would not rule out further approaches for FBD from other financial services groups over the coming months.
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MORNING BRIEFS - Halifax Bank of Scotland today said it planned to raise £4 billion sterling from shareholders in a rights issue.
*** The sweets industry has been consolidating. Mars has teamed up with billionaire Warren Buffett to buy the world's biggest chewing gum maker Wrigley for $23 billion, creating the world's largest confectionery company. The deal means Buffett's Berkshire Hathaway gets more than 10% stake in Wrigley, which will become a separate Mars subsidiary.
*** The price of a barrel of oil has eased slightly after a two day strike by refinery workers at Grangemouth in Scotland came to an end earlier today. The strike had helped push prices to new records. A short while ago, New York's crude had fallen back 22 cents to $118.53 a barrel while London Brent has also eased 22 cent to $116.52 cents.
**** Royal Dutch Shell saw its profits for the first three months of this year come in at $7.8 billion. That is $1 billion more than this time last year thanks in large part to higher oil prices.
*** OPEC, the oil producing cartel, has warned that the price of crude could keep rising to reach $200 a barrel. OPEC president Chakib Khelil blamed the falling value of the US dollar, which makes other assets, including oil, more attractive for foreign investors. OPEC has also proved resistant to increasing output to cope with increased demand.
*** On the currency markets, the euro is worth $1.5630 and 78.57 pence sterling.
