Reckitt to sell China baby formula business, IWG warns on 2021 earnings

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The FTSE 100 is expected to open eight points higher on Monday, having closed up 0.66% on Friday at 7,069.04.

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UK consumer goods group Reckitt Benckiser said it has agreed to sell its baby formula business in China to the private equity firm Primavera for $2.2bn. Reckitt said it expected to receive about $1.3bn in cash from the deal which it will use to pay down debts, and will keep an 8% stake in the unit, it said on Monday in a statement.

Workspace provider IWG warned that underlying earnings for 2021 are set to be “well below” the previous year’s level due to Covid-related restrictions. “Whilst we have continued to see strong recovery in some of our markets since our first quarter trading update, including positive occupancy momentum in the US, the overall improvement in occupancy across the whole group has been lower than previously anticipated as a result of the prolonged impact of Covid-19, including continuing lockdown restrictions and the emergence of new variants of the virus in some markets,” it said.

AstraZeneca said on Monday that final results from the head-to-head ‘ELEVATE-RR’ phase 3 trial of ‘Calquence’, or acalabrutinib, demonstrated non-inferior progression-free survival and statistically significantly fewer events of atrial fibrillation versus ibrutinib in adults with previously-treated chronic lymphocytic leukaemia (CLL), the most common type of leukaemia in adults. The FTSE 100 drugmaker also said that separately, updated results at four years of follow-up from the ‘ELEVATE-TN’ phase 3 trial continued to show a strong progression-free survival benefit for Calquence as combination therapy or as monotherapy in previously untreated patients with CLL.

Newspaper round-up

Experts have raised concerns that Amazon may escape paying significantly more tax in some of its biggest markets unless world leaders close a large loophole in a historic global deal. Finance ministers in London from the G7 group of wealthy nations, including representatives of the UK, US and EU, on Saturday agreed to the landmark deal aimed at making the biggest companies such as Apple, Microsoft, Google and Facebook pay more tax. - Guardian

The UK lost out to France as the most popular European destination for foreign investors for the second year in a row, amid disruption from Brexit and the coronavirus pandemic. During 2020 the UK secured 975 inward investment projects compared with France’s 985 projects, according to accountancy firm EY. - Guardian

Labour shortages are spilling into the retail sector following a hiring crisis in hospitality that has upended the day-to-day running of pubs, bars and restaurants. Shop workers have been hard to find this year with one in three retail leaders struggling to fill roles, new data has shown. Fashion firms are among the companies hit the hardest, followed by smaller retailers, which employ up to 1,000 staff. - Telegraph

The French government and left-wing campaigners have called for a higher minimum rate of corporation tax than that agreed by the G7, sparking fears of rising global levies that could hurt small businesses. The deal struck between G7 finance ministers on Saturday is designed to force technology giants to pay more tax by introducing a minimum global corporation tax rate of 15pc. - Telegraph

Reckitt Benckiser is taking a £2.5 billion loss on the sale of its struggling baby formula business in China through a sale to a private equity firm. The consumer goods group bought the business as part of the 2017 acquisition of Mead Johnson, the American baby milk group, for which it paid $16.6 billion. It is now selling most of the Chinese division to Primavera for $2.2 billion. After costs, Reckitt expects to receive about $1.3 billion. - The Times

US close

Stocks on Wall Street finished in positive territory on Friday, with the Dow Jones Industrial Average rising 0.52% to 34,756.39.

The S&P 500 added 0.88% to 4,229.89, and the Nasdaq Composite advanced 1.47% to 13,814.49.