Babcock sells Frazer-Nash, Avon Protection cuts revenue guidance

London open

The FTSE 100 is expected to open 15 points higher on Friday, having closed down 0.37% on Thursday at 7,193.23.

Stocks to watch

Defence and aerospace engineer Babcock said it has sold its Frazer-Nash Consultancy to US peer KBR for £293m as part of its disposal programme to bolster its balance sheet. Frazer-Nash provides engineering and technology solutions across a broad range of national infrastructure, to operators and regulators from a network of nine UK and four Australian locations. The consultancy, which Babcock acquired in 2007, employs around 900 people. The sale forms part of Babcock's targeted disposal programme, which aims to generate at least £400m in the next year. Proceeds from this transaction will be used to reduce net debt.

Avon Protection cut its revenue guidance for 2021 and 2022 because of delayed orders and supply chain disruption. The personal protection products company said it expected revenue to be in the range of $245m-$260m for the year to the end of September and reduced its guidance for 2022 revenue to $320m-$340m. Cash conversion in 2021 is likely to be about 50% because of inventory build-ups and delayed receipts from customers. Avon said it was also affected by a tight US labour market.

Newspaper round-up

The board of Vectura has recommended a £1.1 billion takeover by Philip Morris International despite more than 20 leading public health bodies, experts and doctors calling for it to reject the deal. The respiratory drugs company said last night that it would recommend shareholders accept the acquisition by one of the world’s largest tobacco companies, which values it at 165p a share, a 10p-a-share premium to a rival 155p-a-share offer from Carlyle, the US private equity firm. - The Times

Companies offering Covid tests to travellers may be skewing the market by not charging VAT sales tax, a Guardian investigation has found, adding to pressure on the government to intervene and regulate pricing. Guidance from the UK’s tax authority, HMRC, states Covid tests are only exempt from VAT, which amounts to 20% on the sale price, if administered by a registered health professional or if the company selling them has sales of less than £85,000 a year. - Guardian

Facebook could be forced to unwind its acquisition of Giphy after the competition watchdog said the deal may be harming consumers and businesses. The move could lead to the UK’s Competition and Markets Authority taking the world’s largest social media company to court if Facebook does not comply with its final decision. - The Times

Hackers behind one of the biggest-ever digital coin heists have now returned nearly all of the $610m-plus they stole, the cryptocurrency platform targeted this week by the attack says. The Poly Network platform, which was little known before Tuesday’s heist, on Thursday declared the hacker on Twitter to be a “white hat”, referring to ethical hackers who generally aim to expose cyber vulnerabilities, upon the return of the funds. - Guardian

Gopuff, the American grocery delivery group, has accelerated its British expansion plans by snapping up a rival London-based start-up. The Philadelphia-based business — valued at $15 billion as of last month — has agreed an undisclosed sum to buy Dija, which promises to deliver orders in ten minutes. - The Times

US close

Wall Street stocks closed higher on Thursday as market participants thumbed over this week's jobless report and July's producer price index.

At the close, the Dow Jones Industrial Average was up 0.04% at 35,499.85, while the S&P 500 was 0.30% stronger at 4,460.83 and the Nasdaq Composite saw out the session 0.35% firmer at 14,816.26.

The Dow closed 14.88 points higher on Thursday, narrowly extending gains recorded in the prior session.

Thursday's primary focus was news that unemployment claims slipped during the week ended 7 August, according to the Labor Department, with initial jobless claims falling by 12,000 to 375,000. The four-week moving average of claims edged up by 1,750 to 396,250, while secondary unemployment claims dropped 114,000 to 2.86m.

Also drawing investors' attention, US producer prices rose more quickly than anticipated in July, according to the Department of Labor, with final demand prices jumping at a month-on-month pace of 1.0% in seasonally adjusted terms last month. Final demand goods prices increased by 0.6% month-on-month, with a 2.6% jump in energy prices more than offsetting a 2.1% decline in food prices, while on the services side of the equation, final demand prices were up 1.1% on the month, led by a 2.7% increase in those for transportation and warehousing.