What to watch: National Grid pivots to electricity in £7.8bn deal, Lookers upgrades profit, markets push higher on dovish Fed

LaToya Harding
·Contributor
·3-min read
The move will mean that the proportion of the National Grid's assets in electricity will increase from around 60% to about 70%. Photo: David Moir/Reuters
The move will mean that the proportion of the National Grid's assets in electricity will increase from around 60% to about 70%. Photo: David Moir/Reuters

Here are some of the top business, market, and economic stories you should be watching today in the UK, Europe, and around the world.

National Grid pivots to electricity in £7.8bn deal

National Grid (NG.L) has snapped up Western Power Distribution (WPD), the holding company of Britain’s largest electricity distribution business, from US-based company PPL in a deal worth £7.8bn.

The company, which manages the UK’s power infrastructure, has also agreed in a separate transaction to sell Narragansett Electric Company, to PPL Energy Holdings, a subsidiary of PPL, for an equity value of £2.7bn.

The Narragansett Electric Company supplies electricity and gas in Rhode Island and has around 780,000 customers.

The move will mean that the proportion of the National Grid's assets in electricity will increase from around 60% to about 70%.

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"These transactions will be transformational for our UK portfolio," John Pettigrew, chief executive of National Grid, said.

He added: "The acquisition of WPD is a one-off opportunity to acquire a significant scale position in UK electricity distribution. WPD has a high quality, fast growing asset base and an excellent track record of customer satisfaction, operational performance and financial returns.

"We have received a premium valuation for our Rhode Island business and I am confident that we will also deliver attractive shareholder value from the NGG Sale in due course."

Lookers upgrades profit

Car dealer Lookers (LOOK.L) has announced it expects full-year profit for 2020 to beat expectations, predicting a small profit after a turbulent year.

The group now expects to report underlying profit before tax of around £10m, compared to £4.2m the year before.

The FTSE 250 company said in a brief update to the market that it was still working on its full accounts for the last financial year.

In July, its were shares suspended temporarily due to a £19m hole in a past set of accounts. This lead to an investigation into the firm by the Financial Conduct Authority (FCA).

The investigation, which looked at financial statements for the years ended 31 December 2017 and 2018, has now been closed. However, Lookers has subsequently switched auditor from Deloitte to BDO.

On Thursday, Lookers said that it would issue a trading statement for the first three months of the year in April.

Shares rose 6% on the back of the positive news.

Lookers shares rose more than 6% on Thursday on the back of the update. Chart: Yahoo Finance
Lookers shares rose more than 6% on Thursday on the back of the update. Chart: Yahoo Finance

Markets push higher on dovish Federal Reserve

European stocks opened mainly higher on Thursday after the Federal Reserve committed to maintaining a dovish monetary policy.

On Wednesday, Fed chair Jerome Powell projected a rapid jump in US economic growth this year as the COVID-19 crisis eases.

While inflation is expected to reach 2.4% this year, above the central bank's 2% target, Fed chair Jerome Powell called it a temporary surge that will not change the Fed's pledge to keep its benchmark overnight interest rate near zero.

The FTSE 100 (^FTSE) was flat after the bell, down 0.03%, while the CAC (^FCHI) rose 0.22% and the DAX (^GDAXI) was 0.67% higher.

Miners were rallying in London as precious metals prices rose after the Fed announcement.

Attention will now turn to the Bank of England (BOE), which is expected to act similarly today and keep interest rates on hold.

Jim Reid, Deutsche Bank strategist, says the BOE is expected to “walk a tightrope between talking up the recovery whilst avoiding too hawkish a message that would see an unwarranted tightening in financial conditions.”

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