United Utilities has agreed to sell its main non-regulated water businesses to France's Veolia Environnement for around £175m in total.
The deal includes stakes in businesses in Bulgaria, Estonia and Poland; design and management contracts with Southern Water; and three Scottish private finance initiative operations. United - Britain's largest listed water company - has already sold off non-regulated operations in areas such as Australia and the Philippines to concentrate on its water assets. The news has sent the company's shares 9p higher to 569p, outperforming the overall market.
Despite the new Office for Budget Responsibility cutting UK growth forecasts - no real surprise to anyone - the FTSE 100 is holding most of its early gains, and is now 25.11 points higher at 5188.79.
Miners continue to be among the leading risers, but while banks are higher despite the threat of breakup continues to hover in the political background. Barclays is 7.15p better at 298p after a couple of buy notes. Exane BNP Paribas issued an outperform rating on the bank, although it cut its price target from 400p to 380p. Bank of America/Merrill Lynch did something similar, advising clients to buy but cutting its price target from 500p to 420p in the light of the uncertain economic outlook. Merrill said:
Barclays looks cheap and profitable this year and remains a buy. Given the increased uncertainty we may have to wait longer to see a relative re-rating.
Lloyds Banking Group has pulled back from earlier losses to edge up 0.09p to 54.42p. But Morgan Stanley has moved from equal weight to underweight on the bank and cut its target by 23% to 50p. It said:
It faces the biggest risk among UK banks of missing consensus beyond 2010, given pressure on net interest margin, tepid GDP growth and industry funding strains.
