The UK regulator on Wednesday threw a ‘surprising’ monkey wrench into the acquisition of Avast by US cybersecurity peer NortonLifeLock, finding that the combination could reduce competition.

The Competition & Markets Authority noted that Avast and NortonLifeLock are ‘close competitors, with few other significant rivals’.

The CMA said it is ‘concerned that if completed the proposed deal could lead to a reduction in competition in the UK market.

‘This could lead to UK consumers getting a worse deal when looking for cyber safety software in the future.’

The regulator said NortonLifeLock and Avast now have five working days to submit proposals to address its concerns, or it will refer the merger to a in-depth phase 2 investigation.

Tempe, Arizona-based NortonLifeLock had agreed back in August to buy Prague-based Avast in a cash-and-shares deal worth $8.6 billion at the time. UK antitrust clearance was the only remaining regulatory condition for the deal, which had been expected to close on April 4.

In response, NortonLifeLock called the CMA’s decision ‘surprising’, noting that the deal has received approval in the US, Germany and Spain. It also suggested it planned dig in its heels.

‘NortonLifeLock remains confident that the merger should be approved and does not intend to propose any phase 1 remedies,’ it said. ‘The parties will continue to engage constructively with the CMA and their review.’

Due to the impasse, the two companies said they now expect the acquisition to complete in ‘mid-to-late 2022’.

Avast shares were down 8.8% early Wednesday in London, while the wider FTSE 100 index was rising.

Here is what you need to know at the London market open:

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MARKETS

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FTSE 100: up 1.5% at 7,280.08

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Hang Seng: up 9.1% at 20,088.10

Nikkei 225: closed up 1,6% at 25,762.01

S&P/ASX 200: closed up 1.1% at 7,175.20

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DJIA: closed up 599.10 points, 1.8%, at 33,544.34

S&P 500: closed up 2.1% at 4,262.45

Nasdaq Composite: closed up 2.9% at 12,948.62

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EUR: firm at $1.0961 ($1.0957)

GBP: down at $1.3040 ($1.3049)

USD: up at JP¥118.35 (JP¥118.26)

GOLD: down at $1,915.42 per ounce ($1,926.06)

OIL (Brent): up at $102.48 a barrel ($101.36)

(changes since previous London equities close)

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ECONOMICS AND GENERAL

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Wednesday’s key economic events still to come

0830 EDT US import & export price indices

0830 EDT US retail sales

1000 EDT US NAHB housing market index

1000 EDT US manufacturing & trade

1030 EDT US EIA weekly petroleum status report

1400 EDT US Federal Reserve interest rate decision & economic projections

1430 EDT US press conference with Fed Chair Jerome Powell

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Negotiating positions with Russia in the Ukraine conflict are now more realistic, Ukrainian President Volodymyr Zelensky said in a video message. But it would still take a while before Ukraine can be satisfied, he added. Ukrainian and Russian negotiators met via video conference on Monday and Tuesday. Presidential adviser Mykhailo Podolyak said on Tuesday evening that talks would continue on Wednesday. Ukraine is demanding an end to the war and a withdrawal of Russian troops. Among other things, Moscow is demanding that Kiev recognize the annexed Black Sea peninsula of Crimea as Russian and the separatist areas in Ukraine’s east as independent states.

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US President Joe Biden will announce $800 million in new security assistance to Ukraine Wednesday, a White House official said, with the announcement set to come soon after Zelensky addresses the US Congress. The announcement, expected to come at 11.45 am Washington time, brings ‘the total [aid] announced in the last week alone to $1 billion,’ the official, who spoke on condition of anonymity late Tuesday, said. Biden had already authorized $200 million in additional military equipment to Ukraine on Saturday. That came on top of $350 million authorized by Washington, also for military equipment, on February 26 – at the time, the largest such package in US history.

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Japan posted a merchandise trade deficit of JP¥668.3 billion, about $5.6 billion, in February, the Ministry of Finance said. The figure marked Japan’s seventh month in a row of trade deficits. It also missed expectations for a deficit of just JP¥112.6 billion. Exports climbed 19% on year to JP¥7.190 trillion, shy of forecasts for an increase of 21% but still up from the 9.6% gain in the previous month. Imports rose by 34% year on year, compared to expectations for an increase of 28% following a 38.7% increase a month earlier, revised down from an original 39.6%.

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BROKER RATING CHANGES

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SocGen cuts Reckitt Benckiser to ’sell’ (buy) - price target 5,400 (7,200) pence

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Berenberg starts Devolver Digital with ’hold’ - price target 180 pence

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Jefferies raises On The Beach to ’hold’ (underperform) - price target 240 (220) pence

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COMPANIES - FTSE 250

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IG Group said it expects full-year revenue will moderately exceed current market expectations. The third quarter that ended February 28 was another one of revenue growth, it said, with net trading revenue up 13% to £257.2 million. This reflects an all-time high in the number of active clients at 292,200 versus 220,900 a year before. ‘I’m delighted to be reporting another quarter of outstanding performance driven by a record number of clients trading in the period. Today, we have more clients and a broader range of products to trade than ever before in our history,’ said Chief Executive June Felix.

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Egyptian gold miner Centamin reported a drop in revenue and profit for 2021 in a year of ‘peak reset’. Revenue for 2021 fell 12% to £733.3 million and pretax profit halved to £153.6 million from £315.0 million. ‘In December 2020, we announced our three-year reset plans and outlook, which framed 2021 as our peak reset year, meaning lower production and higher capital expenditure. Therefore, understandably, our financial results last year were not as strong as previous years but, importantly, our business is in a much stronger position as we invest in our long-term success,’ the company said. Centamin produced 415,370 ounces of gold in 2021, down 8% on 2020, though it expects an improvement in the year ahead with 2022’s guidance range sitting at 430,000 ounces to 460,000 ounces. However, costs are set to also rise. All-in sustaining costs in 2022 are guided between $1,275 to $1,425 per ounce sold, reflecting inflationary pressures and a $226 million comprehensive asset reset and growth investment programme. In 2021, all-in sustaining costs rose 19% to $1,234.

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IT services provider Computacenter said revenue for 2021 was up 24% at £6.73 billion from £5.44 billion the year before, and pretax profit improved 20% to £248.0 million from £206.6 million. The firm plans to make a payout of 66.3 pence per share for 2021, up 31% on 2020. Computacenter added that its cash position was strong at the end of the year and, while it prioritises the organic growth of the business as well as merger and acquisition activity, it will consider ‘returning value to shareholders’. Computacenter said it is confident of a year of ‘further progress’ in 2022, though added: ‘Given the profile of our profitability in 2021, we have a more challenging comparison in the first half of 2022 compared to the second, due to the fact that an abnormally high percentage of our profits came in the first half of the year.’

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COMPANIES - MAIN MARKET AND AIM

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Tonic water maker Fevertree Drinks said it will pay a special dividend after a strong 2021, though it cautioned on inflationary pressures. Revenue for 2021 rose 23% to £311.1 million from £252.1 million in 2020, with pretax profit increasing 7.8% to £55.6 million from £51.6 million. Adjusted earnings before interest, tax, depreciation and amortisation rose 11% to £63.0 million. Fevertree said its sales performance in the year was strong given continued widespread On-Trade - meaning restaurant and bar - closures in the first half of 2021. When the On-Trade re-opened, it recovered strongly, the firm said, while its at-home performance remained well above pre-pandemic levels. For 2022, the company expects revenue growth between 14% and 17%, to a range of £355 million to £365 million. Fevertree cautioned that commodity prices have increased ‘dramatically’ in recent weeks, and it expects to deliver Ebitda between £63 million and £66 million for the year ahead - at best this will represent growth of 4.8% on 2021. Fevertree’s total dividend for 2021 was 15.99 pence, up 2% on the 15.68p paid out for 2020. On top of this, it is recommending a special payout of 42.90p.

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COMPANIES - GLOBAL

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Apple manufacturing partner Foxconn said its iPhone plant in Shenzhen, China, has partially resumed operations after a shutdown due to coronavirus cases. The Taiwan-based company said a ‘closed loop’ system had been introduced for employees, with dormitories located on site. This has allowed some operations to restart at the Shenzhen site and was in line with the local government’s pandemic prevention measures, the firm said. ‘This process, which can only be done on campuses that include both employee housing and production facilities, adheres to strict industry guidelines and close-loop management policies issued by the Shenzhen government,’ Foxconn said. The Shenzhen government imposed a one-week lockdown on Monday and said all 17 million residents would be tested for Covid-19 during that time.

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Wednesday’s shareholder meetings

Idox PLC - AGM

Safestore Holdings PLC - AGM

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