FTSE 100 Live: Tobacco giant in £25bn write-down, TUI plans LSE exit

British American Tobacco shares have fallen 7% in the wake of the surprise move to write-down the value of its US brands by £25 billion.

The Lucky Strike maker slid 171p to 2316.5p, while rival Imperial Brands retreated 22p to 1841.5p.

Other blue-chip fallers included Diageo, which reversed 16.5p to 2796p after UBS switched the drinks giant to a “sell” recommendation.

The FTSE 100 index improved 29.55 points to 7519.39, with mining technology firm Weir one of the leading stocks after it revealed a 20% operating margin target for 2026. Shares advanced 69.5p to 1934p.

The FTSE 250 index added 100.39 points to 18,587.92, led by buy-to-let lender Paragon Banking as shares rose 9% or 45p to 536p following annual results.

The response to figures from automotive services business Redde Northgate and Baltic Classifieds was also favourable as they rose 5% and 3% respectively.

Building materials supplier Marshalls has said Matthew Pullen will become the group’s next chief executive from March 2024.

He will succeed Martyn Coffey in the top job role. The latter will remain available as an adviser to support the transition. Pullen was most recently COO of piping manufacturer Genuit Group.

Marshalls has faced challenging conditions in 2023. But Coffey said Pullen inherits "a business that is ready to resume growth when markets improve".

British American Tobacco will write down the value of its US brands like Lucky Strike by a massive £25 billion as it transitions away from cigarettes and faces “macroeconomic headwinds” in the world’s largest economy.

The group has made an effort to transition to vapes as countries crack down on cigarettes. Last month, Rishi Sunak announced a plan to create a “smoke free generation” in the UK by raising the smoking age by one year every year.

But BAT now expects this transition in the US to lead to an eleven-figure impairment charge. BAT’s market cap is currently £55.69 billion. It said a failure to prevent the sale of illegal vapes was also hurting its business there.

Boss Tadeu Marocco, who took over from Jack Bowles earlier this year, said: “Consistent with our vision to 'Build a Smokeless World', and in combination with the current macro-economic headwinds impacting the U.S. combustibles industry, in 2023 we will take an accounting non-cash adjusting impairment charge of around £25bn. 

“This accounting adjustment mainly relates to some of our acquired U.S. combustibles brands, as we now assess their carrying value and useful economic lives over an estimated period of 30 years. Accordingly, we will commence amortisation of the remaining value of our U.S. combustibles brands from January 2024.”

Travel giant Tui is considering delisting from the LSE to pursue a primarry listing in Frankfurt.

The firm said today: "In the past four years, the ownership of TUI AG’s shares and the liquidity on the exchanges has evolved significantly with a notable liquidity migration from UK to Germany.

"In light of the views expressed by shareholders and any further feedback from shareholders, the Executive Board is currently considering, if an Upgrade to a Prime Standard listing in Frankfurt with MDAX inclusion and a delisting from the London Stock Exchange would be in the best interest of shareholders."

Tui today posted revenues of 8.5 billion euros for the year to September, an increase of 11% on last year, while earnings more than doubled to just shy of 1 billion euros.

The travel firm said it expected a further sales rise of 10% and earnings increase of 25% for the year ahead.

Bowling firm Ten Entertainment is set to be sold to a US private equity firm for just shy of £300 million.

The offer was made by Texas-based firm Trive and represents a 33% premium on yesterday's closing share price.

Ten Entertainment said: "Notwithstanding the opportunities to accelerate this growth, the TEG Directors are conscious of the need to be balanced against the uncertainties and risks that exist in the short and medium term. TEG is not immune to the highly unstable national and international political outlook together with a volatile economic backdrop, all of which have impacted UK economic conditions and UK consumer confidence as well as having led to significant inflation in certain input costs."

Gains of 2% for Apple and Nvidia shares were the highlight of a dour Wall Street session, with the Nasdaq the only major benchmark in positive territory.

The S&P 500 index and Dow Jones Industrial Average were slightly lower as traders awaited Friday’s key jobs market report for clues on the outlook for US interest rates.

The FTSE 100 index mirrored the US performance with a decline of 0.3%, whereas Germany’s Dax index rose by 0.8% to close at a record high.

London’s lacklustre showing followed heavy selling of mining stocks, while oil majors have been impacted by the decline of Brent Crude to a five-month low of $77 a barrel.

The Hang Seng index, which fell by more than 2% following the downgrade of China’s credit rating by Moody’s, has recovered to stand 0.7% higher.

CMC Markets expects the FTSE 100 to open today’s session up 25 points at 7514.

Good morning. Here's a summary of our top headlines from yesterday:

• On The Beach wins £2 million legal case over cancelled Ryanair flights. Says it is "engaging with Government and regulators on the market power of airlines"
• Pub and bar groups today looked to be in line for bumper Christmas party trade in London, but £500 million could be knocked off total spend across the capital's hospitality sector as train strikes cause disruption, according to a new forecast.
• Thames Water: London’s heavily indebted 15 million customer tap water provider reports half-year earnings of £627 million, up over a fifth from revenue of £1.2 billion, up 11%, but debt nears £15 billion and there were reports this week that what it said was new equity funding from a shareholder was actually a loan.
• Video game maker tinybuild says it will run out of cash if it can't get new funding by end of January, aftering being hit by combination of poor sales and two legal settlements
• Moonpig uses AI to upsell gifts to personalised greetings card to its 4 million customers, helping it take revenue over £150 million, up almost 7% to £152.1m and profits of £89 million, up over 15%