The Week In Review: Acquisition leaves Xstrata mining a rich seam
Saturday 19 August 2006
Xstrata, the mining company, has finally got the go-ahead from shareholders for the £8bn acquisition of the remaining stake in its Canadian rival, Falconbridge. The deal gives Xstrata yet more scale, as well as diversification into the nickel market.
While the management has yet to be drawn on the extent of the synergies from the takeover, analysts forecast that the deal could increase earnings by as much as 25 per cent by next year.
At a time when commodity price growth has cooled, the deal is the perfect next step for a company that has delivered its shareholders phenomenal returns for the past few years. Having more than quadrupled in size in four years, it remains one of the best long-term performing stocks in the FTSE 100.
Compared to the largest mining stocks in the UK, Xstrata does not look overpriced. It is trading on less than 10 times this year's forecast earnings, and even after accounting for potential falls in commodity prices and cost inflation, several analysts believe there could be up to 30 per cent upside to its current price. Tread carefully, but for those with an appetite for risk, Xstrata is worth a punt. Buy.
Oxonica was spun out of Oxford University in 1999 and floated last year. This week came news of a key deal, which analysts believe will be worth up to $13m for the company. Oxonica will supply Turkey's national oil company with its Envirox fuel additive, which not only increases diesel fuel efficiency by 10 per cent, but also cuts carbon dioxide emissions. Buy.
AT Communications, named after founder and chief executive Alex Tupman, has agreed to buy rival Rocom, so called as its founder is Robert Old. Both have done well out of the tie-up; Old is set to walk away from the business more than £17m richer, while Tupman has doubled AT's revenues by making the deal, its fourth since listing on AIM in July last year. Buy.
Estate agency chain Countrywide has turned in an impressive set of first-half results, cashing in on a recent mini-revival in the UK housing market. All well and good. But can such growth in the housing market be sustainable after such a long bull run? Avoid.
Pipex Communications is the country's fifth-largest supplier of broadband internet services, and the price war that has erupted in the industry over the past few months has done its shares no good. However, the falls look to have been overdone. Trading at 18 times forward earnings, with a high probability that the group will eventually be taken over, Pipex shares are worth tucking away.
Hot Tuna is the only company on AIM with an ex-supermodel on its board. But Elle Macpherson is not an executive director of the surf brand just because she has a pretty face. Having built up her own clothes brand over the past 10 years, Macpherson could be just what Hot Tuna needs. The 18 to 25 age bracket it is aiming at is worth more than £1bn. Still, with little sales revenue yet, wait and see.
Prospects for growth look good at property company Hammerson, though the company is stingy with dividends - a yield of 1.6 per cent is set to more than double as a Reit, but will remain well shy of the sector average. However, this is a well-run company with good growth prospects. Buy.
Seeing Machines may not be large enough to catch the eye of many investors, but it is well worth a look. Shares in the AIM-listed imaging software developer leapt nearly 10 per cent this week after it won funding from the Australian government to continue development of its glaucoma diagnostic device. Buy.
Emergency repair group Homeserve sealed what could prove to be a truly transformative deal this week, giving itself access to another 3.4 million potential customers in the US. The tie-up with electricity group FirstEnergy may take several years to make a serious impact on the company's bottom line, but in the long term, the deal should give the group a strong foothold in a massive market. Buy.
Angus Monro spent three-and-a-half years and more than £16m transforming the bulk of the Poundstretcher retail estate into a new format called Instore. Now, Trevor Coates, his successor at Instore, is embarking on another overhaul of the business. Coates is certainly well incentivised to make a good go of it - he stands to make £6m if he can get the group's shares up to 60p over the next three years. That's a big if though. Avoid.
On Wednesday, BTG unveiled the sale of its WebNav online navigation tracking patents for $5m and a share of future profits. On Thursday, it said that TolerRx, a licensee of its diabetes treatment TRX4, had raised enough money to finance late stage clinical trials of the drug. If TRX4 makes it on to the market, BTG can expect substantial royalties. Buy.
These recommendations are taken from the daily Investment Column
Boom time continues for Balfour Beatty's projects
Balfour Beatty has done very well out of the Government's private finance initiative (PFI) scheme over the years. This week, Ian Tyler, the construction group's chief executive, assured the City that PFI is going to continue to be a key part of the Government's procurement programme for a good time to come. And it seems that the PFI model is catching on abroad. Tyler revealed that Balfour Beatty is looking at bidding for a number of projects in Asia, Europe and the US.
Meanwhile, the group continues to do very well with its core UK construction and engineering operation. It posted a 15 per cent rise in first-half profits before exceptional items to £60m. There was also news that the group's order book had hit a record £8.8bn.
Balfour Beatty, which builds railways, schools and hospitals, is the single biggest contractor working on the Heathrow Terminal Five development at present. Along with Amec and the US group Jacobs, it hopes to win the contract to manage the site where the London 2012 Olympics are to be held.
Trading at nearly 14 times forward earnings, the group's shares stand at a premium to the wider sector. However, for a quality operator like Balfour Beatty this is not expensive. Buy.
Customers paying up to £250 more on energy bills than they should every year
10 tips for taking out a personal loan
Has your Premium Bond won the £1million jackpot?
There are 'dark corners' of the investment and pensions industry, says Pension Minister
Simon Read: You're guilty until proven innocent when HMRC sends in the tax credit detectives
- 1 What happens to your body when you give up sugar?
- 2 Ed Miliband less influential than One Direction's Louis Tomlinson in official Doncaster power list
- 3 Japanese island overrun with cats after population explodes
- 4 Delhi bus rapist blames dead victim for attack because 'girls are responsible for rape'
- 5 Have sex with your iPad thanks to the new sex toy no-one asked for
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
Durham Free School: 'Creationism taught at' free school facing closure
Nearly 100,000 of Britain's poorest children go hungry after parents' benefits are cut
Ukip would cut billions from Scottish budget to fund English tax cuts
End of the licence fee: BBC to back radical overhaul of how it is funded
Ukraine crisis: Top Chinese diplomat backs Putin and says West should 'abandon zero-sum mentality'
iJobs Money & Business
£15000 - £18000 per annum: Recruitment Genius: This is a great opportunity for...
£50000 - £60000 per annum + Excellent Salary: Austen Lloyd: An outstanding new...
£20000 - £21000 per annum + uncapped commission: SThree: As a graduate you are...
£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...
Day In a Page
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads