Market Report: BBA continues to prove value of demergers

There is a common debate among investors over the short-term merits of mergers and acquisitions, and there are certainly plenty of examples of mergers that have failed to deliver anything even loosely resembling shareholder value.

Carlton and Granada, Glaxo Wellcome and SmithKline, BTR and Siebe all merged amid much fanfare only to disappoint and all have taken several years to turn around. In fact, it is often possible to make a better argument for pulling companies apart rather than gluing them together.

BBA Group looks to be a case in point. It completed the demerger of its materials arm, Fiberweb, after Thursday's EGM. BBA is now trading as BBA Aviation, and both stocks enjoyed strong debuts as investors and analysts enthused about their newly single status. Fiberweb listed at 142p and closed at 176p, up 34p, while BBA Aviation, up 12p at 286.5p, benefited from upgrades from brokers UBS and Dresdner Kleinwort.

Among blue chips, the falling copper price put a big dent in the mining sector, as nine of the top 10 blue-chip fallers were miners. Xstrata led the way, with a 109p fall to 2154p, despite Deutsche Bank resuming coverage of the stock with a "buy" recommendation and a 2,880p price target. Copper miners were in the red, with Antofagasta down 21.75p to 457.75p, Vedanta Resources, off 52p to 1,236p and Kazakhmys 46p weaker at 1,136p. Broker Numis Securities suggested investors look for a pre-Christmas sell off as a buying opportunity.

Wolseley and Hanson were out of favour as bleak US housing data reported that new home builds have reached a six-year low, 14 per cent lower than in September and 27 per cent lower than last October. Both companies are heavily involved in the US housing market, but investors are increasingly concerned about trading. Wolseley fell 26p to 1,190p while Hanson lost 7.5p to close at 751.5p.

On the upside, rumours of a bid for the confectioner Cadbury Schweppes continue to build momentum, despite the fact that with a market capitalisation of more than £16bn including debt, it would be the largest ever European buyout. Traders are looking at the wave of private-equity buyouts taking place in the US at the moment and many do not think the price tag is the main stumbling block. Cadbury's added another 9.5p to close at 541.5p.

The weak mining and oil sectors dragged the FTSE 100 down 62.9 by the close to 6,192, the biggest single-day sell off for a month. An uninspiring opening on Wall Street left most London traders with little reason to change positions ahead of the weekend.

Second-line oil stocks were also out of favour with investors as the oil price hit a 12-month low. Brokers have been bearish on the sector in the past few weeks, but traders who have been in the sector for any length are still sitting on healthy profits. Venture Production fell 60.5p to 830p, followed by Petrofac, 20p off at 354p and Dana Petroleum, down 79p at 1,260p.

Traders are betting on a bid for the waste-management group Augean, 20.5p better at 148p, a month after it warned on slower growth. Investors believe the company has been unofficially up for sale for some time, but management are unwilling to accept anything less than 180p a share. The bid talk was sparked as 7 million shares were crossed at 157.5p.

Empyrean Energy investors are used to a roller-coaster ride, thanks to the company's policy of weekly drilling updates. This week, Empyrean has given two drilling updates, and yesterday's sent its shares up 12.5p to 83p. However, some traders said the company has only a 6 per cent stake in the Sugarloaf-1 field, and claimed the statement gave little new information.

Market-makers report a surge in interest in Islamic Bank of Britain. Its shares rarely register on most investors' radar screens, but the volume so far this week has been significantly higher than usual. IBB shares leapt 4.75p to 23.75p yesterday as rumours of a bid for the company did the rounds.

The word in the market is that Kryso Resources, a mineral-exploration firm with assets in Tagikistan, is to announce a positive assay result on its nickel and copper project next week. Although its shares were unchanged at 8.5p, investors expect a good bounce once the announcement is made.

The property investment group Dawnay Day Treveria completed one of the biggest AIM placings of the year, raising €300m at €1.12 per share. Citigroup handled the placing and acted as lead manager for the group. DDT shares ended at €1.21 as more than 20 million shares changed hands.

voicesSiobhan Norton on why she eventually changed her mind
Life and Style
fashion Designs are part of feminist art project by a British student
Snoop Dogg pictured at The Hollywood Reporter Nominees' Night in February, 2013
people... says Snoop Dogg
Life and Style
food + drinkZebra meat is exotic and lean - but does it taste good?
Arts and Entertainment
Residents of Derby Road in Southampton oppose filming of Channel 4 documentary Immigration Street in their community
Scottish singer Susan Boyle will perform at the Commonwealth Games opening ceremony in Glasgow
commonwealth games
Lane Del Rey performing on the Pyramid Stage at Glastonbury 2014
people... but none of them helped me get a record deal, insists Lana Del Rey
Arts and Entertainment
Dwayne 'The Rock' Johnson stars in Hercules
filmReview: The Rock is a muscular Davy Crockett in this preposterous film, says Geoffrey Macnab
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Cost Reporting-MI Packs-Edinburgh-Bank-£350/day

£300 - £350 per day + competitive: Orgtel: Cost Reporting Manager - MI Packs -...

Insight Analyst – Permanent – Up to £40k – North London

£35000 - £40000 Per Annum plus 23 days holiday and pension scheme: Clearwater ...

Test Lead - London - Investment Banking

£475 - £525 per day: Orgtel: Test Lead, London, Investment Banking, Technical ...

Business Analyst - Banking - Scotland - £380-£480

£380 - £480 per day: Orgtel: Business Analyst - Banking - Edinburgh - £380 - ...

Day In a Page

Noel Fielding's 'Luxury Comedy': A land of the outright bizarre

Noel Fielding's 'Luxury Comedy'

A land of the outright bizarre
What are the worst 'Word Crimes'?

What are the worst 'Word Crimes'?

‘Weird Al’ Yankovic's latest video is an ode to good grammar. But what do The Independent’s experts think he’s missed out?
Can Secret Cinema sell 80,000 'Back to the Future' tickets?

The worst kept secret in cinema

A cult movie event aims to immerse audiences of 80,000 in ‘Back to the Future’. But has it lost its magic?
Facebook: The new hatched, matched and dispatched

The new hatched, matched and dispatched

Family events used to be marked in the personal columns. But now Facebook has usurped the ‘Births, Deaths and Marriages’ announcements
Why do we have blood types?

Are you my type?

All of us have one but probably never wondered why. Yet even now, a century after blood types were discovered, it’s a matter of debate what they’re for
Honesty box hotels: You decide how much you pay

Honesty box hotels

Five hotels in Paris now allow guests to pay only what they think their stay was worth. It seems fraught with financial risk, but the honesty policy has its benefit
Commonwealth Games 2014: Why weight of pressure rests easy on Michael Jamieson’s shoulders

Michael Jamieson: Why weight of pressure rests easy on his shoulders

The Scottish swimmer is ready for ‘the biggest race of my life’ at the Commonwealth Games
Some are reformed drug addicts. Some are single mums. All are on benefits. But now these so-called 'scroungers’ are fighting back

The 'scroungers’ fight back

The welfare claimants battling to alter stereotypes
Amazing video shows Nasa 'flame extinguishment experiment' in action

Fireballs in space

Amazing video shows Nasa's 'flame extinguishment experiment' in action
A Bible for billionaires

A Bible for billionaires

Find out why America's richest men are reading John Brookes
Paranoid parenting is on the rise - and our children are suffering because of it

Paranoid parenting is on the rise

And our children are suffering because of it
For sale: Island where the Magna Carta was sealed

Magna Carta Island goes on sale

Yours for a cool £4m
Phone hacking scandal special report: The slide into crime at the 'News of the World'

The hacker's tale: the slide into crime at the 'News of the World'

Glenn Mulcaire was jailed for six months for intercepting phone messages. James Hanning tells his story in a new book. This is an extract
We flinch, but there are degrees of paedophilia

We flinch, but there are degrees of paedophilia

Child abusers are not all the same, yet the idea of treating them differently in relation to the severity of their crimes has somehow become controversial
The truth about conspiracy theories is that some require considering

The truth about conspiracy theories is that some require considering

For instance, did Isis kill the Israeli teenagers to trigger a war, asks Patrick Cockburn