Market Report: Bid for Berkeley expected after strong run
Tuesday 14 November 2006
It looks as if there could be more deals in the pipeline in the house-building sector. Berkeley Group has been on a tremendous run since the start of the month, adding more than 19 per cent since 2 November.
The word in the market is that a bid could come before the end of the week, probably from a rival with private equity backing. The shares closed at 1,702p yesterday, 108p better and top of the FTSE 250 leaderboard. The company's land bank, based almost exclusively in London and the South-east, is widely regarded as the best in the sector. If a bid comes, it will follow hot on the heels of Sir Tom Hunter's 585p per share bid for Crest Nicholson. That bid looks as if it will not prove to be at enough of a premium to tempt shareholders - although Crest Nicholson shares fell 2p to 615p on profit-taking, that is still 5 per cent better than the offer price.
In the main index, the mobile telecoms giant Vodafone hit a 12-month high ahead of today's results, 1.5p firmer at 136p. Recent broker comment has been unusually bullish, and with strong results across its major European peers there is pressure on Vodafone to deliver. Investors will be hoping to hear more on the cost implications of its broadband offering, due to begin in January.
Experian, the consumer credit rating agency, has attracted a lot of institutional interest since the company demerged from GUS in October priced at 560p. Traders said that lots of institutions were increasing their stakes in the group because of potential bids, mainly from private equity groups and US rivals. Shares in Experian closed 13.5p better at 599.5p, a new high, as investors switched out of Home Retail Group, what remains of GUS's retail operations, sending its shares 2p worse to 406.25p, a new low.
The copper price tanked again in the metal futures markets, wiping a big chunk off London-listed mining valuations. Worst hit, not surprisingly, were the copper miners Antofagasta, 26.5p worse at 468.25p, Kazakhmys, down 60p to 1,140p, and Vedanta Resources, off 66p to 1,367p.
In the wider market, London shares got off to a good start, only for afternoon profit-taking to leave the FTSE100 14.2 worse at 6194.2 by the close, despite a strong opening on Wall Street. London shares were propped up by a bounce in pharmaceuticals after last week's sell off and good support for utilities.
The Swiss broker UBS's coverage of Premier Oil continues to raise some eyebrows around the market. Last time around, it recommended a "buy" on the shares with a 1,300p target when the shares were trading at 1,287p. The broker yesterday upped its target to 1,400p, but reduced its rating to "neutral". The shares dropped 32p to 1,330p, although to be fair most second-line oil stocks suffered from profit-taking after last week's strong gains. Dana Petroleum, 44p worse at 1,313p, and Burren Energy, 30.5p lower at 901p, led the fallers. The broker Teather & Greenwood downgraded Dana to an outright "sell".
News that Northern Petroleum has plugged and abandoned an exploration well in the Netherlands knocked the shares back by 20.5p to close at 101p. However, some traders believe that the well in question, Steenwijk-1, was not core to the group's valuation. The company said that there are no implications resulting from the abandonment, and traders may take the sell-off as a good buying opportunity. A recent Investec sector review gave the shares a target price of 260p, of which only 16p was ascribed to Steenwijk.
Investors in Asia Energy will be watching developments on the political scene in Bangladesh with interest. Presidential elections are due in January, and if the ruling party loses it could be bad news for Asia Energy. Its Phulbari project, reported to be one of the largest untapped coal deposits in the world, is highly controversial, and could lead to the displacement of at least 40,000 people.
The shares have been volatile to say the least; but good buying support yesterday saw the stock close 5p better at 105p on talk that there may be a positive decision from the Bangladeshi government before the election.
Retail investors piled into Black Rock, an oil and gas exploration group with assets in the North Sea and Colombia, on word that the company is about to report strong drilling results. The company has had a rough ride over the past couple of months, losing two key board members since August. The shares topped the small caps leaderboard, closing 0.48p better at 1.55p, a gain of 44.9 per cent, as more than 35 million shares changed hands.
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