The logistics sector may not be the most exciting industry in the world but it was certainly a major talking point in dealing rooms across the Square Mile yesterday. The buzz seems to have been caused by talk that a new wave of consolidation may be about to break out in the sector and it helped Exel add 7p to 859p, Wincanton gain 3.75p to 264.25p and Christian Salvesen put on 0.5p to 62.5p.
Exel's acquisition of Tibbett & Britten last year showed that serious cost savings can be generated if logistics players come together. Since that deal, Exel has itself been the subject of takeover speculation, especially after its rival Deutsche Post received approval from its shareholders to raise fresh equity for acquisitions. Merrill Lynch revived interest in this story yesterday. "Exel's strong industry positioning, including scale, global footprint and broad customer base suggests it could be an attractive acquisition target in our view," said the broker as it urged investors to pile into the stock.
Meanwhile, Wincanton was driven higher by rumours of a bid from Holland's TPG. Shares in the group have not fully recovered from Wincanton's loss of a major contract earlier this year. Therefore, now would be a good time for a trade buyer to swoop. Investec Securities takes the view that a takeover cannot be ruled out and suggested that a bid could be worth as much as 350p given the company's impressive cashflows.
Takeover speculation aside, Wincanton is due to post annual results next week which should see the group unveil a pre-tax profit of £35m, up from £30m in the previous year. And so is Christian Salvesen. On Tuesday, it is forecast to report a profit of £17m but if you believe the most recent gossip to surround the company this could prove to be far too conservative an estimate.
In the FTSE 100, 3i Group dropped 13p to 691p after UBS downgraded its recommendation on the venture capitalist to "neutral" from "buy". The venture capital sector has had a great run in recent years but the Swiss broker fears that conditions may be about to get less favourable for major players in the coming months. UBS also cut back its estimate of 3i's net asset value to 625-635p a share from 630-640p. The FTSE 100 finished the week on a negative note, falling 5.6 points to 4,999.4
Airline stocks lost ground as the price of crude continued to move higher. British Airways fell 3.25p to 270p, easyJet dropped 1p to 224p and Ryanair lost ¤0.01 to ¤6.65. ITV added 1p to 115.5p as investors looked forward to the upcoming regulatory changes that will see up to £100m taken off the broadcaster's annual licence payments to the Government. Some believe once this is confirmed it will leave ITV a tempting target for a predator with either a private equity house or US trade buyer seen to be the most likely bidder.
There was another day of brisk trading in Egg, up 1p to 109.25p. More than 28 million shares changed hands. Autonomy ticked 0.5p lower to 236.5p as Citigroup urged investors to take profits from the stock. The US broker pointed out that Autonomy shares have soared by 46 per cent over the past year, leaving it on a rather demanding stock market rating.
Oxford BioMedica rose 2.5p to 31.25p on the back of positive trial results from one of its technologies. The stock was also boosted by suggestions the company is on the way to securing a licensing agreement for one of its products with a US pharmaceuticals giant. Ncipher held steady at 215p despite a series of director share sales. Alexander van Someren, the software group's chief executive, sold 30,000 shares at 218p while Nicholas van Someren, the chief technology officer, disposed of 20,000 at the same price.
There was also director selling at Care UK, 1p higher at 422.5p. Sir Tim Chessells, a non-executive at the nursing homes operator, bagged £34,000 from the sale of 8,000 shares at 422p.
Lower down the pecking order, Beowulf Mining added 0.75p to 6.25p as a large seller was finally cleared from the market. Isotron gained 10p to 600p on whispers the medical equipment group is close to securing a contract from a large NHS hospital. Rok Property put on 5p to 560.5p as brokers argued that the company stands at too great a discount to its net asset value.
Finally, AgCert raised £61m via a placing at 140p thanks to a groundbreaking business plan. The company quite simply turns pigs' manure into money by processing the manure in such a way that reduces the usual level of greenhouse gas emissions.
That saving is then converted into a tradeable credit which AgCert can then sell for cash on the fast-growing emissions credit market.
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