Market Report: Britvic sparkles as talk of French bid bubbles
Wednesday 31 May 2006
Two profits warnings in its first six months as a listed company have made the management at the soft drink makerBritvic about as popular in the City as an outbreak of the plague. That may be about to change, though, with the French private-equity group PAI poised to make an offer worth 280p per share.
Rumours of a bid for Britvic emerged on Thursday, when Britvic gave another poor trading update. However, rather than sink, the shares closed 21p better as traders speculated that an offer for the company would be made, with shareholders reported to be keen to be shot of an investment that has failed to live up to expectations.
Traders said PAI, once the private-equity arm of the French banking giant BNP Paribas, is likely to make its offer at the top end of expectations to get support from PepsiCo. The US soft drink group has a bottling agreement with Britvic and owns 5 per cent of the company. It is thought to be against a private buyer, but a 40 per cent premium may be too good to turn down. Shares in Britvic closed 1.25p firmer at 205p.
After poor performances across European equity markets on Monday, a sell-off looked on the cards for London equities, and the FTSE 100 duly dropped 90 points in early trade. The index struggled to recover throughout the morning and a grim opening on Wall Street - with the Dow falling more than 100 points in the first hour of trade - added to London's woes. The FTSE 100 tanked late in the session, closing 139 worse at 5,652.
Although there was selling pressure across the board, asset managers and building materials groups were the worst hit, with Old Mutual 8.5p lower at 163.5p, Schroders off 44p at 1,003p and Amvescap 22p worse at 508p. Hanson, badly affected by concerns over a weaker US housing market and interest rates, dropped 38p to 642p, whileWolseley was 63p worse at 1,202p.
There was a reversal of fortune for Tate & Lyle, the sugar producer, which finished Friday's session as the only faller in the FTSE 100. The shares added 2.5p to close at 565.5p as traders bought the stock, saying the recent sell-off, based on the launch of lawsuits to protect its patent on Sucralose, used in Splenda, has been overdone.
The mid-cap oil exploration and production group, Soco International, has been one of the stars of the FTSE 250 this year, as the shares doubled in value between the start of March and the end of May. However, disappointing drilling results from its Vietnamese operations gave shareholders a sobering dose of reality as the stock plunged 102p to close at 1,235p. Bridgewell Securities, Ambrian and Numis Securities warned clients to steer clear of the shares.
Other second-line exploration and production stocks suffered in the wake of the Soco announcement, with JKX Oil & Gas shedding 26p to close at 385p and Venture Production closing 43.5p weaker at 648.5p. Petrofac was also out of favour as the broker, Deutsche Bank, initiated coverage of the stock with a "sell" recommendation, sending the shares 16.25p lower to 281p.
The healthcare software group iSoft was high on the list of fallers again, as the Health minister, Lord Warner, was reported to have said the company's NHS contract was running late. Rumours of a deeply discounted rights issue at iSoft have been rife in recent sessions, and the reports did nothing to alleviate traders' concerns over the company. The shares, the worst performers in the FTSE 350 this year, having peaked at 395p in January, lost 7.25p to close at 86.75p.
In the small-caps, the oils services groupHamworthy was well bid, climbing 30.25p to close at 337.75p, as the company reported a 20 per cent jump in turnover to £137m, doubled the dividend to 6p and strengthened the balance sheet, with £27m of cash on the books. The broker, Collins Stewart, published a bullish update on the numbers and increased its target price for the shares to 400p.
Formation Group looks set to cash in on theWorld Cup, as it confirmed Fifa, the global governing body of football, has awarded it a four-year deal to manage a worldwide video gaming tournament, called Fifa Interactive World Cup. Shares in Formation added 1.25p to close at 14p, up 9.8 per cent.
There seems to be no end in sight for the beleaguered shareholders of Pace Micro Technology, as the set-top box manufacturer warned on profits for the fourth time in nine months.
Many technology stocks have enjoyed a bounce in the past couple of years, albeit to levels a long way short of the height of the dot.com boom. However, Pace is languishing at a little more than 4 per cent of its peak value. Yesterday's warning, for which it again blamed supply shortages of parts, sent the shares down 7p to 47p. A rally still looks a long way off.
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