Corporate activity rumours have been rife in recent weeks at Corus Group, the company that was once British Steel. The word is that a deal could be announced next week, and once again the German rival ThyssenKrupp and the Russian group Severstal are the names in the frame.
Traders said further consolidation in the industry is almost inevitable after Mittal Steel brokered a merger with the French rival Arcelor three weeks ago and Corus looks like the favourite to face the next bid. Rather than a merger, traders expect a bid for Corus because its size, £4.4bn including debt, makes it the smallest of the major European players. Shares in Corus were well supported all session, closing 19.25p better at 451p on solid volume with 16 million shares changing hands. If a bid comes, most traders expect the company to reject anything less than 530p per share.
BP continued to attract support on the strong oil price and rumours that the Rosneft IPO has become oversubscribed. BP is thought to be considering placing a substantial order for shares in the Russian state oil company, due to price on Friday and begin trading on 17 July, and with Rosneft momentum building, traders expect the stock to have a positive start to listed life. BP added 9.5p to close at 647.5p against a falling market.
London shares ended the week marginally lower as US payroll figures came in as expected, although poor results from 3M led to a sell-off in early trade in New York. The FTSE 100 closed off 1.1 at 5888.9.
Yet again the spectre of US legislation against the online gambling industry resulted in heavy selling of PartyGaming and 888 Holdings. A meeting in the House of Representatives is due to be held next week and although most analysts still believe a bill is unlikely to be passed by the Senate the threat of legislation will not go away in a hurry. PartyGaming led the FTSE 100 fallers, 6.75p worse at 108p, while 888, thought to be a potential bid target, shed 5p to close at 208p.
There was little relief for shareholders of Taylor Nelson Sofres after Thursday's profits warning following the poor performance by the group's US operations. The broker Panmure Gordon, a long-term seller of the stock, reiterated its "sell" advice with a new price target of 175p. The broker does not believe the company makes an attractive takeover target and suspects there may be more bad news. The shares tumbled another 11.75p to close at 183.25p.
A bout of profit-taking at Enodis dragged the shares down 6p to 200p, even though many traders expect another bid from one of two US suitors. The favourite to bid again is Manitowoc, which has been given until a week on Monday to make another offer or walk away for six months. One trader said: "Manitowoc is performing strongly, having recently revised its forecasts upward, and could come back with a bid at closer to 230p.
Stelios Haji-Ioannou, fresh from being knighted in the Queen's Birthday Honours list, had a little less than £24.5m added to his personal fortune after easyJet said it would beat current forecasts for profit growth by between 40 and 50 per cent. The shares topped the FTSE 250 leaderboard, adding 34p to close at 425p, a rise of 8.7 per cent, as a raft of brokers upgraded forecasts and encouraged clients to buy the shares. Panmure Gordon, UBS and Merrill Lynch all published bullish notes on the budget airline operator. The news was enough to send the under-fire British Airways 10.75p better to 359p, while the bitter rivals Ryanair Holdings firmed €0.18 to €7.71.
In the small caps, Egdon Resources was well bid as traders speculated that a bid is imminent. The group is developing salt caves in Dorset for gas storage and believes that if the project reaches its full potential, it could supply up to 20 per cent of the UK's gas demand. A similar, but significantly smaller, project was snapped up by ScottishPower for £80m last year. Shares in Egdon surged 27p to close at 178.5p.
Shares in IGM, a holding vehicle for a Chinese mobile technology group, were sharply lower as market makers tried to work a number of large sell orders. The shares have been out of favour since dropping more than 20 per cent in their first day of dealing in late May, having been placed at 51.5p, and have been very volatile since. The shares dropped another 14.5p yesterday to close at 23.5p, an all-time low and more than 54 per cent below the placing price.
Finally, investors will be looking out for the debut of Geiger Counter on Monday, as trading begins after the company raised £12m through a subscription offer at 50p. The uranium and nuclear energy investment group is probably not one for ethical portfolios, but demand is expected to be good.Reuse content