The pharma giant GlaxoSmithKline could be back on the acquisition trail as talk circulated that it was preparing a bid for a Danish biotechnology group. This came on a day that the market soared more than 2 per cent, as investors bet on the Bank of England cutting interest rates today.
Rumours did the rounds in the afternoon that Glaxo was set to target Denmark's Genmab, which has a market capitalisation of 2.1bn. The companies have previously had licensing and development deals together, but talk yesterday was of a full takeover. Glaxo closed up 16p at 1,304p. Glaxo has had tough times recently, with sales hit by the scare over the diabetes drug Avandia.
The oil industry has bolstered the M&A rumour mill in recent months, and talk re-emerged in Abbot Group yesterday. Traders chatted about an imminent 360p-per-share bid, 15p lower than the levels expected when the oil services group first announced talks in October.
The private equity house 3i is understood to have walked away last month, with First Reserve and Candover believed to be duelling for the asset. Abbot stormed up late in the day, 8.25 per cent higher at 351p. The FTSE 100 wiped out the previous day's losses, soaring 178.6 points to close at 6,493.8, although volume was not particularly strong, on expectations of a rate cut. Housing stocks, the miners and some of the banks rebounded from the previous day's shocker to lead the market up.
David Buik of Cantor Index said: "The market seems hell bent on a base-rate cut. If they don't get one, hold your breath for a roller-coaster ride."
Top of the leaderboard was Taylor Wimpey, which had ended with the wooden spoon the previous day. It pounded back up 8.4 per cent as investors ignored the bleak housing data released by Halifax in the morning. Barratt Developments was close behind, up 6.0 per cent at 467.75p.
The miners returned to form as consolidation talk continued to swirl round the sector. Credit Suisse was talking up the merits of the much rumoured merger of Anglo American and Xstrata. The Swiss broker said an Anglo bid of 40 per share, with the deal done 50/50 cash and shares, would boost 2008 earnings per share by 13 per cent. Anglo rose 5.0 per cent to 3,273p, while Xstrata finished 4.2 per cent higher at 3,458p.
After struggling earlier in the week, Royal Bank of Scotland had a sterling day, rising 6.0 per cent to 465.75p as the market predicted positive third-quarter numbers today.
There were few fallers on a good day for the blue chips but predictably bottom of the pile was Northern Rock. The same old woes dragged it a further 2.9 per cent lower to 100p.
Also down was Mitchells & Butlers, which has endured a torrid weak as sentiment turned against it. The pub group closed down 2.1 per cent at 507p.
Investors were furiously hitting the "buy" key as those who played Daley Thompson's Decathlon on the Spectrum in the 1980s will remember to send Game Group to the top of the mid tier. The computer game retailer spiked 15.8 per cent to 209p after the European Union gave the green light to its takeover of Gamestation. The decision had been in the balance and investors' relief was palpable. Altium Securities called the decision a "victory for common sense" and added that rival Game Stock could now bid for the enlarged Game.
Some very vague bid chat emerged in William Hill, as it rose 9.5p to 502.5p. One trader said the rise was down to other factors: "It was due a recovery. It has been flat since Ladbroke's results recently and sold off heavily on Tuesday."
The worst mid-cap stock was Eaga Group, which has been sliding since Friday. The green support services group slumped a further 3.7 per cent to 155.5p.
Market makers were complaining of investor apathy among the small caps, as the euphoria higher up failed to translate. One said: "There has been a lot of aggressive selling, causing big movements in stock." Sellers clearing out caused Eicom, the TV subscription, distribution and advertising group, to slump to the worst performer of the day, down 47.83 per cent at 3p.
Also down was Moss Bros after it warned on full-year profits. The clothing retailer fell 3.95 per cent to 36.5p after it said sales had been lower in the past seven weeks.
On the plus side, Spacelabs Healthcare was heading towards the final frontier as it revealed its majority stakeholder OSI Systems is looking to buy the remaining shares for 100p. The shares rocketed 12.1 per cent to 92.5p. Investors saw Trafficmaster as a steal, after BMW chose it to provide a stolen vehicle tracking service for its cars in the UK and Ireland. Shares rose 12.4 per cent to 50p.
Finally, the Qatar-based construction company Pan-celitca raised $50m (24.7m) in a pre-IPO placing carried out by Hichens. The construction group is expecting to float on AIM in the spring.Reuse content