Market Report: Astra tipped as bidder for US eye-care firm
Wednesday 12 December 2012
Is AstraZeneca's chief executive, Pascal Soriot, ready for an eyesight test? Analysts at Kepler think Mr Soriot could be one of a number of pharmaceutical company bosses eyeing up Bausch & Lomb, the US eye-care company. Private equity firm Warburg Pincus has hired Goldman Sachs to sell the contact lenses and eye-surgery equipment specialist.
Astra won't be alone in its interest – reports have mooted fellow UK-based pharmaceutical group GlaxoSmithKline will be taking a look, as will France's Sanofi, Germany's Bayer and the US groups Merck & Co and Abbott.
The New York state-based company could fetch between $8bn (£5bn) and $10bn, reports in the US suggest.
Ever since Mr Soriot put Astra's planned £2.8bn share buy-back programme on hold when he joined earlier this year, analysts and traders have speculated he is saving the cash for a buying spree to stock up his ever-depleting drugs cupboard.
As Kepler's Fabian Wenner points out: "While there is no way around a larger acquisition for Astra in our view, the company will most likely pick up pharma assets to replace the $7bn in sales it is bound to lose until 2017."
Last month Astra was linked to a bid for the biopharmaceutical group Amarin. But bid chatter around the group has subsequently faded. Today Astra's shares lifted 13p to 3,042.5p, while Glaxo's gained 4.5p to 1,376.5p.
Tullow Oil lost more than 8 per cent the day before, after it admitted it had found a dry well in Ghana. But today some traders began to whisper about a vague bid rumour and the shares recovered 32p to 1,182p.
The miner Anglo American's share-price rise was accompanied by a positive note from analysts at Barclays. The scribes upped their rating to equalweight (hold) from underweight (sell) and gave it a 1,970p share-price target. The shares lifted 49.5p to 1,882.5p as Barclays listed issues that they think its new management should address, including a dividend hike by 50 per cent, a turnaround plan for its platinum miner Amplats and improvements to its Brazilian and copper mines.
The consumer goods giant Unilever received a boost from the analysts at UBS. They decided to raise their share-price target for the stock to 2,590p, prompting the food-to-soap maker to jump up 16p to 2,429p.
The FTSE 100 headed higher and closed at a nine-month high, ahead 20.88 points to 5,945.85. The City is expecting a "Santa rally" – the rise of the stock market before Christmas.
Mike van Dulken, head of research at Accendo Markets, said: "We could see a Santa rally delivered but in stealth fashion and in limited quantity."
Meanwhile, some do not expect the index to reach the 6,000 mark by the end of the year. Joe Rundle, head of trading at ETX Capital, predicted: "I think you will see a push and a close at the end of year of 5,975 – 6,000 feels a little high with so little cheer around the economy."
Merger chat wasn't just reserved for the top-flight index; analysts at Panmure Gordon picked up on chat about AG Barr and Britvic. The soon-to-be merged soft drinks groups could now be a target for Japan's Suntory, according to the speculation.
Analysts thought Suntory's reported IPO move could lead to a buying spree, with FTSE 250-listed Barr Britvic an "obvious fit". Panmure's Damian McNeela said: "Whilst unconfirmed at this stage, it is thought that proceeds could be used to fund international acquisitions. Suntory is already a Pepsi bottler and licences Orangina to AG Barr. If Suntory were to consider a move into the UK, then we would expect its interest to fall on the enlarged Barr Britvic Soft Drinks company."
Shares in the Irn-Bru owner AG Barr fizzed up 3.5p to 485p and Pepsi bottler Britvic sparkled 2.1p to 393.1p.
There was good and bad news for two Cambridge tech whizzes. The good news for Silicon Fen came from the inkjet-tech firm Xaar. Though sounding as if it would be more at home in a sci-fi film, Xaar said strong sales meant profits for the year will be ahead of market expectations, with a profit margin of around 20 per cent. Shares in the small-cap index group soared 22p to 286p.
But there was bad news for shareholders in the AIM-listed biotechnology group Sareum. The Cambridge based cancer-drug specialist warned shareholders that it won't be able to conclude a deal in time for the year end as it had hoped.
It said "collaboration and licensing discussions around a number of programmes continue" and it is "confident that a commercial deal … will be concluded". The company said it has £4m of funding which gives it "flexibility in funding further work". The shares lost 0.25p to 1.48p.
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