Market Report: AZ Electronic Materials is about to bid auf Wiedersehen

In the midst of London’s stock market IPO boom, one mid-tier technology group is about to bid auf Wiedersehen.

AZ Electronic Materials, the maker of chemical components for flat screens including Apple’s iPad, jumped more than 50 per cent to the top of the table on news that the German drugs and chemicals giant Merck is to buy it in a £1.6bn, 403.5p-a-share offer – a 53 per cent premium to the previous day’s close.

Analysts didn’t expect another rival bid to get in the way and the news is welcomed by shareholders, who have had tough year – its shares fell 35 per cent when it issued a profit warning in April. The deal is also good news for the chief executive Geoff Wild, who has shares and long-term awards that could be worth more than £6m.

AZ added 132.1p – or 50.25 per cent – to 395p.

The overall market was still cautious as concern remained that the Fed would begin to wind down its quantitative easing programme. The FTSE 100 was broadly flat after four days of large falls but still ended the day in the red, down 11.64 at 6,498.33.

After more than a week of City downgrades for Tesco, there was no let up the day after its poor third-quarter results. Analysts continued to issue downgrades and it fell 6.85p to 333.15p.

After days in the dog-house, miners perked up as bargain hunters saw a chance to pick up stocks cheaply and Vedanta Resources rose 2p to 848p.

Analysts at Investec appraised gold miners, and, despite the falling gold price, said to buy Randgold Resources at 5,095p – which declined 1p to 4,039p – and rated mid-tier listed and Egypt-focused Centamin a buy at 54p. It added 4.02p to 42.6p.

The insurer Phoenix fell 42.5p to 661.5p on the news after the markets closed last night that private equity group TDR Capital is selling half of its 16 per cent stake.

Polymetal International lost 23.2p to 477.3p after the miner said would not pay special dividends.

Analysts at FinnCap rated Aim-listed Gem Diamonds a buy with a target price of 190p and it shone 4.5p brighter at 148p. Also on Aim, Rare Earth Minerals said it had found lithium at its project in Mexico and it fizzed up 0.08p to 0.74p.