Market Report: BG Group nosedive sparks takeover talk
Thursday 01 November 2012
Huge share price falls get the City chattering about takeovers. The 13 per cent slump in BG Group's share price sparked just that yesterday.Dealers in the square mile were already gossiping by lunch time that the oil and gas group could be a takeover target for Shell.
That rumour has done the rounds before. Back in 2010 it was reported there could be a deal.
Shares in BG Group tanked after the firm disappointed the market with a production forecast downgrade. It told the City not to expect any growth next year either. The news came as a shock to investors as the company had a strong record of good dividends and growth.
But the market was certainly looking at taking advantage of BG's huge share price drop. Broker Hargreaves Lansdown announced 96 per cent of its client trades on the shares were buys.
But scribes at Investec gave it a sell rating and a share price target of 1,000p.
BG's shares plummeted 182p to 1,147.5p. Shell's shares lost 13p to 2,190.5p.
On the flip side, shares in Tullow Oil were gushing after reports emerged it has made discoveries in Kenya. Analysts at Liberum Capital gave its shares a hold rating following the reports. Its shares spurted up 22p to 1,404p.
Wall Street reopened after a two-day break following the destructive superstorm Sandy. Volumes were still lacklustre but at least there wasn't a repeat of what happened after the UK's Great Storm of 1987. The hurricane in Britain happened to be followed by Black Monday – a global stock market crash.
Investors had thought the FTSE 100 would lift during early afternoon trading when the US returned. But the benchmark index was not able to hold onto yesterday's gains.
Investor concerns over the continuing eurozone crisis meant the blue-chip index lost 67.20 points to 5,782.7.
Utility stocks were also a drag on the index. Severn Trent and United Utilities were down 45p to 1,606p and 18p to 677p respectively, while UK water and sewerage services group Pennon dropped 7.5p to 717p.
Back to the subject of takeover rumours, the long-mooted Informa deal was still being touted about. Dealers reckon a deal could happen soon. Rival publisher UBM, up 8p to 699.5p, has been in the frame, as has German publisher Axel Springer and private-equity bidders. The business publishing and events group ended up 4.6p at 400.2p.
The fizzy-drinks merger of Britvic and AG Barr is "at an advanced stage of discussions", but the pair have another extension until 28 November to agree the £1.4bn deal. AG Barr fell 3p to 445p but Britvic rose 0.8p to 359.2p.
On the small caps, credit card insurer CPP revealed it has had a bid approach from Affinion Group which owns card-protection brand Sentinel. Its shares gained 8.5p to 29.5p.
Over on AIM, jeweller to the stars Theo Fennell's talks with potential buyer EME Capital have got an extension from the Takeover Panel. The potential deal now has until the end of November. Theo Fennell's shares were static at 13p
There was an update from gold miner Centamin on its troubles in Egypt. The previous day it was forced to suspend its shares on news that a court ruling declared its rights to operate its flagship Sukari mine invalid.
It yesterday said it will appeal against the ruling.
A Goldman Sachs analyst note said "the co-operation of the Egyptian Mineral Resource Authority to ensure continuing operations at the mine and no statement from the court that the concession agreement is invalid should be viewed as positive in what remains an unclear situation." Centamin's shares remain suspended at 63.82p.
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