Market Report: Bid gossip lifts share price for Reed Elsevier
Saturday 20 November 2010
There was little to cheer yesterday as Ireland continued to cast a shadow over the top-tier index, but Reed Elsevier managed to make a gain as market gossips turned towards the publisher once again.
The company, whose publications include New Scientist and Variety, was the subject of takeover chatter last month with a private equity firm rumoured to be taking a look. Yesterday, speculation of a bid was revived and a price of 650p-a-share quoted, although details on the identity of the bidder were scarce.
The share price of the company – which released an interim management statement on Thursday revealing that subscription numbers have remained poor – was quiet for most of the session, but as the gossip took hold it rose sharply. At one point it peaked at 540p, but by the end of the day it had settled slightly, up 6.5p to 535.5p.
There was more gossip to emerge, however, as bid rumours also helped Man to post a gain. The largest listed hedge fund in the world has often been talked about as a takeover target, and again, Bank of New York Mellon was mentioned as the firm taking a look.
Man did add 10.9p to 295.1p, but analysts were sceptical about whether a bid would be made for the company. Oriel Securities' Keith Baird pointed out that the company's returns, albeit strong, are very unpredictable, and he wondered whether "a large asset mananger would want to take on that extra volatility, even though the returns are quite good". However, he did say that Man's acquisition of GLG Partners earlier this year "possibly makes it more palatable".
Overall, the FTSE 100 suffered a disappointing end to the week, despite a late rally, as it shed 35.88 points to end on 5,732.83. As a decision on a bailout for Ireland failed to materialise by the close of the session, the banks were one of the day's major losers; Standard Chartered Bank dropped 49p to 1,803p while Lloyds Banking Group closed on 66.72p, down 1.07p.
China announced that it was upping its reserve requirements for banks, but there was still a fear that an upward change in interest rates could be next. As has been regularly seen in the past few days, worries over an increase in rates hit the miners, with Eurasian Natural Resources Corporation suffering the most, losing 17p to 910p.
It was a good day for the technology companies, as they benefited from a read-across from the States where Dell revealed that its third-quarter net income had increased by an impressive 144 per cent. It had a particular effect on Autonomy, which made 17p to 1,416p, with USB saying that the software company's chief executive had told the broker that it was looking at "acquisition opportunities".
Another technology company doing well was Arm, which was up 14.3p to 384.9p at the top of the leaderboard. Its chief executive Warren East spoke at a Morgan Stanley conference in Spain on Wednesday, and the broker, which reiterated its "overweight" advice, said he provided "the most bullish presentation so far". Mr East said that it was aiming to become the top player in the graphics chips market currently dominated by Imagination Technologies, which also saw a decent gain of 14.7p to 332p.
One technology firm not doing so well was Sage Group, which fell 8.2p to 261p as investors reacted badly to vague gossip that it was taking a look at the French group, Ingenico. Meanwhile, suggestions that Qantas' fleet of A380s would not take to the skies again for weeks, as Rolls-Royce works to fix the engine fault that forced one plane to perform an emergency landing, meant that the engineering giant's terrible November continued, as it retreated 11.5p to 592p.
There was one major loser on the FTSE 250, as BTG dropped 19.4p to 231.6p. The market was responding to the drug developer's announcement of a deal to buy Biocompatibles, with shareholders in the cancer-treatment developer offered 10p and just over one-and-a-half new shares for each of their existing shares.
Also involved in an acquisition, but much less damaged as a result, was Balfour Beatty. It edged down ever so slightly 0.3p to 279p as it revealed that it had spent £7m on purchasing businesses from Rok, the recently collapsed maintenance firm.
Thursday was a tough session for Lamprell, but yesterday it managed to regain some of its losses, putting on 18.9p to 313.9p. The company, which upgrades and refurbishes oil and gas rigs, had been hit after it warned that results would be towards the lower end of expectations, but things were looking cheerier yesterday, with Evolution Securities pointing out that "outlook and backlog are encouraging".
On the Alternative Investment Market, Faroe Petroleum managed to strike a deal with Scottish and Southern Energy that will see the two companies work together to find oil and gas assets in the North Sea. Faroe also managed to conditionally raise a touch over £62m from a share placing of 37.7 million new shares, and dipped 5p to 173.75p.
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