Market Report: Burberry's bid potential talked up once again

Perennially talked about as a possible bid target, Burberry once again found its takeover potential under discussion yesterday as the upmarket clothing retailer shot up the blue-chip index.

The group has seen its share price take a knock in recent weeks, thanks to fears over its exposure to Japan – it lost nearly 8 per cent in just four sessions after the earthquake and tsunami hit the country – but last night it closed 31p better off at 1,147p.

Exane BNP Paribas assisted the luxury brand by adding it to its merger and acquisition target list, replacing the Italian watchmaker Bulgari, which LVMH agreed to buy earlier in the month in a deal worth £3.2bn.

"With a 100 per cent free float, Burberry is the only luxury goods stock without a family as a majority shareholder," said the broker's analyst David Finch, who added that "the recent corporate activity within the space, and the increasing amount of cash in the industry" means the rumours surrounding it are likely to continue.

Pointing out that Burberry – which, it was revealed over the weekend, has signed a deal to sell its products in Saudi Arabia – is "working hard to shift its price and mix upwards", Mr Finch said that although "the company is making good progress, this process is far from over and we would expect that it could be optimised and accelerated within the context of a larger group".

Overall the FTSE 100 edged up just 3.73 points to 5,904.49, as the miners endured a tough session. Randgold Resources – down 98p to 4,638p – and Kazakhmys – down 22p to 1,425p – were among those left weaker by a fall in metal prices

Also affected was Aquarius Platinum on the FTSE 250, retreating 25.7p to 344.3p. The group announced late on Friday that it is in talks with the government of Zimbabwe, where it operates, about plans to force companies operating there to be at least 51 per cent owned by the country's citizens.

Legislation was passed in 2007, and last week officials revealed details of its implementation. "While this may be all old news in many ways, it once again brings into focus the very real political risk in Zimbabwe," Panmure Gordon's Alison Turner said.

Back on the top-tier index, Arm Holdings was quiet for most of the day, but it shot up when markets over the Atlantic opened, eventually finishing near the summit with a rise of 13.5p to 558.5p.

Takeover speculation has had a large role in its recent advances, but traders yesterday pointed instead to the decision by the influential US financial publication Barron's to include its boss Warren East in its annual round-up of the world's top 30 CEOs.

Noting that this puts Mr East "in the company of Warren Buffet and Steve Jobs", Aviate's Neil Campling added that if the group "maintains its current multiple ... then [it] should move beyond 1,000p and towards 1,500p over time", advising that the chip maker "should sit at the core (pun intended) of any global equity growth portfolio".

Meanwhile, market voices also said Arm was helped by the apparent high demand for Apple's iPad 2, which features its technology, after its release in the UK last week.



The likelihood of an imminent break-up may be "receding", according to HSBC, but Smiths still managed to tick up 7p to 1,324p. Talk that such a move could be close was helped last January by the engineering group rejecting a £2.45bn offer for its medical services unit, but the broker said a number of reasons – including the company's pension deficit – means they remain "unconvinced" by the prospect.

However, its analysts did add that they expect its share price to "move sharply in reaction to merger and acquisition speculation, even if we feel Smiths is unlikely to accept bids at present".

Also rising, despite bid speculation being played down, was Micro Focus on the mid-tier index. Another favourite of the market gossips, yesterday the software group was lifted 6.1p to 314.7p by its announcement of a share buyback programme worth up to £60m.

The chances of it receiving a bid were knocked as a result, with Numis Securities saying the move "indicates that the company is not in active discussions", and Micro Focus clarified it was "not in possession of any unpublished price sensitive information".

Another gainer was Exillon Energy, 8.4p higher at 405.1p, after revealing it had found more oil at its field in Siberia. The index's biggest increase, however, came from Lamprell, with the group – which upgrades and refurbishes oil and gas rigs – 17p stronger at 331p after booking profits in 2010 more than 130 per cent higher than the year before.



On the Alternative Investment Market, Allergy Therapeutics was in top condition as the penny stock climbed 0.88p to 7.75p. The pharmaceutical group released first-half figures which showed a modest improvement in its pre-tax profit, but the better news came from the fact that the Food and Drug Administration in the US has given it the green light to continue with the development of its pollen allergy drug.

News
Susan Sarandon described David Bowie as
peopleSusan Sarandon reveals more on her David Bowie romance
Sport
Arsenal supporters gather for a recent ‘fan party’ in New Jersey
football
Sport
sportDidier Drogba returns to Chelsea on one-year deal
Arts and Entertainment
The Secret Cinema performance of Back to the Future has been cancelled again
film
PROMOTED VIDEO
Life and Style
Balmain's autumn/winter 2014 campaign, shot by Mario Sorrenti and featuring Binx Walton, Cara Delevingne, Jourdan Dunn, Ysaunny Brito, Issa Lish and Kayla Scott
fashionHow Olivier Rousteing is revitalising the house of Balmain
News
people
Arts and Entertainment
Christian Grey cradles Ana in the Fifty Shades of Grey film
filmFifty Shades of Grey trailer provokes moral outrage in US
News
BBC broadcaster and presenter Evan Davis, who will be taking over from Jeremy Paxman on Newsnight
peopleForget Paxman - what will Evan Davis be like on Newsnight?
Life and Style
fashionCustomer complained about the visibly protruding ribs
Voices
The new dawn heralded by George Osborne has yet to rise
voicesJames Moore: As the Tories rub their hands together, the average voter will be asking why they're not getting a piece of the action
Sport
Dejan Lovren celebrates scoring for Southampton although the goal was later credited to Adam Lallana
sport
News
newsComedy club forced to apologise as maggots eating a dead pigeon fall out of air-conditioning
Arts and Entertainment
Jo Brand says she's mellowed a lot
tvJo Brand says shows encourage people to laugh at the vulnerable
Life and Style
People may feel that they're procrastinating by watching TV in the evening
life
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior Risk Manager - Banking - London - £650

£600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...

The benefits of being in Recruitment at SThree...

£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...

Test Analyst - UAT - Credit Risk

£280 - £300 per day + competitive: Orgtel: Test Analyst, Edinburgh, Credit Ris...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Day In a Page

Evan Davis: The BBC’s wolf in sheep’s clothing to take over at Newsnight

The BBC’s wolf in sheep’s clothing

What will Evan Davis be like on Newsnight?
Finding the names for America’s shame: What happens to the immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert?

Finding the names for America’s shame

The immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert
Inside a church for Born Again Christians: Speaking to God in a Manchester multiplex

Inside a church for Born Again Christians

As Britain's Anglican church struggles to establish its modern identity, one branch of Christianity is booming
Rihanna, Kim Kardashian and me: How Olivier Rousteing is revitalising the house of Balmain

Olivier Rousteing is revitalising the house of Balmain

Parisian couturier Pierre Balmain made his name dressing the mid-century jet set. Today, Olivier Rousteing – heir to the house Pierre built – is celebrating their 21st-century equivalents. The result? Nothing short of Balmania
Cancer, cardiac arrest, HIV and homelessness - and he's only 39

Incredible survival story of David Tovey

Tovey went from cooking for the Queen to rifling through bins for his supper. His is a startling story of endurance against the odds – and of a social safety net failing at every turn
Backhanders, bribery and abuses of power have soared in China as economy surges

Bribery and abuses of power soar in China

The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

Highland terriers steal the show at opening ceremony

Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
German art world rocked as artists use renowned fat sculpture to distil schnapps

Brewing the fat from artwork angers widow of sculptor

Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

BBC takes viewers back down memory lane

The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

Nicolas Cage shines in low-budget drama Joe

Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

Make your own ice lollies and frozen yoghurt

Think outside the cool box for this summer's tempting frozen treats
Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

Fiesta is UK's most popular car of all-time

Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
10 best reed diffusers

Heaven scent: 10 best reed diffusers

Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
Commonwealth Games 2014: Female boxers set to compete for first time

Female boxers set to compete at Commonwealth Games for first time

There’s no favourites and with no headguards anything could happen
Five things we’ve learned so far about Manchester United under Louis van Gaal

Five things we’ve learned so far about United under Van Gaal

It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little