Market Report: Buying Beam was likely not on the to-do list. Now it should be
Wednesday 15 January 2014
Following a run of M&A activity, booze experts yesterday declared drinks giant Diageo is ready to pour itself into the mix for US spirits group Beam.
On Monday Japan's Suntory Holdings said it planned to buy Beam for $13.6bn (£8.3bn). The deal, to be approved by the summer, will make the Japanese company the world's third-largest spirits maker.
But Liberum Capital's Pablo Zuanic bet Guinness owner Diageo will make a bid despite unanimous approval by both companies' boards. Mr Zuanic said: "We think a Diageo-led consortium bid is quite possible."
But it conceded: "Buying Beam at this point was likely not in new chief executive Ivan Menezes' to-do list. Now it should be."
Mr Zuanic expected Diageo will to want to split up the brands and keep some of its bourbon and tequila products.
Traders seemed only slightly convinced by Mr Zuanic's reasoning and Diageo fizzed up 7.5p to 2,003.5p.
After a tumble during morning trade the FTSE 100 recovered and closed ahead 9.71 points at 6,766.86.
Top of the table was BSkyB after renewed takeover chat. Media mogul Rupert Murdoch walked away from an £8bn bid in 2011 but experts at UBS declared Mr Murdoch's "Fox could revisit a takeover of BSkyB… or [BSkyB] could seek to merge with a mobile operator".
UBS said growth opportunities such as new initiatives including NowTV, Entertainment Extra+ make it attractive. UBS, which advises BSkyB, raised its rating of BSkyB to buy and added it to its European Key Call List. The City agreed and it broadcast a 31.5p rise to 871p.
Standards-testing group Intertek fell 76p to 2,993p as analysts at Natixis cut their rating to reduce.
On the mid-tier table, construction group Balfour Beatty gave an update in line with expectations but the City's relief pushed it up 4.5p to 294.5p.
Fund manager Ashmore tumbled 50.8p to 358p after it revealed a large outflow of funds with clients pulling from emerging markets.
AIM-listed Volga Gas surged 7.75p to 109.75p on a 46 per cent production rise.
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