Market Report: Cross-channel deal puts bid spotlight on Croda

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The Independent Online

A multibillion-euro deal on the Continent helped to drive Croda International to a new all-time high last night, while hopes were also raised that the speciality chemicals group could be on its way to becoming a blue-chip company.

It touched 1,799p during yesterday's session, before closing at 1,718p – an uptick of 24p – in the wake of news from Europe that the directors of the French chemicals producer Rhodia had agreed to a €3.4bn (£3bn) approach from its Belgian rival Solvay.

The acquisition put the takeover focus back on Croda, whose chemicals can be found in a number of consumer products, including Nivea sun cream, with Charles Stanley's Jeremy Batstone-Carr one of those pointing to a positive read-across.

"It is sector consolidation, which many thought would happen," the analyst said, "and a company like Croda, which is a bit of a niche operator, particularly in things like consumer care, would almost certainly make a tasty morsel for a potential buyer looking to buy exposure in that important niche."

Croda has frequently had its bid potential highlighted, with Goldman Sachs last week saying it was one of the companies in the sector likely "to be the subject of merger-and -acquisition speculation". Yesterday, it was also boosted by Numis Securities, which – initiating coverage on the group with a "neutral" rating – said the idea of it gaining a promotion from the mid-tier index "does not strain credibility".

Despite market voices worrying over how long the rally can last, the FTSE 100 continued its recent strength, gaining 7.06 points to finish at 6,016.98. The miners provided support – including Fresnillo and Antofagasta, which shot up 46p to 1,611p and 27p to 1,424p respectively – as analysts from JP Morgan Cazenove named the sector as one of its "top picks", saying it "is likely to continue benefiting from the global upcycle and asset reflation".

Aggreko powered to the top of the leaderboard after the generator supplier announced it had signed a contract with Tokyo Electric Power to send emergency electrical equipment, and it was lifted 84p to 1,678p.

BP crept down 0.75p to 469.25p as US officials poured cold water on reports that it could begin drilling again in the Gulf of Mexico within months. The oil giant also spent the day trying to persuade a tribunal in London to green-light a share swap with the Russian group Rosneft after the original tie-up was blocked in Sweden last month, while it also announced it had agreed to sell its aluminium-manufacturing unit Arco for $680m.

In early trading, it looked as if Sunday's news that Vodafone is disposing of its 44 per cent share in the French mobile operator SFR would leave the telecoms group in the blue, with it set to receive €7.95bn (£7bn) from Vivendi for the stake. Yet despite Prime Markets' Richard Curr saying the company's strategy of reducing its minority stakes will result in "a leaner, meaner global communications giant", it ended up slipping back 0.25p to 178.85p.



Merger-and-acquisition activity was also moving stocks on the FTSE 250, where Close Brothers backtracked 14.5p to 829.5p after the merchant bank agreed a $41.6m (£26m) deal to buy the financial advisers Cavanagh. Meanwhile, Kofax was one of the major losers following its announcement that the sale of its hardware unit will not be completed until the end of next month. The deal was originally expected to go through last March, and news of the delay left the software group 13.5p lower at 521.5p.

Cranswick's trading statement was clearly not to the market's taste, as the pork supplier retreated 41p to 790p despite the group saying its full-year results would meet expectations. However – with the company warning that the following year "may be more demanding than usual" given the current consumer environment – analysts from Panmure Gordon noted that its "outlook statement was more cautionary" than previous updates.

It was beaten to last place by Dixons, which at one point plummeted as low as 11.47p, though by the bell it was only 0.73p behind at 11.99p. The high-street electrical retailer issued a profit warning last Wednesday, and since then, it has lost nearly 30 per cent of its share price.



Market gossips have been fired up recently about Coal of Africa, with vague takeover speculation about the miner being a potential bid target re-emerging last week. Yesterday, the group gained another 5.25p to 89p on the Alternative Investment Market after announcing it had been granted a key licence for its Vele project in South Africa, leading to renewed optimism that output there will be resumed soon.

Meanwhile, the small-cap software company Alterian shed nearly 20 per cent – sliding 35.75p to 154p – after issuing a profit warning. The group said its revenues for the full year would end up 10 per cent less than previous forecasts, and its chief executive, David Eldridge, said he was resigning as a result.

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