Market Report: GKN finds new gear as City praises deals
Wednesday 05 June 2013
The car and aerospace components company GKN hit a 14-year high after analysts at UBS praised its recent acquisitions as "transformative". Scribblers at the bank reckon the recent purchases of the Getrag and Volvo Aero businesses have "strengthened GKN's strategic position in both of its key markets – aerospace and autos".
The shares hovered around 314p on the back of the news, just shy of GKN's intraday high of 316.7p, a level last seen in mid-1999. GKN closed up 15.1p at 313.7p.
The pest control company Rentokil also rose on reports of a possible offer for its office maintenance business. The US private equity firm Clayton, Dubilier & Rice is reportedly considering buying the division, with a price tag of over £400m, and also purchasing Balfour Beatty's rival operation with the aim of merging the two. Mike Murphy at Numis advised investors to add Rentokil, saying a sale of the business would leave the company more focused and with "excellent long-term growth potential". Rentokil put on an extra 2.3p to 90.75p.
Fund managers were all the rage on the benchmark index. Société Générale was bullish on F&C Asset Management, raising it from a "hold" to a "buy" and saying that the market has failed to recognise the progress made by F&C with its restructuring plan. The activist investor Edward Bramson has been quietly building a stake in the company over the past two weeks through his investment vehicle Sherborne, but his intentions remain unclear. F&C added 2.8p to 98.1p.
Aberdeen Asset Management also banked 7.4p to 463.9p, while Schroders put on 27p to 2,364p, Man Group added 2.9p to 116.5p and Jupiter took on 8.3p to 327.5p.
Vodafone made gains late in the day on the news that the Indian government had taken steps towards agreement with the mobile giant over a long-running tax issue. The government has long claimed it is owed £1.31bn in tax for asset acquisitions made in India in 2007, despite the Supreme Court ruling in Vodafone's favour last year. The company picked up 3.45p to 192.05p.
The FTSE 100 bounced back from Monday's one-month low, after weak US manufacturing data led investors to assume that the Federal Reserve will keep up its stimulus programme. The index clicked up 33.46 points to 6,558.58.
The City was pleasantly surprised by a tie-up between two fashion powerhouses. The budget retailer Primark announced it will sell its womenswear online through the fashion site Asos in a "very limited trial". The move comes just two months after Primark, owned by Associated British Foods (ABF), ruled out a move online.
Analysts at IG said: "These two very different clothes retailers could find this tie-up to be very rewarding. This will offer Primark [the] ability to assess the online retail market without the expense of starting up a website and creating a distribution network, [while] Asos will gain increased exposure."
ABF added 30p to 1,867p, while Asos ticked up 49p to 4012p.
What a difference a day makes. After ending Monday among the 10 worst-performing stocks, investors yesterday saw value in Tesco, boosted by strong retail sales figures. The supermarket added 6p to 364.45p.
EasyJet shares plunged on Monday amid fears that the civil unrest gripping Turkey could disrupt operations. But yesterday the budget carrier soared to the top of the index as it assured investors that Turkey isn't a significant part of its network, picking up an extra 42p to 1,263p.
Details emerged of a sell-off by Glencore Xstrata of copper mines in Peru, worth about $5bn (£3bn). The company is offloading the mines as part of an agreement with China's anti-monopoly watchdog, which vetted the commodities giant's mega-merger earlier this year. Now it looks as if the frontrunners in the bid for the assets are two companies with links to the Chinese government. Glencore Xstrata drilled down 0.15p to 326.4p.
Roll-Royce shares drove up 3p to 1,190p after the engine maker announced a contract worth £3m with the Italian cruise ship builder Fincantieri.
On Aim, Nighthawk Energy registered an uptick after discovering an oil column at one of its Colorado drilling sites. Nighthawk jumped 0.27p to 5.675p.
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