Market Report: Invensys on the up as bid rumours refuse to die
It is the takeover tale that refuses to go away. Rumours that Invensys could be in line for an approach have seemingly been around for ever, but that did not stand in the way of the City's enthusiasm for the story yesterday as the engineer jumped as much as 10 per cent amid continuing bid speculation.
With the latest vague rumours claiming it may be the subject of an approach priced up to 350p a pop, Invensys touched a high of 232.9p during trading, which would have been its highest closing price since last October.
Although some the gains were gone by the bell, the group (which lost roughly a fifth in one session in January after releasing a profits warning) still finished the day 10.6p ahead at 222.1p.
This means it has gained more than 13 per cent in the past three sessions, during which period volumes have been steadily rising. Yesterday more than 22 million shares were traded, close to five times the average for the past three months.
As market gossips suggested there could be more than one potential bidder, unsurprisingly both China Southern Rail and German giant Siemens were being mentioned, with the two often having been linked with Invensys in the past.
Meanwhile, giving the frequency with which the rumour is revived, traders were certainly wary. "The story has been around so many times before, but you never know," one conceded.
April ended on a downer for the FTSE 100, with the top-tier index slipping 39.33 points to 5,737.78 following the news that Spain is back in recession and disappointing economic data from the US.
Having risen nearly 12 per cent last week amid suggestions the recent decline of its share price could leave it vulnerable to an approach, Man Group was back in the red ahead of today's first-quarter update, dropping 3.5p to 103.5p.
Fellow asset manager Aberdeen, however, was in much better form following its interim results, climbing 9.5p to 283.5p – its highest closing price for more than a decade.
Don't panic, was the message to AstraZeneca investors. The drugs giant may have lost 6 per cent in one session last week following the resignation of boss David Brennan and poor first-quarter results, but Jefferies analysts declared that, with "sentiment at its nadir [and] dividend yield at its peak", now was the time to buy, which helped the shares firm up 19p to 2,699.5p.
They were also keen on its mid-tier peer Hikma (22.5p stronger at 628p), saying the recent sell-off – which has seen its share price retreat more than a fifth since March's full-year results – "provides [a] compelling entry point".
Elsewhere on the FTSE 250, FirstGroup was stuck in reverse, sinking 6.1p to 194.8p. The public transport firm had already shed nearly a third since March's warning that its UK bus margins were on course to drop more than a third this year, but HSBC's Joe Thomas believes it has further to go.
The scribbler cut his target price to 190p after warning that the group – along with peer GoAhead – faces "the greatest incentive to overpay [for new rail franchises] given their dependence on rail cash and rail profits".
He also played down bid hopes around GoAhead, which eased back 1p to 1,140p, saying a takeover "appears remote".
Essar Energy was the top mid-tier riser, soaring 9.08 per cent to 146.5p. Dealers said the move – the power generator's third rise in a row – was a continuation of a rebound in response to the group's share price recently losing more than a fifth in less than a fortnight.
At the other end, Aquarius Platinum slumped 10.28 per cent to 130p after admitting it had suffered a net loss over the third quarter thanks in part to a surprise drop in production.
Empyrean's Tom Kelly had a eureka moment after learning that the explorer's partner Eureka Energy had become a takeover target. Both hold stakes in the Sugarloaf shale project in Texas, along with Aurora Oil & Gas, which has made an A$104m (£66.7m) bid for Eureka.
This prompted Empyrean boss Mr Kelly to announce that the approach "indicates that there is strong interest in Eagle Ford shale assets" such as Sugarloaf, as the tiddler spurted up 10.34 per cent to 8p.
Among the other AIM-listed explorers, Gold Oil advanced another 0.38p to 6.88p amid growing excitement over its attempts to find a partner for its Peru operations. It announced in March that a number of majors had shown "considerable interest" while extending the bid deadline to early this month.
Meanwhile, the Kurdistan-focused Gulf Keystone Petroleum was 10.75p stronger at 237.75p following the latest update from its operations.
Elsewhere, Snoozebox was preparing for its first session of dealings today after the firm – which makes portable accommodation – raised £12m through a placing at 40p-a-share.
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