Market Report: Invensys surges after bid rumours of 400p a share
Friday 07 October 2011
As the market rally gathered pace yesterday, it was a hectic session for the gossips with Invensys among those back in the takeover spotlight.
The engineer jumped after reheated rumours emerged claiming a number of potential predators were lurking in the shadows and that it could receive an approach as high as 400p a share.
Some of those being linked with a possible move included China Southern Railway and Switzerland's ABB. However, traders refused to get too excited over the revived gossip, given that the names had all been mentioned before in similar whispers.
Nonetheless, the rail-signalling group was still driven up 9p to 212p on the mid-tier index, although it remains over 10 per cent lower than a week ago.
SABMiller surged by 7.02 per cent to 2,247.5 in response to vague talk that the Grolsch-brewer could be bought by the Budweiser owner Anheuser-Busch InBev in an $80bn (£52bn) deal.
Analysts have frequently put forward the idea of a merger between the two drinks giants, although SAB's agreed acquisition of Foster's has been seen by some as an attempt to protect itself from a predator.
In the wake of reheated bid rumours on Wednesday, Ferrexpo was still climbing as it managed to rise more than 10 per cent for the second session in a row. The iron ore producer charged forwards 28p to 294.8p, giving itself a further boost by revealing encouraging production results.
Rumours were also spreading around BP, although they were hindering, rather than helping, the energy giant. Murmurs the group has been talking down its forthcoming figures caused it initially to drop as low as 383.38p, yet the oil group denied the story and managed to close 2.5p better off at 392.8p.
The decision by the Bank of England to pump £75bn into the economy helped the FTSE 100 continue to bounce from the 15-month low it touched earlier in the week. Rising 189.09 points to 5,291.26, the top-tier index has now added more than 7 per cent over the last two sessions.
The eurozone banks were given a lift by the European Central Bank's announcement that it would provide emergency loans to the sector. Lloyds advanced 2.87p to 35.87p while Barclays and Royal Bank of Scotland rose by 12.4p to 167.85p and 1.76p to 24.36p respectively.
Prudential ended up in the gold medal position, soaring 62p to 590p, although traders were blaming a bear squeeze. Admiral, meanwhile, slipped 4p to 1,259p after analysts from Exane BNP Paribas gave the car insurer an "underperform" recommendation and claimed the group's share of the market was likely to drop.
Negative broker comment was also harming Next, which was pegged back 1p to 2,446p. Barclays Capital downgraded its advice on the high street fashion chain to "underweight", warning that the recent "Indian summer" would have had a negative impact on trading for the retailers.
The top spot on the FTSE 250 was grabbed by Exillon Energy after the explorer struck black gold in Siberia for the second time in three weeks, with the latest find driving it up 22.57 per cent to 234.1p.
Renewed talk that Howden Joinery could become a takeover target failed to spark the imaginations of investors. The kitchen supplier crept up 0.9p to 101p, despite Evolution Securities saying its "attractive business model... could prove too tempting for Travis Perkins".
Thomas Cook was lifted 3.33p to 40.65p after Morgan Stanley said the next six months could see the troubled tour operator's share price double if it could avoid needing to raise equity.
Elsewhere in the leisure sector, the market was checking into the blue-chip hotels group InterContinental. It was bumped up 31p to 1,028p following a positive overnight update from its US peer Marriott, with scribblers from Panmure Gordon saying the figure "underpins" their forecasts for InterContinental as they reiterated their "buy" recommendation.
It was its last session as a small-cap stock, but Galliford Try failed to go out with a bang, instead staying steady at 425p. The construction company will start trading today on the mid-tier index following the deletion of Autonomy (down 4p to 2,546p) from the indices after its takeover by Hewlett-Packard. Taking the software group's place on the top-tier will be the defence group Meggitt, which closed 63.6p ahead at 336p.
Elsewhere, Axis-Shield finally gave in to Alere, but the diagnostics company, which ticked up 18p to 468p, was certainly not happy about it. Although it advised shareholders to accept the US group's 470p a share offer, it still said the offer "fundamentally" undervalued it.
Datong slumped 26.42 per cent to 19.5p on the Alternative Investment Market after the Leeds-based tracking-systems provider, which issued a profits warning in August, admitted it would post a small loss for the year.
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