Market Report: Iraqi deal pumps up Premier Oil
Friday 12 October 2012
News that Iraq will sign a deal with a handful of oil and gas explorers next month triggered a share price jet for Premier Oil. Iraq's oil ministry confirmed contracts will be signed with Premier, and partner Russia's Bashneft, on 8 November.
The explorer saw its shares gush up 20.5p to 374.7p on the news. It agreed a deal with Bashneft, and the Iraqi authorities gave the right to develop the field in the southern part of the country, during the summer. But the confirmation of signings next month gave punters confidence.
The FTSE 100 index was steadier and punters were happier to invest in riskier stocks again with miners and banks moving toward the toward the top of the index. It ticked up 53.04 points to 5,829.75, led by a gain for the luxury goods group Burberry, which sashayed to the top. Burberry recorded a 13.26 per cent gain after its sales slowdown wasn't as bad as investors had feared. Its shares moved up 133p to 1,136p.
The biggest float of the year kicked off with insurer Direct Line shares priced at 175p. The motor insurer floated by Royal Bank of Scotland attracted private investors, rather than institutions who were said to have shied away from the stock. The shares drove up to 188p on the first day of trading. RBS was also boosted by the float and edged up 11.1p to 273.8p but bank stock is also up on reports that the implementation of capital rules could be delayed.
Don't head for the recycling bin with your DS Smith shares yet. Punters are used to bad news when it comes to the aftermath of a company purchase, but the City was left pleasantly surprised by packaging firm DS Smith yesterday.
The company said it will save more than it had first thought after buying the recycled packaging business of Sweden's Svenska Cellulosa Aktiebolaget in the summer. Savings are likely to come in at €100m (£80m) a year, up on the previously estimated €75m.
Scribes at Investec maintained their buy rating of the shares and put their price target under review. Chris Dyett said: "With cash, costs, interest and tax guidance better, we remain bullish on the prospects for the combined group."
The company bought the SCA division for €1.6bn in June to expand across northern Europe, where its consumer goods customers operate.
Shareholder Trevor Green, head of institutional funds at Aviva Investors, said: "Huge credit to management for taking on such a major acquisition and the update has shown they have quickly got on with the integration. Few companies have had the nerve to take on major acquisitions this year."
But Panmure Gordon analyst Paul Jones said: "We switch our recommendation from buy to hold, given the run the shares have had in recent months."
The deal, structured as a reverse takeover, was financed with debt and £466m from a discounted rights issue at 95p a share. The shares crashed down to 133.2p by late June but staggered back up during late summer. DS Smith's shares packed in a rise of 7.3p to 197.3p.
The City will have to wave goodbye to another woman – WH Smith's Kate Swann will leave after nine years at the newsagent-cum-book shop. Swann has been credited with saving the once struggling retailer. She announced her departure with WH Smith's full-year results to September. Its share price lost 21p to 631p.
Financier Nat Rothschild's Bumi raced up the mid-cap index after Indonesia's wealthy Bakrie family filed for a divorce from the debt-laden company.
The Indonesia-focused coal miner has been mired in debts and financial investigations. The company's shares have crashed since the summer but the proposal caused a near 40 per cent spike in the share price as punters seemed to value the potential shell company free of assets as a good deal. Its shares bounded up 73.3p to 259p.
Reheated bid speculation for Informa, publisher of Lloyd's List, helped it book a share price gain of 13.9p to 411.8p.
Private equity player Carlyle has until tonight to make an offer for defence contractor Chemring. The Takeover Panel agreed to extend the "put up or shut up'"deadline last month. Chemring's shares ticked up 3.4p to 335.3p ahead of the deadline.
Over on Aim, gold miner Condor Gold cheered investors with a deal to buy a concession close to its La India Project in Nicaragua. Its shares glittered up 2.5p to 168p.
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