Market Report: ITV essential viewing as takeover talk hots up

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The Independent Online

Rumours of a private-equity advance for ITV were broadcast around the market yesterday.

Apax, Kohlberg Kravis Roberts and Provident were apparently considering a bid for the television company.

The three companies are supposed to be mulling an offer of around 100p per share, and, while there was no official confirmation of the speculation, the chatter took ITV's stock to seventh place on the FTSE 100 leader board.

The shares were also helped by brokers at Bear Stearns, who revised their stance on the stock to "peer perform" from "underperform". And while some did question the logic of a bid, citing the dull outlook for UK TV advertising and the uncertainty surrounding the contract rights renewal negotiations, which may not be resolved in ITV's favour, the company's shares gained 2.75 per cent to close at 78.60p.

Anticipation of a private equity bid also boosted Friends Provident, the embattled life assurance company. JC Flowers is working on an offer for the company following the results of last week's strategic review, which sparked a sell-off in Friends Provident shares. Some in the market expect a formal bid as early as next week.

The speculation won the stock third place in the list of the day's best performers, gaining 3.46 per cent, or 4.70p, to 140.70p.

Overall, the market had a lacklustre start to the week. The FTSE 100, which swung past the 6,000 mark at the end of last week, was down three points to 6026.20 as volumes remained low. Beyond Friends Provident, other finance sector stocks also bounced back.

Royal Bank of Scotland, which suffered as concerns about its capital position mounted last week, closed up 4.31 per cent or 16.75p at 405.50 as the worry eased. Sector counterpart Barclays closed at 481.25p, up 1.96 per cent, or 9.25p. Other banks, including Lloyds TSB, which gained 1.30 per cent, or 5.75p, to close at 447.50p, and HBOS, which gained 1.28 per cent, or 9p, to close at 710p, also had a positive start to the week.

The mining sector represented a mixed bag. Ssome stocks, buoyed by unrelenting M&A optimism, continued to rally while others fell by the wayside as investors raked in profits from last week's record run.

Vedanta performed the best, gaining 3.01 per cent, or 59p, to 2019p. Antofagasta was also up, gaining 1.43 per cent, or 10p, to 710p.

BHP Billiton was marginally higher, to 1649p, up 1.66 per cent, or 27p, while Rio Tinto, which rose to the top of the FTSE 100 leader board on Friday, slipped by 1.30per cent, or 73p, to 5527p.

Lonmin, which was touted as a potential bid target for BHP after the Chinese moved into Rio, was down despite a spike in the price of platinum. The company's shares were 0.43 per cent, or 15p, lighter to 3031 by the end of the day.

Xstrata, another one of last week's high fliers, slipped too, down 2.70 per cent, or 108p, to 3895p. Kazakhmys closed flat at 1262p.

Depressed house builders also fared better yesterday, as hopes of an impending interest rate reduction drove the sector in to positive territory.

The market expects the Bank of England, which is due to meet to consider interest rates on Thursday, to trim the base rate to 5.25 per cent, in order to stave off a slowdown in economic activity.

The prospect took Taylor Wimpey to the top end of the FTSE 100 leader board as its shares climbed 4.27 per cent, or 8.25p, to 201.25p.

Bellway, another housebuilder, was up by just over 1 per cent, or 9p, to 828p while Berkeley Homes was heavier by more than 3 per cent, or 32p, at 1060p.

Elsewhere, the FTSE 250 gained 75.50 points to 10262.10 yesterday.

There was little movement in Minerva, which was the subject of renewed bid speculation at the end of last week. The speculation eased up and the shares reversed their course and fell, to 141.50, down 0.88 per cent, or 1.25p.

Topps Tiles, another stock which gained last week as investors anticipated a bid, lost 4.63per cent, or 7.50p, to close at 154.50p.

The recruitment firm Robert Walters, on the other hand, gained as investors anticipated some stake-building by large shareholders keen to capitalise on a weak stock. The company's shares closed up 5.53 per cent, or 6.50p, at 124p by closing time.

Higher platinum prices, while offering no solace to Lonmin, took Aquarius Platinum to first place on the FTSE 250 leader board as the company's shares gained 11.09 per cent, or 74p, to 741p.

On AIM, platinum prices also gave a boost to the metals producer Ridge Mining which rose by 3.64 per cent to 114p yesterday.

Jubilee Platinum, another AIM-listed miner, also rose, to 66p, up 1.15 per cent by the end of the day.