Market Report: JJB up as rumours over Footlocker bid return
Friday 26 November 2010
Market gossips turned their attention back towards JJB Sports, as rumours swirled that the troubled sports retailer could be the target of a takeover bid. Not for the first time, the company at the centre of speculation was Footlocker, with the US trainer chain supposedly looking to make a bid of between 10p and 12p a share. Chatter about it and JJB has been around for a while, with rumours in June that it was considering making an offer of 30p, and it also re-emerged last month.
JJB, which was founded by Wigan Athletic's owner Dave Whelan in 1977, saw its third day of rises in a row yesterday, putting on 0.32p to 6.42p, despite Panmure cutting its recommendation on the company to "hold". However, analysts were quick to pour cold water on the idea of an approach from Footlocker, with one pointing out that JJB was not yet close to regaining the losses it suffered after issuing a profit warning a fortnight ago.
"If Footlocker wants to enter the UK market, it is something they might well look at it," said another analyst, who was also sceptical about the likelihood of an offer being made. "The question is whether the quality of the sites would be fit for purpose, as it were."
With the US shutting up shop for Thanksgiving, it was a quiet session on the market yesterday following a volatile few days, and the FTSE 100 finished 41.83 points better off on 5,698.93.
Investors were able to pore over the latest CBI distributive trades survey, which – combined with John Lewis releasing positive sales figures – brought some cheer for the retailers ahead of the festive season. As a result, Marks & Spencer booked gains of 9.1p to 384.1p and Next was boosted 19p to 2,097p.
The big movers on the top-tier index were the property companies, thanks to Capital Shopping Centres, which is in talks over a £1.6bn purchase of Manchester's Trafford Centre. Yesterday CSC revealed that the US firm Simon Group, which holds a 5.6 per cent share in the British company, had let it be known that it was looking at making a bid approach.
According to CSC, Simon – which did not give an indication of how much it may offer for the firm – asked for the Trafford Centre bid to be put on hold, a request which was refused. Still, CSC was fired to the top of the blue-chip index thanks to the news, moving 43.6p to 381p, helped by Nomura speculating that Simon's approach may spark an auction for the company.
It was joined near the top of the leaderboard by many of its peers, as Hammerson put on 18.4p to 405.8p while British Land was up 13.8p to 492p. Panmure Gordon's Andrew Saunders pointed to the fact that the latest developments came after reports about British Land buying Plymouth's Drake Circus mall and the Westfield Group selling 50 per cent of its new Stratford centre. "There's a perception that there may be a new wave of corporate activity and deal-making to be done in this sector," he said.
InterContinental Hotels was among the session's gainers, as the market welcomed its forecasts for two major markets. The hotel group, which owns the Holiday Inn chain, said that it expects operating profits of $44m to come from the Middle East and $21m from China. The numbers clearly impressed, and InterContinental climbed 25p to 1,167p.
The software firm Autonomy did not manage to regain Wednesday's losses, despite vague, reheated rumours of Microsoft making an approach doing the rounds, yet it still posted a gain of 20p to finish on 1,291p.
On the FTSE 250, it was DMGT which found itself at the bottom of the index despite the publisher of The Daily Mail releasing full-year figures that beat forecasts. Nonetheless, it dipped 20p to 544.5p as it warned it could be hit by the Government's austerity measures.
Brokers were rather more optimistic than the market, however. Investec kept its "buy" rating on the firm while Numis said that the outlook looked "encouraging in B2B", although it conceded that B2C was "more mixed".
Thomas Cook managed a slight gain of 1.5p to 190.5p, as it said that it would enter into a joint venture with the Russian travel company, Intourist. The British holiday firm will take a 50.1 per cent share of Intourist, and invest a mix of shares and cash to the value of around £29m.
The company also revealed that its expansion plans were not finished yet, however, and its chief executive said that it was hoping to move into the Chinese and Brazilian markets.
On the Alternative Investment Market, Regal Petroleum's revelation that it had received a number of enquiries over a potential takeover meant it rocketed by more than 45 per cent. Although Regal did try to play down hopes by saying that "there can be no certainty that any offer for the company will be forthcoming", the oil and gas explorer still soared 5.75p to 18.25p.
Meanwhile, its peer Bowleven was enjoying a more modest rise. During test drilling, it said, it had come across "further log evaluated pay" in one of its wells off Cameroon, news which meant it finished the session 20.5p higher on 338p.
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