Market Report: Misys sale prediction fails to prevent it falling
Tuesday 30 November 2010
The takeover spotlight was on Misys yesterday following a prediction that the software company will be an acquisition target next year, prompting an early share price gain before it – like so many on the markets – bolted downwards.
Jefferies International tipped the company to change hands in 2011 following Misys's recent acquisition of its Irish peer Sophis. Analysts from the broker said that the £375m purchase reinforced "the company's credentials as a bid target during 2011", pointing out that Sophis will remain a standalone unit. This, according to Jefferies, "suggests that Misys may be leaving the integration decisions to be made by the next owner".
Although Misys reached 295.5p at one point during trading yesterday, any major gains to come from the prospect of a sale will have to wait for more favourable conditions as it ended edging down 1.8p to 291.3p on a day of losses across the board.
At the start of trading, hopes were high that Ireland's bailout, announced over the weekend, would stabilise the market after last week's falls. Yet early gains were quickly lost, and with a fall in commodity prices and no boost forthcoming from Wall Street, the FTSE 100 fell 117.75 points to 5,550.95.
"The reversal of the bullish start [came about] by a gradual realisation that the Irish bailout could be the tip of the iceberg if contagion spreads throughout the eurozone," said City Index's Giles Watts. "And with volumes light, the move lower [was] exacerbated further."
The biggest faller among the blue-chips was Petrofac, which dipped 85p to 1,392p, as investors reacted to its revelation that it will spend $100m on a stake in the oil explorer Seven Energy. Although the deal was revealed last Thursday, the Thanksgiving holiday meant that many US investors were only now expressing their displeasure.
Cairn Energy was also left in a bad way, plummeting 17.4p to 377.6p, thanks to the Indian government, which pushed back the deadline for its decision on whether to allow the company to sell a majority stake in its Indian business. A judgement on the sale to Vedanta Resources – which ended 65p weaker on 2,010p – was expected to be made by the end of the year, but the new deadline is the end of February.
BP was one of those to start the day in positive fashion, but the oil company, which said that it has struck a $7bn deal to sell its 60 per cent share of Pan American Energy, ended up shedding 7.75p to 428.25p. Meanwhile, as British Airways shareholders gave the thumbs-up to its proposed merger with Iberia, the airline dropped 10.7p on 261.2p.
Tui Travel also looked as if it would be one of a handful of companies to make a gain, yet a dip in the last few hours of the session saw it ease back 0.3p to 214.4p. The tour operator announced that it was getting rid of its Thomson Al Fresco business, which is set to be bought by the French company Homair Vacances.
there were a few more risers on the FTSE 250, with Salamander Energy near the top after it announced that it had discovered a sizeable quantity of gas at its Angklung-1 site off Indonesia. Panmure Gordon's Peter Hitchens called it "exciting news for the company" and investors certainly agreed, bumping up Salamander's price 10p to 243.1p.
However it was beaten to the summit by Punch Taverns, which – according to reports – is considering selling thousands of its pubs in an effort to tackle its debt. "The radical move would be a departure from the group's recent attempts to reduce its debt via modest disposals, a zero-dividend policy and a share placing during 2009," said Langton Capital's Mark Brumby, with the pub group making 3.2p to 62.3p.
Speculation was also swirling around Gartmore, which has endured a torrid time ever since the high-profile Roger Guy announced his retirement. Its price advanced 3.2p to 62.3p following reports that Henderson Global Investor is sizing up the fund manager.
At the other end, DMGT, which released full-year figures last week, took the wooden spoon, falling 29p to 520p. Not far behind were Barratt Developments – down 3.35p to 71.05 – and Persimmon – down 14.5p to 345.1p – as the housebuilders suffered from Bank of England figures revealing that the number of mortgages approved in October was a six-month low.
on the Alternative Investment Market, reports that Blackstone may buy back Southern Cross, which it listed in 2006, forced the care home company up 1.5p to 18.5p, while the discovery of oil in an exploration well off Mozambique part-owned by Cove Energy meant the explorer was lifted 9p to 97p.
Meanwhile, China Food Company had investors licking their lips as the company said that production at its new soya sauce factory was around five weeks ahead of schedule. According to the Shandong province-based company, which produces cooking and dipping sauces, over 50 silos are now full of the brown liquid, leading it to book gains of 7p to 50.5p.
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