Market Report: Pace picks up after bid rumours drive up rating

With its share price having plummeted by roughly 60 per cent in just three months, 2011 has not been a vintage year for Pace, yet hopes that its dismal performance could have turned it into a potential bid target helped the set-top box maker finish high up the mid-tier index's leaderboard last night.

The group's downturn accelerated in March when it shed 20 per cent in just one session after revealing that one of its US customers had delayed a large order. Worse was to come, as an unexpected profit warning a fortnight ago caused it to plunge by almost 40 per cent.

Yesterday, however, Pace rose 4.6p to 102.8p after Exane BNP Paribas speculated it could turn from "predator to prey". Saying that forthcoming margin pressures meant the set-top box sector needed "to consolidate further to improve their bargaining power and achieve greater scale", the broker added the company's "US foothold could be attractive to Korean players", naming Samsung, and that private equity firms could be tempted as well.

Exane's analysts also upgraded Pace's rating by two levels, changing it from "underperform" to "outperform". Claiming the sell-off was overdone and exacerbated by poor communication from the company, they calculated that, in the worse case, it would still be worth 75p while the most positive outcome could see it reach 205p.

Despite a late slump, the FTSE 100 gained 22.52 points to finish at 5,858.41, enjoying a bounce after losing 112.6 points on Monday. Yet again it was the miners dictating the direction, this time helped by Goldman Sachs – which advised investors last month to take profits from commodities – switching its stance back and recommending zinc, copper and oil.

Fresnillo and Antofagasta jumped up 54p to 1,356p and 36p to 1,196p respectively, while BHP Billiton – which had its target price increased by 364p to 2,510p by Natixis – climbed 41p to 2,345p. Also recovering was Glencore, which moved up 11p to 525p on the commodity trader's first day of unconditional trading. The group nonetheless closed below its issue price of 530p before entering the top-tier index last night.

An update from Cairn Energy on its operations in Greenland was well received, as the explorer was pushed up 16.6p to 435.8p. The group announced it was to spend $600m (£371m), and market voices expressed optimism over the chances that the company's deal to sell a controlling stake in Cairn India to Vedanta Resources – up 35p to 2,090p – would be approved; a decision is expected on Friday.

At the other end, the banks were knocked by Moody's decision to place the ratings of a number of UK lenders under review over fears of tougher treatment from regulators. Lloyds Banking Group – down 1.13p to 49.74p – and Royal Bank of Scotland – down 0.44p to 40.44p – were among those included, despite Evolution Securities' Arturo de Frias reiterating the former as his "top conviction buy".

The ash cloud was still hurting International Airlines Group as the group declined 4.2p to 230.8p, but its mid-tier peer easyJet was not as badly hit, edging down just 0.1p to 345p. The budget airline was helped by its house broker, Royal Bank of Scotland, which said the decision by Lufthansa to close its Italian brand was a "positive development for easyJet, which should support its yields from [next winter]".



On the FTSE 250, the London Stock Exchange shifted 19p higher to 908p as vague rumours spread that its US rival, Nasdaq, could be about to make an approach worth more than 1,500p a share. Speculation about such a move has been triggered recently by news that LSE's planned merger with the Canadian bourse group TMX has been challenged by a higher offer from the Maple Group consortium.

The rival bid was rejected, but question marks remain over the tie-up, which requires regulatory approval as well as a green light from the Canadian government. Meanwhile, Nasdaq's decision to give up in its attempts to buy NYSE Euronext has led to suggestions it could be looking for another target, although traders played down the talk, saying the LSE and TMX deal was still the most likely to go through.

It has been a good run for Marks & Spencer recently, with the retailer putting on more than 20 per cent since the middle of March. However, the high street institution ended up slipping back 11.4p to 385.6p after a rise in its full-year profits of 13 per cent failed to beat forecasts significantly.

Also releasing figures was De La Rue, which advanced 10p to 840p despite its pre-tax profits dropping by nearly £24m to £72.8m. The bank note printer's preliminary results led Panmure Gordon to reiterate its bearish position, saying that "while rumours of a bid may continue to do the rounds, the fundamentals continue to shout sell."



On the Alternative Investment Market, the property developer Eatonfield saw its share price fall nearly 50 per cent after announcing it was no longer selling its Welsh sites – news that triggered a collapse of 0.16p to 0.17p.

Start your day with The Independent, sign up for daily news emails
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Abuse - and the hell that came afterwards

Abuse - and the hell that follows

James Rhodes on the extraordinary legal battle to publish his memoir
Why we need a 'tranquility map' of England, according to campaigners

It's oh so quiet!

The case for a 'tranquility map' of England
'Timeless fashion': It may be a paradox, but the industry loves it

'Timeless fashion'

It may be a paradox, but the industry loves it
If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

Could have done with Osama bin Laden staying alive?

Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
New exhibition celebrates the evolution of swimwear

Evolution of swimwear

From bathing dresses in the twenties to modern bikinis
Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine