Market Report: Positive reaction for Yule Catto acquisition

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The formula was spot on for Yule Catto yesterday, as investors welcomed what they believed was a shrewd acquisition by the chemical company, which reached its highest share price for more than four-and-a-half years.

The British group jumped 30p to 290p – a rise of more than 11 per cent – after announcing it will spend €157m (£132m) on PolymerLatex, the German latex manufacturer. The deal will enable Yule Catto to expand its presence in both Asia-Pacific and Europe, and was described by the company as a "transformational opportunity".

The enthusiasm with which the news was greeted came as a surprise to some, with one trader saying he was "staggered" at the share price bump, though analysts welcomed the move.

Altium Securities said the acquisition made the company "a leading global player in latex products", while Numis Securities' Charles Pick said "people could very quickly see the logic to it", although he did warn that Yule Catto's tax rate is likely to increase.

Overall, volumes were low on the market as the FTSE 100 gained 47.8 points to finish on 5,860.75. The top-tier index was helped by the miners, after a feared rise in Chinese interest rates failed to materialise.

It was widely expected that the country would raise the rate over the weekend following the news that inflation in November was 5.1 percent, its highest for over two years. Yet a key economic meeting on Sunday passed without an increase.

With metal prices gaining, among the beneficiaries were Fresnillo and Antofagasta – up 61p to 1,594p and 46p to 1,543p respectively – while Kazakhmys grabbed pole position, making 63p to 1,592p. The eighth biggest copper producer in the world was helped by strong Chinese import data being released at the end of last week.

The market was positive on thedecision by Reckitt Benckiser to make a move into the Indian market and spend $726m (£457m) on the pharmaceuticals company Paras Pharma. Reckitt – whose brands include Calgon and Vanish – rose 64p to 3,573p after the announcement.

Panmure Gordon was positive on the deal. The broker said the acquisition gave Reckitt "a strong strategic position in one of the fastest growing global healthcare markets albeit at comparatively high transaction multiples".

Although fallers on the blue-chip index were well in the minority, among them were a few names that haverecently been the subject of market speculation. Despite Cobham, G4S and Smith & Nephew all being gossiped about last week as potential takeover targets, yesterday they edged down 3.6p to 205.9p, 2.1p to 250p and 5p to 645.5p respectively.

there was rather a lot of acquisition activity among the oil services groups on the FTSE 250, as the companies involved were pushed towards the summit of the mid-tier index.

Wood Group added 32.8p to 521p in the wake of a trading update in which it revealed a $955m (£601m) deal to buy Aberdeen-based PSN.

Evolution Securities said it sees "a logic and strategic fit for the PSNacquisition within Wood Group's[engineering and production facilities] division". However, the broker did warn that "there is a risk of an equity issue in the new year to reduce the level of debt taken on to fund the acquisition", and downgraded its recommendation to "add" as a result.

Just behind it was Wellstream Holdings after it said it was supporting a 780p-a-share offer from General Electric. Having had two previous bids snubbed, it was third time lucky for the American giant, which – according to Forbes – is the second-largest company in the world.

It seems as if even the financial markets are not immune to discussing The X Factor following the show's Sunday finale, as analysts examined just how much of a boost it has given ITV. Panmure Gordon's Alex DeGroote said the network could see "a share price bounce" given that more than 20 million viewers are thought to have watched Matt Cardle take the crown, "one of the highest ITV audiences in recent memory".

According to Mr DeGroote, this "firms up the already strong peaktime network performance of recent months", but despite Simon Cowell's assistance, ITV failed to make it to the top of the charts and booked gains of 1.2p to close on 74.2p.

Betfair may be about to start trading on the FTSE 250 next week, but Evolution was rather bearish ahead of the gambling group's first-half figures, expected today. The company was down 54p to 1,181p as the broker warned of "troubles ahead", citing "regulatory and non-core growth concerns".

meanwhile, on the Alternative Investment Market, Regal Petroleum jumped 1.5p to 25.75p after the explorer welcomed Energees ManagementLimited's takeover attempt. The Ukrainian company has offered £77m, yet investment vehicle Heamoor threw a potential spanner in the works by saying it may offer more.