Market Report: Premier Farnell boosted by rumours of Chinese bid

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The Independent Online

Whispers of a Chinese bid sparked life into shares of Premier Farnell, the struggling electronics parts distributor. It was suggested that bidders had been tapping up major shareholders about the possibility of a 160p-a-share deal. 

That price is some way above Wednesday’s 101p closing price, up 2.5p, and would value the company at just below £600m.

However, the former FTSE 250 firm was worth almost double that just a few years ago when Harriet Green, the former Thomas Cook boss, was in charge.

A 40 per cent slump last year resulted in the departure of chief executive Laurence Bain in August, with rumours circulating that activist investor GO Investment Partner would push for a merger with embattled Electrocomponents.

A spokesperson for Premier Farnell declined to comment.

On the wider market, more disappointing Chinese data – this time from PMI services – sent miners back to the bottom of the FTSE 100, which slipped 63.86 points or 1 per cent to 6,073.38.

Anglo-Australian iron ore heavyweights BHP Billiton, down 36.6p at 709.4p, and Rio Tinto, 93p cheaper at 1,846.5p, were the biggest blue-chip losers.

BAE Systems flew 18.5p higher to 512.5p as RBC Capital upgraded the aerospace and defence giant. The broker said defence spending in the US, where BAE makes 40 per cent of its sales, would be greater than in the past couple of years.

Banking giant HSBC dropped 14.3p to 508.3p as JPMorgan slashed its rating to underweight, with fears over the emerging markets outlook. It points out that it is 40 per cent more expensive than its smaller Asia-focused rival Standard Chartered.

The oil price rout – Brent crashed $1.82 or 5 per cent to $34.60 a barrel – left its mark on the FTSE 250 with Tullow down 11.7p at 152.7p, while Premier Oil, which was dumped out of the mid-cap index last month, slumped to new lows, down 7.75p to 35.5p.

Elsewhere, AIM punters’ favourite African Potash leapt 0.28p or 16 per cent to 2.03p as it sent off the first batch of fertiliser to its Zambian customer.