Market Report: Reckitt Benckiser rises on bid battle hopes
Tuesday 05 July 2011
As the top-tier index moved above the 6,000-point level for the first time in nearly eight weeks, Reckitt Benckiser was pushed forwards last night after the re-emergence of speculation that the Cillit Bang manufacturer could be in line for an approach.
According to the vague chatter, the consumer goods group – whose brands also include Durex and Gaviscon – could be the subject of a bid battle, with market gossips claiming both Unilever and the US giant Procter & Gamble could be interested.
With suggestions any approach would be in the region of 5,000p a share, Reckitt rose 35p to 3,488p despite traders playing down the tale and similar chitter-chatter having done the rounds before. Analysts have previously suggested the forthcoming departure of Reckitt's long-standing chief executive Bart Becht – announced in April – could increase the likelihood of its agreeing to such a move.
With the US markets closed for Independence Day, it was a quiet session for the FTSE 100 but a significant one symbolically as it finished 27.78 points higher at 6,017.54. The blue-chip index's seventh consecutive day on the rise, it has added more than 340 points over that time, and Deutsche Bank helped by changing its stance on equities to positive, saying it believed the fourth quarter would see the global economic recovery "regain traction".
The situation in Greece was not entirely being ignored, as the banks closed in the red. Lloyds Banking Group and Royal Bank of Scotland were worst hit, retreating 0.94p to 49.88p and 0.58p to 39.11p respectively after the rating agency Standard & Poor's warned that plans to roll over the country's debt would "likely amount to a default under our criteria".
Signs that a ceasefire in the Spanish price war could be around the corner saw Imperial Tobacco shift forwards 26p to 2,143p following the cigarette manufacturer's decision to cancel most of its price cuts. Morgan Stanley said the move was "a clear positive for the industry" and that Imperial "stands to benefit most from a sustained reversal", although Citigroup warned it was not certain the company's rivals would follow suit.
Hopes it would receive a better offer than the 780p approach from Melrose it rejected as "opportunistic" last week continued to help Charter, with the company climbing 12p to 828.5p as UBS raised its target price to 850p from 550p, describing the offer as "probably just a starting point".
Saying the equipment manufacturer's board "have alternative options" – including the possibility of appointing "a high-calibre, respected 'can do, will do'", chief executive – the broker claimed the acquisition history of Melrose – up 6.2p to 366.6p – showed that the buy-out company could end up offering more than 900p a pop.
Also still in the midst of a takeover saga was Rank, and the owner of Mecca Bingo eased up just 0.2p to 149.7p after telling a number of its shareholders to withdraw their support for the 150p a share approach from Guoco. Noting that this is Rank's fifth change of recommendation, Evolution's James Hollins kept his "neutral" advice on the company, saying the news "throws further confusion into the market and Guoco needs to sell its intentions to shareholders".
Meanwhile, Croda was 72p better off at 1,985p after Citigroup said the speciality chemicals company – which has frequently been the subject of bid talk – was one of the top stocks on its M&A watch list, as was Talk Talk, down 1.1p to 144p.
A recent addition to the list has been the London Stock Exchange, and it ticked up 26p to 1,059p, still benefiting from chitter-chatter suggesting it could merge with Nasdaq following its failed attempt to acquire TMX.
Premier Foods was the mid-tier index's biggest riser by a long shot, advancing 1.63p to 18.71p – a jump of nearly 10 per cent. Last week the Mr Kipling owner plummeted more than 30 per cent in just two sessions after predicting its profits for the first-half would drop by at least a quarter, but yesterday it enjoyed a partial rebound despite Investec slashing its price target by 15p to 20p.
Chatter suggesting Dragon Oil could be in line for an approach helped the explorer power up 42.5p to 550.5p, with market gossips saying it could be in the sights of two different aggressors. Both the Emirates National Oil Company – which holds over half of Dragon Oil – and the Chinese state-owned Cnooc were rumoured to be potentially interested, with the chatter claiming a bid could be worth between 700p and 750p a share.
Psion lost over 17 per cent – moving 15.38p lower to 74.25p on the small-cap index – as the mobile computer maker warned it would see a £4m loss for the first half of the year. At the other end, Vectura increased 9.75p to 92.25p off the back of the news last week that the drugmaker's Swiss partner Novartis has received regulatory approval in Japan and the US for its new lung medicine indacaterol.
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