Market Report: Reed Elsevier may be next to feel shareholders' fury

 

Will Reed Elsevier be the next to be swept up in the "shareholder spring"? With investors increasingly flexing their muscles, City scribblers were wondering yesterday whether the publishing and exhibitions giant may be forced into action.

Amid unhappiness over the performance of its share price, there has been no shortage of voices calling for the group to shed one or more of its divisions.

Panmure Gordon's Alex DeGroote has been one of the loudest, and yesterday – after attending an investor day focused on both Reed's exhibitions business and its trade magazine unit RBI – he reiterated his call for a break-up.

However, the investors' revolution has also given a boost to his confidence, with the analyst saying that such a scenario now "appears more likely given current market-wide shareholder activism".

He is certainly not the only one urging a shake-up. Mark Braley of Deutsche Bank said the event "reaffirmed many of the negatives regarding the broader group structure" – not what Reed's bosses will have had in mind.

"It is much less than clear that [the company] is a 'natural home' for either of these businesses," he added, arguing that they were "unlikely to get the attention or capital that they need to truly prosper".

Despite their grumblings, both scribes continued to recommend Reed as a "buy". Investors were not so keen, however, as the group edged back 2.5p to 508.5p.

At one point it looked as if a bad week was going to turn into a terrible one as the FTSE 100 plummeted towards the 5,500 level. Yet encouraging consumer confidence data from across the Atlantic helped the top-tier index to finish 31.57 points stronger at 5,575.52, although it has still lost nearly 80 points over the past four sessions.

A slowdown in China's industrial production growth meant the heavyweight miners were the biggest fallers, with Eurasian Natural Resources left with the wooden spoon after being driven back 20.5p to 516.5p.

The banks were also weighing on the Footsie following JP Morgan's admission that it had suffered a $2bn trading loss in a mere six weeks – Barclays, the worst of the lot, crashed down 6p to 202.8p.

There was a number of bid favourites up on the blue-chip leaderboard, including Hammerson, as the developer was lifted 13.3p to 429.8p in the wake of analyst speculation earlier in the week it could be a potential takeover target for Aussie rival Westfield.

Severn Trent was given another push by Deutsche Bank's James Brand, who continued to press his view there could be further takeover activity among the utilities, saying a possible approach for the water firm – which closed 51p stronger at 1,693p – could be worth 2,000p.

However, he added that rivals United Utilities (up 12p to 642p) and Pennon (up 13.5p to 746p) may "offer much more material upside if taken over".

Meanwhile, Shire puffed up 58p to 2,048p after Nicolas Guyon-Gellin of Exane BNP Paribas suggested a takeover valuation of 2,900p a pop if the drugs maker ever does finally receive an approach.

The power of the grey pound was being bigged up by the City as analysts from Bank of America Merrill Lynch eyed up those retailers set to benefit most from the second wave of the post-war baby boomers moving into later life. Arguing that an increase in womenswear purchases from those over 45 is good news for the high street in general, they picked out Marks & Spencer – whose advertising campaigns are fronted by the Sixties supermodel Twiggy, left – as the best placed.

The scribblers also highlighted Debenhams and upgraded their rating on both to "buy", prompting the department store up 3.85p to 80.8p, while M&S advanced 12.1p to 360p.

The sector was also helped by impressive weekly sales figures from John Lewis, while Home Retail (2.9p stronger at 81.25p) received some rare broker support. With the Argos-owner having dropped over a fifth since its final results at the start of the month, Liberum Capital decided it was time to remove its "sell" advice, although it still warned it was "by no means clear that management and the board are any closer to a strategy beyond cost cutting and hoping for a recovery".

Proximagen fattened up 45.12p to 257.5p following the US FDA approval of its peer Arena Pharmaceuticals' obesity drug, which is similar to a product being developed by the AIM-listed biotech company.

Elsewhere, the agrochemical firm Eden Research stayed flat at 19.5p on its debut after moving from PLUS Markets to AIM.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Content Writer - Global Financial Services

£25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Web Developer - PHP

£35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Field Sales Consultant - Financial Services - OTE £65,000

£15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Loan Underwriter

£18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...

Day In a Page

A nap a day could save your life - and here's why

A nap a day could save your life

A midday nap is 'associated with reduced blood pressure'
If men are so obsessed by sex, why do they clam up when confronted with the grisly realities?

If men are so obsessed by sex...

...why do they clam up when confronted with the grisly realities?
The comedy titans of Avalon on their attempt to save BBC3

Jon Thoday and Richard Allen-Turner

The comedy titans of Avalon on their attempt to save BBC3
The bathing machine is back... but with a difference

Rolling in the deep

The bathing machine is back but with a difference
Part-privatised tests, new age limits, driverless cars: Tories plot motoring revolution

Conservatives plot a motoring revolution

Draft report reveals biggest reform to regulations since driving test introduced in 1935
The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

The Silk Roads that trace civilisation

Long before the West rose to power, Asian pathways were connecting peoples and places
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

The honours that shame Britain

Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
When it comes to street harassment, we need to talk about race

'When it comes to street harassment, we need to talk about race'

Why are black men living the stereotypes and why are we letting them get away with it?
International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

International Tap Festival comes to the UK

Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border
Doris Lessing: Acclaimed novelist was kept under MI5 observation for 18 years, newly released papers show

'A subversive brothel keeper and Communist'

Acclaimed novelist Doris Lessing was kept under MI5 observation for 18 years, newly released papers show
Big Blue Live: BBC's Springwatch offshoot swaps back gardens for California's Monterey Bay

BBC heads to the Californian coast

The Big Blue Live crew is preparing for the first of three episodes on Sunday night, filming from boats, planes and an aquarium studio
Austin Bidwell: The Victorian fraudster who shook the Bank of England with the most daring forgery the world had known

Victorian fraudster who shook the Bank of England

Conman Austin Bidwell. was a heartless cad who carried out the most daring forgery the world had known
Car hacking scandal: Security designed to stop thieves hot-wiring almost every modern motor has been cracked

Car hacking scandal

Security designed to stop thieves hot-wiring almost every modern motor has been cracked
10 best placemats

Take your seat: 10 best placemats

Protect your table and dine in style with a bold new accessory