Market Report: Sky high after boost for media sector
As one of the City's longest-running bid tales finally came true, media stocks were providing some rare winners yesterday in a tough session on the markets. After it was revealed that the advertising agency Aegis, a subject of takeover speculation for years, is finally getting bought out, BSkyB was another company in the sector on the rise amid optimism ahead of the satellite broadcaster's upcoming results.
The group (whose Sky Atlantic channel is currently showing Armando Iannucci's Veep, starring Julia Louis-Dreyfus) climbed 4p to 688p after Nomura's Matthew Walker recommended buying the stock in the run-up to its fourth-quarter figures, due to be released later in the month.
BSkyB is currently in the midst of a share buyback – it announced yesterday it had bought another load worth £200,000 – and the analyst is expecting "the company to indicate it will commence another sizeable buyback when the current one is finished".
Also joining it on the Footsie's leaderboard was fellow broadcaster ITV, which was lifted 0.4p to 72.25p. Still neither's rise came close to that of Aegis. The marketing group flew up a huge 73.1p to 235.3p after announcing it had agreed to a £3.2bn approach from Japan's Dentsu.
City voices were playing down the chances of a rival bid emerging, although Panmure Gordon's Alex DeGroote cautioned that the possibility, while unlikely, "should not be dismissed out of hand".
Meanwhile, rival WPP edged up 1p to 785.5p, although the size of Sir Martin Sorrell's advertising giant means it is not expected to attract a predator.
However, Liberum Capital's Ian Whittaker argued that the deal meant French companies Havas and possibly Publicis "will now be seen as potential bid candidates". The former's chairman Vincent Bolloré is widely thought to have been once keen on merging it with Aegis, in which he is the largest shareholder.
With the release late on Wednesday of the minutes from the latest US Fed meeting proving disappointing for those hoping for signs that QE3 is around the corner, the FTSE 100 was knocked back 56.23 points to 5,608.25. There was also pessimism ahead of the latest GDP figures from China, due overnight, which meant that the heavyweight miners were suffering as a result: Eurasian Natural Resources slipped 17.3p to 393.6p while Antofagasta was 43p lower at 1,040p.
The worst fall on the top-tier index came from Ashmore, with the fund manager slipping 22.2p to 307.8p following the news that its assets under management have dropped more than expected.
Meanwhile, punters were checking out of InterContinental after the rival hotel group Marriott announced late on Wednesday that it was seeing weakening demand outside the US. However, City scribblers were claiming that the read-across was positive, with Oriel Securities' saying the "update confirms the strength of the US hotel market", although InterContinental still dipped 47p to 1,503p.
The news that it had abandoned its attempts to get US approval for the use of its cancer drug Tykerb in combination with a rival product saw GlaxoSmithKline weaken 29.5p to 1,435.5p. Rival drugs maker Shire, however, advanced 9p to 1,864p after Goldman Sachs added the stock to its important-sounding "Directors of Research Focus List".
Cable & Wireless Communications (CWC) has been trading recently near its lowest price since the 2010 demerger from Cable & Wireless Worldwide, but yesterday the telecoms group jumped 1.21p to 31.58p after a long-time pessimist decided that it was time to snap up its shares. Changing his advice to "buy", Bank of America Merrill Lynch's Wilton Fry argued that CWC could make a large sum from disposing of its stakes in Monaco Telecom and Macau's CTM, while adding that he was more positive on its outlook.
Few were surprised by Royal Dutch Shell's announcement that it was extending its 220p-a-share offer for the Aim-listed explorer Cove Energy (1.5p higher at 274p) for a fourth time, with the deadline now pushed back to 25 July. The oil giant, which crept down 0.5p to 2,285.5p, still has time to improve on the 240p-a-pop approach from Thailand's PTT, while analysts from Investec earlier in the week said they expect a sealed bid auction to be called by the Takeover Panel soon.
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