Market Report: Takeover rumours put 3i back in the spotlight

  • @greentoby

It may be more used to doing deals of its own, but 3i was back in the takeover spotlight yesterday. The private equity firm – whose rather diverse portfolio includes luxury lingerie seller Agent Provocateur as well as camping retailer Go Outdoors – was on the rise amid the return of vague speculation it could be in line for an approach.

Takeover talk has circled the group for a while now thanks to its share price having dropped more than 40 per cent since the start of 2011. The latest rumours revived the idea that 3i's bosses could launch an attempt to take it private, with suggestions a potential price could reach 275p a pop. City voices were not keen on the tale, however, arguing that investors were unlikely to be keen about such a prospect.

The whispers were also accompanied by revived speculation one of the group's rivals may fancy their chances, with Boots' part-owner KKR once again touted as a potential bidder. Last month, rumours suggested Electra Private Equity could be interested, although the firm later denied this. In response to the latest mutterings, the group touched a high of 200p in early trading. However, with traders playing down the chatter, by the bell 3i was just 2.7p better off at 196.4p.

Overall, it was a quiet start to the week as the FTSE 100 crept up 5.26 points to 5,892.75, and with Cheltenham Festival under starter's orders today, dealers were not exactly hopeful about things getting busier this week. The benchmark index was knocked back at the start of the session by China revealing its largest trade deficit for at least a decade in February, and many of the heavyweight miners failed to recover with Vedanta Resources pegged back 52p to 1,369p.

The banks were also in the red amid growing unease over Greece's debt swap deal as Royal Bank of Scotland and Barclays retreated 0.83p to 25.37p and 4.85p to 235.85p respectively. The former, along with a number of its ex-directors, is also facing a £2.4bn legal claim from disgruntled investors.

Engineer GKN dipped 1.5p to 211p following fears over the possibility of a fundraising. The group is believed to be in pole position to snap up Volvo's aircraft business, which prompted speculation over whether a rights issue might be needed if a deal does happen.

Meanwhile, as Morrisons showed off its new store concepts at an investors' day, it finished in pole position on the Footsie. The supermarket was lifted 6.8p to 301.6p as it continued to rise in the wake of last week's final results.


* The London Stock Exchange ticked up another 8.5p to 963.5p on the FTSE 250 following Friday's announcement of the deal to take control of LCH.Clearnet, despite warnings there could be another twist in the tale. Analysts from Barclays Capital said that, with the LSE agreeing to pay less than expected, its peer and LCH's largest shareholder, NYSE Euronext, could be tempted "to interlope on the transaction".

However, they also added that the group may be put off by the public support for the tie-up from both its fellow stakeholders and LCH's management.

Cobham's decision to give up on attempts to buy Thrane & Thrane received an emphatic thumbs up from the Square Mile. The defence group was fired up 10.1p to 220.6p after revealing it was walking away following the rejection by its Danish peer of a £273m bid.

Punters were clearly confident ahead of Computacenter's final results, which are set to be released today, as the IT firm topped the mid-tier index by flying up 11.29 per cent to 410p.

Centamin was in glittering form, with the gold digger advancing 3.55p to 85p after announcing production had restarted at its flagship Sukari mine in Egypt following the end of a workers' strike.

Elsewhere, Misys' slumped 13p to 328p on the news that merger talks with its Swiss rival Temenos have ended. The software group is still talking to Vista Equity Partners, CVC Capital and Valueact Capital Master (with the latter two working together) over possible bids, although Panmure Gordon's George O'Connor noted that "private equity has a habit of walking away from deals".


* Another dramatic day for Gulf Keystone Petroleum left the explorer 16.38 per cent worse off at 240p on AIM after the group released an update from its operations in Kurdistan which Seymour Pierce's Dr Dougie Youngson said was "mixed".

Meanwhile, Touchstone Gold jumped 8 per cent higher to 20.25p after drilling results from its Rio Pescado project received a good reaction, with talk also claiming a major seller in the yellow metal digger had been cleared.

FTSE 100 risers

l Land Securities 728p (up 11.5p, 1.61 per cent) Property developer rises for a fourth straight day as sentiment in the sector continues to be helped by BNP Paribas' sale last week of a stake in its French peer Klepierre.

l Carnival 1,947p (up 28p, 1.46 per cent) World's largest listed cruise company advances after Numis Securities' Wyn Ellis decides to change his recommendation from "hold" to "buy".

FTSE 100 fallers

l Man Group 137.5p (down 2.3p, 1.65 per cent) The world's largest listed hedge fund manager is hit by HSBC cutting its rating from "overweight" to neutral" and its target price from 150p to 140p.

l Aggreko 2,300p (down 13p, 0.56 per cent) Temporary power provider retreats as investors decide to bank profits following its final results on Friday, which prompted a rise of nearly 4 per cent.

FTSE 250 risers

l Carillion 315.1p (up 10p, 3.28 per cent) Support services firm advances after announcing it has won a contract worth around £120m to provide further construction work on the Thameslink project.

l JD Wetherspoon 417p (up 12p, 2.96 per cent) Pubs group rises as Citigroup's scribblers keep their "buy" advice following its half-yearly report last week, although they cut their price target to 475p from 510p.

FTSE 250 fallers

l Premier Farnell 210.6p (down 5.6p, 5.59 per cent) Electronics parts distributor retreats after Collins Stewart's analysts decide to downgrade their recommendation to "hold".

l Dairy Crest 343.2p (down 3.8p, 1.1 per cent) Punters decide to bank profits in the Cathedral City-owner after it shot up more than 6 per cent last Friday on the news it may sell its St Hubert spreads business.