Market Report: Takeover talk is back over BG Group

Perhaps traders really do believe the adage that if you say something enough times it will come true. Perennial bid target, oil and gas specialist BG Group, was back on the lips of fast-talking traders today. Dealers insisted the rumour could come true this time and the shares spurted to the top of the benchmark index, 25.5p better at 1,145p today.

Traders – even those not trying to flog BG shares – think the stock has reached a point that makes it just too cheap for rivals to ignore.

Royal Dutch Shell, up 3p to 2,267p, has often been mentioned as a potential acquirer. BP, down 3.55p to 455.45p, and US based Exxon Mobil have all been thrown up as possible bargain hunters, and then there are buyers who may emerge from China.

The reason BG has become such an attractive story to tout for the mergers and acquisitions (M&A) bankers and traders with long positions in the stock is the decrease in its share price – they hit a two-year low last autumn. BG warned in October that its production wouldn't grow this year because of issues and delays at some of its projects and punters dumped the stock. It lost 14 per cent in one day. Next was a warning in November that it would reduce supply to its Chilean accounts due to supply problems in Egypt.

The shares are still more than 15 per cent below its pre-October price and its assets in Brazil, Australia and Africa are tasty prizes for the big oil and gas players.

The benchmark index was clinging onto Monday's rise with very weak volumes of trade. Mixed indicators sent it on a bumpy course through the day.

Positive news out of Europe – in the shape of German economic surveys – was set against rising concerns that the UK's fourth-quarter GDP will be negative later this week and the FTSE 100 finished 1.81 points worse at 6,179.17.

Jefferies analysts cast their eye over the world of publishing, and Financial Times-publisher Pearson is still out of favour after issuing a profit downgrade on Monday.

Jefferies' David Reynolds and Will Smith think there is a prospect of larger-scale M&A in the media sector but rate Pearson a hold, with a share-price target of 1,290p. Shares lost 21p to 1,181p.

Messrs Reynolds and Smith prefer Reed Elsevier, which they rate a buy with a target of 760p. But the shares were 1.5p worse off at 686.5p. They also like mid-tier index group Informa and rate it a buy with a price target of 580p but the publisher and events group was also in negative territory and lost 3.1p to 479.8p.

Former Marks & Spencer executive chairman Sir Stuart Rose is to become chairman of online food retailer Ocado. Its shares jumped 5.95p to 101p on the news, topping the mid-cap index.

The news did remind some sleepy traders that Marks & Spencer itself has been a long-rumoured bid target and vague speculation resurfaced. M&S finished 3.2p ahead at 369.7p.

Back on the mid-tier index, a house-price recovery and diminishing competition is expected to benefit property site Rightmove, UBS's website whizzes suggested.

UBS's Alex Hugh is so confident of Rightmove's success he has rated the shares a buy, up from neutral, and raised his price target to 1,800p, up from 1,600p. Investors were already convinced – the shares built up a position near the top of the mid-tier index and added 44p to 1,599p.

The business, which sells space to estate agents who want to list properties, has said goodbye to competitor PropertyLive.co.uk which is pulling down the shutters at the end of the month.

Mr Hugh says: "Rightmove's competitive positioning remains intact, in our view."

He adds that investors who worried about rival Zoopla fretted unnecessarily. Zoopla has been on a buying spree recently and its latest purchase last month was Globrix.com.

Rightmove's share price has already jumped more than 85 per cent since the beginning of 2009 but Mr Hugh thinks there is further growth to come and says: "Our analysis of viewing data shows Rightmove remains as strong as ever."

Oil and gas firm Cairn Energy plans to spend more than £150m a year on exploration and appraisal over the next five years and the shares trickled up 1.7p to 285.7p.

On AIM, Lo-Q, which creates virtual queue devices for theme parks, has signed up country star Dolly Parton's water park, Dollywood's Splash Country, while the existing contract with Tennessee-based Dollywood has been extended for another three years. The shares were on song, up 5.5p to 397.5p.

Start your day with The Independent, sign up for daily news emails
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Digital Optimisation Executive - Marketing

£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...

Recruitment Genius: Financial Reporting Manager

£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Day In a Page

Sepp Blatter resignation: The beginning of Fifa's long road to reform?

Does Blatter's departure mean Fifa will automatically clean up its act?

Don't bet on it, says Tom Peck
Charles Kennedy: The baby of the House who grew into a Lib Dem giant

The baby of the House who grew into a Lib Dem giant

Charles Kennedy was consistently a man of the centre-left, dedicated to social justice, but was also a champion of liberty and an opponent of the nanny-state, says Baroness Williams
Syria civil war: The harrowing testament of a five-year-old victim of this endless conflict

The harrowing testament of a five-year-old victim of Syria's endless civil war

Sahar Qanbar lost her mother and brother as civilians and government soldiers fought side by side after being surrounded by brutal Islamist fighters. Robert Fisk visited her
The future of songwriting: How streaming is changing everything we know about making music

The future of songwriting

How streaming is changing everything we know about making music
William Shemin and Henry Johnson: Jewish and black soldiers receive World War I Medal of Honor amid claims of discrimination

Recognition at long last

Jewish and black soldiers who fought in WWI finally receive medals after claims of discrimination
Beating obesity: The new pacemaker which helps over-eaters

Beating obesity

The new pacemaker which helps over-eaters
9 best women's festival waterproofs

Ready for rain: 9 best women's festival waterproofs

These are the macs to keep your denim dry and your hair frizz-free(ish)
Cycling World Hour Record: Nervous Sir Bradley Wiggins ready for pain as he prepares to go distance

Wiggins worried

Nervous Sir Bradley ready for pain as he prepares to attempt cycling's World Hour Record
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific