Market Report: Talk returns of Sage bid by Microsoft
Microsoft's founder Bill Gates may be nursing a £20m loss on his bet on sportswear chain JJB Sports, but the US computer giant is back in the spotlight in the City as chatter re-emerges around software group Sage.
Bid talk surrounding Sage has come and gone for years. Earlier this year gossip surfaced in both March and May. Traders are throwing up the usual suspects, including Microsoft and Germany's SAP, as well as talk of private equity interest.
But while some City insiders have played down the hearsay claiming M&A interest is old hat – Microsoft was first linked to Sage back in 2003 – others suggested the deal would make strategic sense.
Sage announced in May that it had teamed up with Microsoft to put its accounting software for small businesses into the cloud via Microsoft's Azure system. Analysts at Merchant Securities said at the time that the deal could reawaken bid rumours.
Some investors were convinced and Sage booked a 7.3p gain to 303.5p.
As the last few traders arrived back at their desks from August holidays, bid rumours resurfaced.
Interest in FTSE 250 Senior Engineering pushed it up 6.4p to 203.8p, a rumour first touted last month. Speculation about bidders eyeing soft drinks group Britvic also bubbled to the surface again and shares fizzed up 2.7p to 322.3p.
Normal service was beginning to resume for the FTSE 100 and after four days of losses it edged up 46.93 points to 5758.4. But volumes globally were lower as US markets are closed for Labor Day.
Miners led the charge on the FTSE 100 with Fresnillo, up 66p to 1627p, Kazakhmys, 17p to 610p, and Vedanta Resources, 24.5p to 892p, topping the board. However, insurance group Admiral was sent tumbling to the bottom of the index, down 36p to 1,150p, as analysts at Credit Suisse cut their rating of the stock to neutral and fellow scribes at Canaccord Genuity reduced it to sell after last week's half year results.
HSBC Global Research turned its attention to the world of expensive handbags and designer clothes and issued a sequel to its luxury report.
Scribes cut British brand Burberry's share price target to 1,500p from 1,550p, while Nomura's analysts issued a buy rating and a price target of 1,450p for the stock. Burberry shares strutted up 2p to 1355p.
On the mid-caps, housebuilders were boosted by positive comments on planning by Chancellor George Osborne, and Barratt Developments moved up 8.6p to 158.6p and Persimmon jumped 36p to 734p.
Over on Aim, organic waste specialist TEG Environmental announced a waste contract in Dagenham and its shares ticked up 2.3p to 6.5p
A strange new name for the owner of the Yellow Pages has not allowed it to turn the page on crippling debts and its creditors are hiring advisors to restructure its £2.2bn liabilities.
Shares in the company, now named Hibu, crumpled 59 per cent, falling 0.7p to 0.49p, on the news that its long list of creditors – including Royal Bank of Scotland, Goldman Sachs and Deutsche Bank – are bringing in US restructuring firm Houlihan Lokey and law firm Linklaters to advise on a debt-for-equity swap. The restructuring talks are the second in a year and are likely to see the creditors seize control.
The group, whose shares traded at around 600p five years ago, has been attempting to turn itself around, but the growth of online search engines like Google has sealed its fate.
Reports about miner Talvivaara were apparently exaggerated. The Finnish company's statement today had a slight touch of the Mark Twain about it.
Talvivaara insisted that "recent publicly reported claims" on its cash position and planned job cuts are "incorrect". The mid-cap miner's shares were driven up 14.6p to 140p following the clarification.
Last month Talvivaara reported a big rise in second-quarter losses, having been hit by production problems and depressed nickel prices. However, the company claims it can achieve "substantial cost savings without any personnel impact" and said its liquidity position is stable.
It said it expects cash reserves to "remain sufficient" regardless of the low nickel price.
FTSE 100 Risers
Rolls-Royce 835.5p (up 14.5p, 1.8 per cent) Planning green light for engine make's second, hi-tech factory in Rotherham to produce single-crystal turbine blades.
Rio Tinto 2795.5p (up 60p, 2.2 per cent) The miner joined peers in a rally yesterday amid speculation China will move to boost its slowing economy. The UK mining sector has fallen 20 per cent since early August on fears of an Asian slowdown.
FTSE 100 Fallers
Morrisons 278.2p (down 1.8p, 0.6 per cent) The UK's fourth-largest supermarket continued its fall from Friday ahead of its results this week. Analysts at Nomura yesterday joined Barclays in cutting their rating for the shares from buy to neutral.
Arm Holdings 559.5p (down 14.5p, 2.5 per cent) The chip maker fell back as analysts at Deutsche Bank cut their rating on the stock from hold to sell.
FTSE 250 Risers
Home Retail Group 97p (up 3.2p, 3.4 per cent) The Argos to Homebase owner edged up as analysts at Investec raised their rating of the shares from sell to buy.
Ophir Energy 586p (up 21.5p, 3.8 per cent) Oil and gas explorer Ophir Energy spurted up following an update from offshore Tanzania. It is also searching for a strategic partner for a well-drilling programme in Tanzania and Kenya.
FTSE 250 Fallers
Bumi 303.2p (down 14.8p, 4.7 per cent) The debt-laden Indonesian coal miner fell again amid weak coal prices and rumours it will sell a 50 per cent stake in Fajar Bumi. The company, established by the financier Nat Rothschild and Indonesian investor Samin Tan, has already been hit by boardroom disagreements.
CSR 310p (down 15.6p, 4.8 per cent) Deutsche Bank scribes downgraded shares to sell, from hold.
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