Market Report: US bid talk returns as ITV pushes ahead
Friday 29 July 2011
Market gossips looking for the next prime time takeover deal switched once again on to ITV last night, as reheated rumours of interest from across the Atlantic pushed the broadcaster up.
A frequent subject of bid speculation, yesterday's vague mumblings suggested it could receive a potential approach from the US worth at least 110p a share. Previous talk has suggested possible aggressors could include NBC, while rumours last month linked ITV with RTL, Europe's largest commercial broadcaster, as well as private equity.
Managing a session high of 71.8p, the group ended up closing 2.15p ahead at 71.05p despite traders failing to be impressed by the rumours. "It could happen, but I won't be holding my breath," was the sceptical opinion of one, who highlighted instead the positive reaction from City scribblers to ITV's interim results, which were released on Wednesday.
The update – in which the broadcaster announced it was to start charging for some of its online content - prompted Numis Securities' Paul Richards to keep his "buy" rating, with the analyst saying it had "made good progress in the first year of its five-year transformation plan".
Royal Bank of Scotland was similarly confident, claiming market expectations for next year were too low given its belief ITV was "sounding increasingly confident about an Olympics boost to advertising".
For much of the day, the FTSE 100 looked as if it was heading for a second consecutive lurch down, and at one point it even threatened to move below the 5,800 point level. However, encouraging jobless claims figures from the US prompted a late climb, and the top-tier index eventually finished 16.63 points stronger at 5,873.21.
Conversations across the City were dominated by a rush of companies releasing figures, and BAE Systems – which began at its lowest level for six years – was one of them. It shot up 14.3p to 306.8p after announcing a £500m share buyback alongside its interim results, while at the other end Centrica dipped 7.3p to 313p as first-half profits at its British Gas business dropped by 54 per cent.
The biggest wash-out, however, was Carnival, which sank 66p to 2,161p thanks to bad news from its US peer Royal Caribbean Cruises, which late on Wednesday reduced its earnings expectations for the year and revealed it was being knocked by the recent unrest in the Eastern Mediterranean region. Shore Capital's Greg Johnson said there was "some negative read-through" for Carnival, but Numis' Wyn Ellis disagreed, claiming that signs of strength elsewhere in the world "suggests that underlying fundamentals in the industry remain strong".
Inmarsat surged forwards 20p to 537p following the announcement by the mobile satellite group's US partner LightSquared of a $9bn network agreement with Sprint.
The deal is a major boost to LightSquared's plans to build a high-speed wireless network that will operate across the US, with Investec estimating that if it becomes viable, Inmarsat could see a benefit of around 145p a share.
However, the broker warned it still needed the green light from the Federal Communications Commission.
Credit Suisse became the latest European bank to issue disappointing figures, yet – after seeing sharp falls on Wednesday – many in the UK sector still managed to rebound. Lloyds Banking Group moved up 1.77p to 45p, while Royal Bank of Scotland and Barclays climbed 1.27p to 36.28p and 6.9p to 227.9p respectively.
Updates were prompting plenty of movers on the FTSE 250 as well, with Inchcape lifted 30.3p by 390p by the news that strength in emerging markets and Asia-Pacific meant the car dealer's first-half profits had jumped 10 per cent.
Kofax's share price, meanwhile, was decimated by more than 17 per cent, as it plummeted 82.5p to 393p after the software group said its revenues for the year had met expectations but not its own targets. Laird was pushed forwards 5.4p to 182.9p in the wake of Cooper Industries increasing its approach to 200p a pop late on Wednesday, as the electronics group responded by saying its US rival's offer "continues to undervalue the company and its prospects".
After falling in the wake of the release of its first-half figures earlier in the week, Domino's managed to more than regain its losses yesterday by climbing 16.5p to 494.4p. Saying the update gave "more visibility" on what the rest of the year holds for the pizza delivery group, Credit Suisse increased both its earnings expectations and its target price, changing the latter to 540p from 510p.
On the Alternative Investment Market, Sarantel shot up by almost 30 per cent after agreeing to provide the US army with GPS antennas for radios. The penny stock shifted 0.22p to 0.94p, as it estimated the deal could result in revenues of more than $6m.
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