Shares: Bid rumours froth again but SAB goes flat in the end

  • @greentoby

Takeover talk around SABMiller was given a top-up yesterday thanks to the revival of chatter that an approach from Anheuser-Busch InBev (ABInBev) could be on the menu. The Grolsch brewer managed to largely avoid the hangover being suffered by most on the top-tier index after City analysts suggested issues in the States may persuade the Belgian giant to put its UK peer on its shopping list.

Highlighting ABInBev's "highly concentrated footprint", Exane BNP Paribas said that as a result the Budweiser owner was being hit by a US beer market "struggling to return to growth". Therefore, claimed the French broker, an approach for SAB was becoming a "more compelling option" given its better greographic exposure.

Speculation around such a deal has emerged rather frequently recently despite SAB's recent acquisition of Australia's Foster's, which was seen by many as a form of defence against any potential pretadors.

Exane's analyst Paola Bertini conceded that if ABInBev did launch a takeover, it would be "quite challenging to execute in what are currently difficult times for the credit markets". However, he also pointed out the group's management has form in borrowing large sums during difficult economic conditions.

Although Mr Bertini removed his "sell" advice on SAB, partly due to its takeover potential, he only replaced it with a "neutral" rating, saying he remained cautious on the European sector as a whole.

Still, SAB did spend much of the session ahead, but by the bell it had edged down 3.5p to 2.180.5p, although it was still one of the best-performing blue-chip stocks.

It was a day in which investors were trying to find cover in the defensives, including Imperial Tobacco which advanced 12p to 2,362p. Like SAB, the Lambert & Butler maker was also given a helping hand by reheated bid chatter as Investec's Martin Deboo claimed a takeover of the cigarette group – which yesterday overturned a £112.3m fine from the OFT – was "a material probability on a three-year view".

European leaders hoping last week's summit would have reassured the markets over the future for the eurozone will have looked at the FTSE 100 yesterday with dismay. The benchmark index started the session behind and spent the day moving lower, eventually closing 101.35 points worse off at 5,427.86.

A lack of faith in the deal reached in Brussels did much of the damage, while the ratings agency Fitch slashed its 2012 growth expectations for the region. Among the financial stocks, Royal Bank of Scotland was driven back 1.43p to 20.59p after the publication of the eagerly awaited FSA report on its near-collapse, although Lloyds ended up with the wooden spoon by retreating 2.29p, or 8.57 per cent, to 24.43p.

Elsewhere, Inmarsat was brought to earth with a bang as the mobile satellites company plummeted 22.5p to 400.9p. The move was blamed on reports from across the Atlantic that government trials on its partner Lightsquared's US wireless network scheme found it caused interference issues with three-quarters of GPS receivers.

Down on the FTSE 250, Gem Diamonds was sparkling after the return of vague speculation it could be in line for an approach. The precious stones producer climbed 8.6p to 188.9p, having already been the subject of speculation recently that Laurence Graff - owner of jeweler Graff Diamonds - may be interested in a potential move.

Takeover hopes were also giving Mothercare a shove as the baby products retailer shot up 7.4p to 168p. After rumours last month suggesting it could get an approach from private equity, the chain was the subject of talk that buyout firm Cinven was mulling over a possible bid.

The clear winner on the mid-tier index was CSR after it announced it was giving up on its digital TV and silicon tuners operations. The chip maker rose 16.3p to 183.8p as a result, with Seymour Pierce's Ian Robertson one cheerleader for the move, saying the management were "doing more than just pruning – they are cutting out the dead wood".

After its share price dropped close to 30 per cent in less than two weeks, Xcite Energy reacted to pressure from investors for answers by releasing an unscheduled update. The North Sea explorer, which recently revealed delays to production at its Bentley field, said that it was expecting a decision on government approval for its development plans"shortly", although this didn't stop it falling 4p to 80.38p on AIM.

Fellow explorer Gulfsands Petroleum was left 16.25p weaker at 170p after announcing it had shuttered its Syrian operations. It was forced to make the move because of European Union sanctions on the country brought as a response to its treatment of the uprising against President Bashar al-Assad.

FTSE 100 Risers

l Diageo 1,374p (up 14p, 1.03 per cent) Guinness-brewer finishes high up the blue-chip leaderboard as defensive stocks enjoy a strong session thanks to punters having little appetite for risk.

l GlaxoSmithKline 1,428.5p (up 4.5p, 0.32 per cent) Drugs maker's unit Stiefel Labs is charged by US regulators with defrauding employees on its stock plan, with the business denying the claims.

FTSE 100 Fallers

l Eurasian Natural Resources 634.5p (down 50.5p, 7.37 per cent) Kazakh digger retreats after denying over the weekend that it is the subject of a formal investigation by the Serious Fraud Office.

l Xstrata 955.4p (down 56.1p, 5.55 per cent) Swiss mining giant is knocked back by the decision from UBS's analysts to lower their target price for the company's shares from 1,550p to 1,450p.

FTSE 250 Risers

l Synergy Health 849.5p (up 20.5p, 2.47 per cent) Sterilisation services provider finally manages to bounce after a four-day losing streak during which its share price dropped almost 5 per cent.

l Thomas Cook 15.27p (up 0.1p, 0.66 per cent) Troubled tour operator finishes just ahead at the bell as it prepares for the release of its preliminary results, which are due out tomorrow.

FTSE 250 Fallers

l International Personal Finance 189.6p (down 14.5p, 7.1 per cent) Emerging markets lender continues to fall after having its recommendation downgraded by Canaccord Genuity to "hold" at the end of last week.

l 131.8p (down 7.7p, 5.52 per cent) Online gaming company retreats as Investec reiterates its "sell" rating and warns that its revenue expectations could be at negative risk.