Market Report: Is Elliott Advisors about to cause trouble in the takeover of Prezzo?


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Is Elliott Advisors about to cause trouble in the takeover of Prezzo? The US activist hedge fund yesterday increased its stake in the Italian restaurant chain to 13.4 per cent and converted its holding from a contract for difference to straight shares. Prezzo agreed to sell itself to US buyout specialist TPG in November for £304m, a price analysts criticised as too low. Elliott first took a 3.1 per cent stake the day Prezzo agreed to the deal.

TPG’s bid has the support of 62 per cent of investors but needs a further 13 per cent to get the deal through, which puts Elliott in a strong position to push for a higher offer. Prezzo slipped 2.25p to 127.87p, above TPG’s 126.5p a share bid.

The first trading day of January was a dour affair, with the FTSE 100 dragged 130.64 points lower to 6,417.16 by falling oil prices. Oil services firm Weir was the biggest faller, off 119p at 1,764p, while BP lost 20.75p to 389.7p on fears that the slump in the rouble heralds further woes. BP owns close to 20 per cent of the Russian state oil operator Rosneft.

Marks & Spencer fell 20.3p to 456.8p as Société Générale downgraded the retailer, arguing that M&S will make little progress until problems at its general merchandise division are addressed.

Pessimistic expectations about J Sainsbury’s Christmas trading figures, due tomorrow, left the supermarket 9.9p lower at 233.5p. Citi forecasts a 1.8 per cent drop in sales.

Traders are still holding a candle for news of would-be deals that broke just before Christmas. Replacement hip and medical dressing specialist Smith & Nephew climbed 10p to 1,175p amid hopes that the US company Stryker will launch a bid for it. British Airways owner IAG rose 6.5p to 493.5p thanks to speculation that it will table a second offer for Aer Lingus.

Hikma Pharmaceuticals leapt 148p to 2,130p after an upgrade from Jefferies. The broker believes the Jordanian company will rebound in 2015.

Ten Alps, the loss-making media production group backed by Sir Bob Geldof, told investors not to prepare for good news, saying it had no idea why its shares had risen sharply recently. Ten Alps retreated 0.05p to 0.82p.