London close: M&A rumour mill cranks up

19th Sep 2012 16:53

After trading in positive territory for most of the day Footsie dipped into the red after US markets opened lower, but bounced back into the black in the final 90 minutes of trading.The day started well with the Japanese central bank unexpectedly opting to beef up its quantitative easing programme, a move which prompted a mini-stampede into mining stocks.The minutes from the Bank of England's Monetary Policy Committee meeting earlier this month were, as usual, pored over by the tea-leaf and rune readers.Opinions remain divided on whether an interest rate cut is in the pipeline, but most pundits agree that it won't be long - November, probably - before the Old Lady of Threadneedle Street is following the Bank of Japan and the US Federal Reserve, and turning on the quantitative easing taps again.M&A market showing signs of lifeAside from the long-running Glencore/Xstrata saga, the summer has not been a great one for mergers & acquisitions (M&A) but there are signs that activity could be picking up.United Utilities rose sharply on the back of renewed speculation over a potential takeover. Usually it is the Germans or French hoovering up industries vital to Britain's everyday life, but this time the rumours point to a consortium of funds including some from the Middle East as the likely buyers, with BofA Merrill Lynch speculating that the take-out price could be around 900p.Accountancy software firm Sage was also put through the rumour mill. The group has often been touted as a likely acquisition by a bigger software rival, but today's rumours focused on a potential sale of the group's US business. George O'Connor, an analyst at Panmure Gordon, gave the rumours short shrift, describing the suggestion as "tosh". O'Connor did speculate, however, that Sage could be touting one of its under-performing operating units to see whether anyone is interested. "As this fresh rumour seeps into the market the price is likely to tick upwards thereby presenting investors with another opportunity to bag some profit." Sell, is O'Connor's advice.William Hill and GVC Holdings, meanwhile, are in the early stages of putting together a joint bid for online gaming group Sportingbet. The two firms said they envisaged an offer that would leave William Hill with Sportingbet's core Australian market and certain other locally licensed businesses, with GVC acquiring the remaining parts.Africa focusPlatinum miner Lonmin initially shot up on the news that striking workers at its Marikana operations are to return to work on Thursday after a settlement was reached late on Tuesday night. By the close, gains were much more modest.Imperial Leather soap maker PZ Cussons was wanted after a well-received trading update. The group said it is confident of a return to profitable growth this financial year, though conditions remain difficult in its core market of Nigeria and challenging elsewhere. Shopper roundOnline fashion and beauty store ASOS continued its recent barnstorming performance, boosting revenues by a third in the last quarter. Retail sales were up 31% year-on-year, with a 15% rise in the UK and a 42% jump in international trading.It was a different story at French Connection, where the shares took a hammering after the group reported a first half loss. The fashion group, which issued a profit warning in May, posted a pre-tax loss of £6.3m in the six-month period ended July 31st 2012 compared to a profit of £0.7m in 2011. Revenue during the period fell to £96m compared to £102.8m a year earlier.Technology company Smiths Group saw top line growth across all of its divisions last year, as revenue broke through the £3bn barrier. Headline profit before tax rose 7% to £554m from £517m the year before. The median forecast from the group of analysts following the stock was £451m. Statutory profit before tax dipped to £366m from £398m as a result of laundry list of exceptional items.Commercial vehicle hire company Northgate said despite economic headwinds affecting both its UK and Spanish businesses, it continues to trade in line with company expectations.Other marketsGilts had a good day with the yield on the 10-year benchmark gilt dipping to 1.84% from 1.88% overnight. Yields move inversely to prices.The most active contract for Brent crude ended the London trading session $3.36 lower at $108.67 a barrel, after the Energy Information Administration said crude inventories rose by 8.5m barrels in the week ended Sept. 14th.FTSE 100 - RisersWeir Group (WEIR) 1,824.00p +2.82%United Utilities Group (UU.) 727.00p +2.76%Rexam (REX) 434.60p +2.36%Fresnillo (FRES) 1,868.00p +2.13%SSE (SSE) 1,400.00p +1.89%AstraZeneca (AZN) 2,959.00p +1.88%ICAP (IAP) 344.00p +1.75%HSBC Holdings (HSBA) 587.80p +1.71%Lloyds Banking Group (LLOY) 39.50p +1.66%ITV (ITV) 89.50p +1.65%FTSE 100 - FallersAviva (AV.) 333.40p -3.33%Admiral Group (ADM) 1,090.00p -1.54%Petrofac Ltd. (PFC) 1,622.00p -1.28%Tullow Oil (TLW) 1,393.00p -1.28%Imperial Tobacco Group (IMT) 2,336.00p -1.10%Rio Tinto (RIO) 3,161.50p -1.00%Aggreko (AGK) 2,373.00p -0.84%Meggitt (MGGT) 407.50p -0.80%Shire Plc (SHP) 1,877.00p -0.79%Land Securities Group (LAND) 786.50p -0.76%FTSE 250 - RisersCentamin (DI) (CEY) 95.00p +4.80%PZ Cussons (PZC) 318.10p +3.51%Debenhams (DEB) 102.90p +3.47%Chemring Group (CHG) 360.60p +3.32%Mondi (MNDI) 627.00p +3.12%Bank of Georgia Holdings (BGEO) 1,330.00p +3.10%Talvivaara Mining Company (TALV) 175.70p +2.81%St James's Place (STJ) 369.40p +2.73%Telecom Plus (TEP) 859.50p +2.63%Brewin Dolphin Holdings (BRW) 166.90p +2.52%FTSE 250 - FallersAquarius Platinum Ltd. (AQP) 46.75p -8.15%IG Group Holdings (IGG) 449.50p -4.20%Ocado Group (OCDO) 67.20p -3.59%TR Property Inv Trust Sigma Shares (TRYS) 70.75p -2.41%International Personal Finance (IPF) 310.00p -2.36%COLT Group SA (COLT) 119.60p -2.29%Premier Farnell (PFL) 181.10p -2.11%Electra Private Equity (ELTA) 1,705.00p -2.01%ITE Group (ITE) 206.00p -1.95%William Hill (WMH) 312.60p -1.91%FTSE TechMARK - RisersOxford Biomedica (OXB) 2.50p +13.64%CML Microsystems (CML) 315.00p +4.65%Promethean World (PRW) 24.00p +4.35%Emblaze Ltd. (BLZ) 48.00p +4.35%Phytopharm (PYM) 12.62p +3.06%FTSE TechMARK - FallersAEA Technology Group (AAT) 0.060p -33.33%Filtronic (FTC) 42.62p -9.79%Optos (OPTS) 167.00p -5.65%Vislink (VLK) 32.00p -3.76%E2V Technologies (E2V) 130.50p -3.33%Skyepharma (SKP) 97.50p -2.50%JH