London midday: M&A activity perks up shares

13th Jul 2009 11:56

The blue-chip index edged higher in the morning sessions despite the weakness of miners and banks, with increased merger and acquisition activity encouraging buyers back to the market. Friends Provident is the best performer after Clive Cowdery's new vehicle, Resolution , said it has received "constructive feedback" from the board of Friends over its merger approach and is mulling its next move. Any deal would largely be shares with a small cash element, Resolution said. Friends, for its part, said it is "open minded about the benefits of industry consolidation" but has rejected the terms of Resolution's proposal.Elsewhere in the sector South African insurer Old Mutual is wanted after UBS upgraded the stock to "buy" from "neutral" and Avior Research started coverage of the company with a "buy" recommendation. Oil and gas firm Venture Production today rejected last Friday's 845p-a-share hostile cash bid from energy group Centrica. Bosses say the £1.3bn offer "substantially undervalues" the business. The unsolicited bid, made after Friday's close, came as the British Gas-owner bought private equity group 3i's entire 5.4% stake in Venture. A slump in the UK and Ireland sent revenues tumbling by 8% in the three months to June at credit checker Experian. Sales in Britain and Ireland crashed by 22%, with falls also recorded in North America (2%), Latin America (9%), and emerging markets (8%). The picture was better stripping out the impact of currencies.Defence firm Cobham has announced its third contract win of the month with a deal to provide wireless network nodes for the US Defense Advanced Research Projects Agency (DARPA). The cost plus fixed fee contract is worth $14.8m. Cobham will design, develop and demonstrate low-cost wireless network nodes which support adaptation by means of distributed network processing, with the emphasis on the "low-cost" element of the description. British Airways tends firmer on suggestions in the press that it is about to unveil a £500m rights issue.ENRC is a rare bright spot in a sector which sees Fresnillo, Xstrata and Lonmin suffer heavy losses. Meanwhile banks are out of favour. Lloyds Banking is reportedly poised to write off as much as £13bn on its loans to commercial property, businesses and mortgage holders as the crisis engulfing the taxpayer-backed bank deepens.Royal Bank of Scotland is a shade lower despite being upgraded to "buy" from "neutral" by UBS.Emerald Energy has received an approach that could lead to a bid for the London-listed mid-cap oil explorer. Today's announcement confirms recent talk that a potential bidder was circling. Emerald's share price leapt 10% on Friday as speculation intensified that an announcement was near.Specialist homewares retailer Dunelm grew market share in the first half of 2009 as like-for-like sales improved, despite a declining market. Like-for-like sales rose 5% in the 26 weeks to 27 June 2009 in comparison with a year earlier. Total sales rose 10.7% to £215.2m in the half-year period.Sausages and pork products supplier Cranswick has made a positive start to its new financial year, with first quarter sales up across most parts of the business. Sales in the first quarter, excluding recently disposed of and acquired businesses, rose 11% to £167m from the first quarter of last year. Growth has been particularly strong in the sausages and bacon parts of the business, while growth was also seen in continental and charcuterie products, fresh pork and cooked meats. Broadcaster ITV gets a boost from UBS, which rates the shares a "buy". The Swiss bank has also upgraded hedge fund manager Man Group to "neutral" from "sell", engineer Invensys from "neutral" to "buy" but cut fellow engineer IMI from "buy" to "neutral".In other broker activity, property firm SEGRO is raised to "overweight" from "underweight" by HSBC but Associated British Foods moves past its sell by date as far as RBS is concerned, as the bank has cut its rating from "hold" to "sell" and trimmed the price target to 685p from 705p.Utility support services provider Spice has bought ComGroup Australia, a company which designs and distributes Simoco branded mobile radio handsets and systems to utilities and government. Spice is initially paying £6.9m for the acquisition, representing a multiple of 3.1 times the operating profit of the business in the year to end-June 2008. Human resources consultant Savile Group has had a cracking year, predicting full year results will be "significantly" ahead of market expectations. The group, which has almost doubled in value since the start of June, said trading in the year ended 30 June 2009 was "extremely buoyant" and well ahead of the previous financial year.Landkom, the Ukrainian wheat and oil seed rape producer, has signed a deal with biofuels company Sunfuel Ukraine. The two companies have agreed to work together on the sale, processing and development of a new non-edible oil seed variant for biodiesel, known as Isis, which is a more cost effective biodiesel fuel to produce than alternatives produced from rape seed and palm oil.FTSE 100 - RisersFriends Provident Group (FP.) 65.19p +7.93%Aviva (AV.) 283.75p +2.53%Land Securities Group (LAND) 434.25p +2.48%BT Group (BT.A) 102.70p +2.34%FTSE 100 - FallersFresnillo (FRES) 454.50p -5.71%Xstrata (XTA) 564.60p -5.43%Lonmin (LMI) 964.50p -3.45%Antofagasta (ANTO) 571.50p -2.81%FTSE 250 - RisersEmerald Energy (EEN) 633.00p +12.93%Dunelm (DNLM) 224.50p +6.78%Moneysupermarket.com (MONY) 49.25p +5.35%Venture Production (VPC) 826.00p +5.22%FTSE 250 - FallersMarston's (MARS) 82.00p -5.48%Aquarius Platinum Ltd. (AQP) 173.50p -4.80%Debenhams (DEB) 80.50p -4.73%Ferrexpo (FXPO) 113.50p -4.22%