Investors plug into talk of swoop for BT
BT LED the charge on the FTSE 100 yesterday after reports that it was strengthening its defences against a possible takeover following share price weakness.
The telecoms company has sought the services of Goldman Sachs to update its strategy for defending a takeover, according to Sky News.
Since January 2016 BT’s stock price has fallen by more than 75pc, becoming a target for competitors and investment groups.
A move by a rival to take over the business, which is in charge of the £12bn drive to roll out superfast fibre broadband to 20m homes and will play a key role in building the UK’s 5G network, would require government approval.
Deutsche Telekom, which owns a 12pc stake, is seen as a likely candidate.
Neil Wilson, of Markets.com, said: “While BT has a lot of legacy baggage – notably £18bn in net debt and a major pension deficit – it’s also got the Openreach crown jewel, which would be worth considerably more on its own than the group is valued today.
“Of course, there is no formal offer, but shares could jump further if one emerges.” Shares ended 7.2p higher at 109p, a rise of 7pc, valuing the company at £10.8bn.
It came as equity benchmarks in Europe finished firmly higher on hopes for a coronavirus treatment. The optimism was driven by reports that Donald Trump, the US president, is looking to fast-track the approval of a vaccine being developed by AstraZeneca and Oxford University.
AstraZeneca jumped 174p to £86.11 on the back of the news.
The FTSE 100 closed up 1.7pc at 6,104.7, with mining, energy, banking, airline and house building stocks all showing decent gains.
The Frankfurt Dax 30 and the Paris Cac 40 outperformed the FTSE 100, climbing 2.4pc and 2.3pc respectively.
Cineworld was among the FTSE 250 leaders, jumping 3.5p to 54.64p, after Peel Hunt said the cinema chain presents “an attractive buying opportunity” for investors with appetite for material risk. The broker, which rates Cineworld at “buy” with a 180p price target, reiterated its view that cinema demand should bounce back once major films are released. “This starts this week with Tenet in the UK and internationally, and next week in the US,” it said.
Peel Hunt noted that the Cineworld share price has fallen further than any other in its sector coverage, but said it should “bounce hard” once investors are reassured over demand.
Meanwhile, British-based outsourcing business Equiniti fell after Goldman Sachs cut its price target on the stock to 195p from 225p. It ended the day 1.4p lower at 111.2p.
Elsewhere, Amigo Holdings crashed by almost a third as its board called on its founder to not push ahead with a series of proposals, including calling a shareholder vote that could seriously shake up the way the embattled company is run.
It shed 5.4p to 12.5p, a fall of 30pc.