China seeks predators to join £7billion bid for GKN
SILLY season bid rumours tend to come and go. But the GKN takeover gossip that has been lingering since the middle of the summer just refuses to go away.
The latest version of the tale goes something like this: China’s SAIC Motor Corporation and its sharpsuited advisers from JP Morgan have approached various US industrial conglomerates about forming a consortium to mount a joint £7bn takeover bid for the FTSE 100 engineering giant.
This is because SAIC, backed by the Chinese state, is interested in owning GKN’s driveline and land systems divisions.
Any partner for SAIC would have to be interested in owning GKN’s aerospace division.
Teaming up with a western company could smooth over any potential regulatory or political hurdles surrounding a bid by a statebacked Chinese company.
City sources said SAIC had already approached several US companies, including United Technologies Corporation and North- rop Grumman Corporation, via JP Morgan, about mounting a joint bid. Potential partners for the Chinese based in Blighty include
BAE Systems, down 2.4pc, or 13p, to 524.5p, Rolls-Royce, down 1.4pc, or 10.5p, to 722.5p, and the highly acquisitive Melrose, up 0.4pc, or 0.75p, to 171.75p.
GKN itself ticked up 0.7pc, or 2.3p, to 323.2p. In the wider market, the FTSE
100 barely moved following a week that saw the blue-chip index flirt with its highest levels of the year. It eventually closed down 0.03pc, or 1.97 points, at 6909.43.
Russian gold and silver mining company Polymetal was the biggest blue- chip faller, after PPF Group, which is controlled by Czech billionaire Petr Kellner, and Jiri Smejc, an associate of Mr Kellner, sold 26m shares, roughly 6pc of the company, via brokers at Morgan Stanley, at £9.75 a share.
PPF Group sold 13m shares, taking its overall stake down to 12.9pc. Mr Smejc, meanwhile, sold 13m shares, leaving him with 1.5pc of Polymetal, which retreated 7.4pc, or 78p, to 981p.
Banks also peppered the loserboard, with Standard Chartered losing 1.9pc, or 12.6p, to 639.1p and
Royal Bank of Scotland falling 2.1pc, or 3.9p, to 182.6p.
EasyJet slipped 1.2pc, or 12p, to 1034p. Brokers at Barclays published a research piece based on an investor lunch held this week with Virgin Atlantic’s chief executive.
Analyst Oliver Sleath noted: ‘Virgin’s commentary echoes that of other UK leisure carriers such as EasyJet, where we believe UK fares have been down double-digit [year on year] in late summer.’ Blue- chip textbook publisher
Pearson continued to be in the doldrums following bearish comment from French stockbroker Exane BNP Paribas this week. The shares dipped 2.1pc, or 16p, to 758p. A downgrade to ‘underweight’ from Barclays weighed on North Sea oil explorer EnQuest. The shares lost 4.6pc, or 1.25p, to 25.75p. On a more positive tack, Anglo
American topped the FTSE 100 leaderboard. Traders noted Barclays upgraded it to ‘equalweight’.
Analysts at Barclays – whose preferred stock in the sector is Rio
Tinto (up 1.2pc, or 29p, to 2519p) – said: ‘ We upgrade Anglo American... having missed the opportunity to do so back in February.
‘This is based on strong valuation support and strong earnings momentum plus the beneficial effect of spiking coking coal prices on their balance sheet.
‘We still think their strategy to shrink the business is suspect but recognise the rationale.’ The shares put on 3.3pc, or 30.5p, to 951p.
Yesterday, Anglo American also appointed Stephen Pearce as the new finance director. Among the smaller companies,
Clipper Logistics edged up 1.4pc, or 5p, to 357.5p. Traders reckon Amazon is interested in buying it although it’s not clear whether the online retail giant has approached the London-listed company.