Takeover rumours put fizz into Fevertree stock

RumouRs of a takeover sent Fevertree shares flying as traders speculated a consumer goods giant could make a bid for the business.

A ‘Buy’ rating from analysts at Jefferies started the chatter as the broker said the business was scalable and there was little threat to it from rival schweppes.

Jefferies said that, while there are around 70 copycat tonics on the market, Fevertree is six times the size of its nearest competitor and has the first-mover advantage of strong brand awareness.

The premium drinks maker first listed in 2014 and became a fast favourite as sales in supermarkets and bars surged.

Fevertree, which was valued at £154m at IPo and is worth more than £2.4bn, has tapped into a trend towards top-notch tipples and the so-called gin-naissance.

Targeting discerning drinkers with its flavoured tonic waters, it has seen its share price increase 1344pc from its flotation price of 134p.

But while the Aim-listed firm may well be ripe for a takeover, some commentators think Unilever

(up 2.2pc, or 88p, to 4108p) – which last year staved off a takeover bid from chocolate giant Kraft – will not be the one to woo it.

Russ mould, investment director at AJ Bell, said: ‘It’s hard to see how Fevertree’s tonic waters and ginger beers would sit alongside marmite, Pot Noodle and Domestos at unilever. There would be more logic in a bid from a leading drinks and spirits maker such as Diageo.’

Diageo (up 0.1pc, or 2.5p, to 2621.5p) is certainly no stranger to expensive takeovers – last year it bought tequila brand Casamigos, owned by George Clooney, in a deal worth up to £720m.

But mould added: ‘You can’t rule out a bid but the price tag may deter companies. Fevertree’s market valuation is more than 50 times its forecast profits for 2018.’

None of the companies have issued a statement on the speculation as yet but the talk alone was enough to send shares soaring 9.7pc, or 212p, to 2384p.

The FTSE 100 edged up 0.39pc, or 29.83 points, to 7730.79 but concerns about consumer spending held back several of the major retailers on the day. Economists had predicted retail sales would grow 3pc in 2017, but the actual growth came in at just 1.4pc.

A major problem is that households are not spending on bigticket items or home improvements and that’s bad news for the likes of Carpetright, which saw its share price plunge 39.5pc, or 64.9p, to 99.6p.

In what’s being dubbed the massacre of the mid-caps, home furnishings retailer DFS dropped 4.3pc, or 8.8p, to 197.2p and sofa company ScS sunk 6.3pc, or 14p, to 209p.

B&Q-owner Kingfisher was also caught up in the fallout, the greatest faller on the FTsE 100 for the day, its shares slipped 2.3pc, or 7.9p, to 336.1p.

Investment giant BlackRock is the only company with a registered short position on Kingfisher – it has a £50m bet against the business, which it placed in November, just days after a trading update from the firm revealed like-for-like sales had fallen 0.5pc.

Pharma giant Astrazeneca edged up after its ovarian cancer treatment was approved for use in Japan. Lynparza, a tablet taken twice daily, aims to prolong the lives of women whose cancer has returned after chemotherapy. shares advanced 1.3pc, or 62.5p, to 5043p.

Shire finally revealed the start date for its new chief financial officer. It was announced back in November that Thomas Dittrich would take up the role, replacing Jeff Poulton who had been at the firm for 14 years.

shire yesterday confirmed Dittrich would assume his post on march 19. shares gained 0.2pc, or 8.5p, to 3461p.