Merger mania pushes Footsie to two-year high
THE FTSE 100 climbed to a twoyear high and a fresh post-pandemic record as takeover talk gripped the City.
The blue-chip index rose 0.9pc, or 68.28 points, to 7611.23, the first time it has topped 7600 since January 2020, a month before the onset of Covid-19 sent global stock markets into meltdown.
GlaxoSmithKline helped lead the FTSE 100’s ascent, gaining 4.1pc, or 66.8p, to 1707.8p, following news of Unilever’s attempted swoop on the pharma giant’s consumer healthcare business.
Unilever shares, however, were down 7pc, or 274.5p, at 3662p as traders surmised that such a takeover could be a step too far for the consumer goods group.
But arch rival Reckitt Benckiser – which makes Dettol and Air Wick – gained 3.3pc, or 202p, to 6397p. Reckitt also appointed a City heavyweight to its board.
Alan Stewart, the former chief financial officer of Tesco (up 1.6pc, or 4.45p, to 289.45p), Marks & Spencer (up 0.1pc, or 0.2p, to 223.5p) and ex-finance director at WH Smith (up 1.2pc, or 18p, at 1582.5p), will join the firm as a non-executive director at the start of next month.
The buzz around takeovers looks set to continue across 2022, with analysts at Peel Hunt predicting merger and acquisition activity among UK companies was ‘likely to increase’ as factors such as uncertainty, shareholder activism and inflation created buying opportunities. Positive broker assessments were also helping push the FTSE 100 higher.
Insurer Admiral Group added 4.2pc, or 130p, to 3241p after it received an upgrade to ‘hold’ from ‘reduce by analysts at HSBC, who also raised their target price on the stock to 3150p from 3050p. Chilean copper miner Antofagasta was also on the up, climbing 4.2pc, or 57.5p, to 1436.5p as UBS upgraded the stock to ‘neutral’ from ‘sell’ and hiked their target to 1400p from 1300p. Housebuilder Taylor Wimpey also jumped 4.2pc, or 6.45p, to 160.4p following a positive trading update.
Shell and BP bobbed higher after they were selected to build new windfarms off the coast of Scotland. Shell shares were up 1.3pc, or 22.8p, at 1845.4p while BP rose 1.3pc, or 5.05p, to 393.75p. Another winner, energy firm SSE, added 0.4pc, or 6.5p, to 1583p.
Oil firms got a lift after analysts at SEB Research predicted crude prices could hit $100 a barrel as demand recovered from the emergence of the Omicron variant and supply remained tight. Crude stands at around $86. An unexpected cut to interest rates by the Chinese central bank also helped to boost the market’s mood.
Elsewhere, cybersecurity group and stock market darling Darktrace tumbled 7.1pc, or 31.4p, to 413.2pp following a broadside from short-seller Shadowfall.
The fund, nicknamed the ‘dark destroyer’ in the City, criticised the FTSE250 firm’s business as being ‘watery thin’ having revealed a bet against the company back in October.
Investment manager Ashmore dropped 1.1pc, or 3.2p, to 286.2p after it flagged ‘challenging market conditions’ as inflation, Covid19 variants and weaker growth in China weighed on its portfolio.
The value of its assets under management stood at £64bn at the end of December, down from £67bn at the end of September.
Blue-chip pharma firm Hikma climbed 0.6pc, or 13p, to 2069p after it snapped up the Canadian business of bankrupt US firm Teligent for £33.5m.
The purchase, which is expected to complete in the first quarter of 2022, marks an expansion of Hikma’s business into Canada and includes a portfolio of 25 injectable medicines.
The FTSE 250, meanwhile, rose 0.6pc, or 128.29 points, to 22,871.64.