Shire’s second dose of Baxalta
IT’S not a matter of if, but when? Drug maker Shire was chased up to 5275p before closing 85p better at 5245p amid growing speculation it could be on the verge of tabling an increased £22bn-plus, or £32-a-share, cash offer for Baxalta, the bleeding disorders and immune deficiencies specialist.
Shire’s shares have fallen 10pc since it had a £19.6bn all-share offer rejected earlier this month by the board at Baxalta, which was recently spun out from the bioscience division of Baxter International.
The initial offer from Shire was essentially hostile as it did not have the approval of the Baxalta board. Its management have failed to engage with the Shire board and has therefore not opened its books. Although Shire’s bid was priced at a 36pc premium to Baxalta’s share price before the approach was announced, its management dismissed the unsolicited offer as too low.
Shire claimed that the deal, which would have given Baxalta’s shareholders around 37pc of the combined group, would generate immediate shareholder value and accelerate the growth plans for both companies.
Shire also pledged to begin a share buyback programme for up to 13pc of the combined post-transaction shares outstanding within two years. Shire’s boss Flemming Ornskov has cash burning a hole in his pocket. The group banked a mouthwatering £934m after its £32bn tie-up with US rival AbbVie collapsed. Shire has refocused its business but needs to make an acquisition before almost inevitably again coming under corporate attack itself.
Shire has been accused of being too reliant on its best- selling treatment for attention deficit hyperactivity disorder (ADHD), called Adderall XR, and management is hell-bent on expanding into high-margin niche treatments, including those involved in rare dis- eases. Come in Baxalta! Bear closing ahead of today’s interim results lifted bombed-out Glencore 6.1p to 176.1p. Broker SP Angel said it’s not a buyers market yet. Today’s statement will highlight the plight of lower commodity prices and give some insight into how well the group is able to manage its different portfolio of mining assets alongside its dominant commodities trading business.
Lonmin fell nearly 8pc to 33.01p after Glencore warned it may close its Eland platinum mine in South Africa due to falling prices. Glencore two months ago disposed of its 23.9pc stake in Lonmin by distributing the shares to its own shareholders.
Another overnight fall in China outweighed better-than- expected UK consumer price inflation figures and the Footsie lost 24.01 points to 6526.29. The latest Bank of America Merrill Lynch Fund Manager survey revealed that China recession is now rated the number one ‘tail risk’ by more than 50pc of respondents. Global emerging markets is the region most want to be underweight.
Wal-Mart’s disappointing quarterly figures dragged Wall Street lower with the Dow closing down more than 30 points despite strong results from Home Depot and data which showed US housing starts rose to a neareight-year high in July.
Broadcaster ITV, 0.1p easier at 259.4p, faces paying up to £50,000 to refund viewers’ votes after TV watchdog Ofcom ruled that it ‘materially misled’ audiences when this year’s winner of Britain’s Got Talent swapped her dog for a stunt double in the final. Around 100,000 viewers voted for the winners by phone – which cost 50p from a BT landline.
Social housing giant Mears advanced 13.75p to 408p following positive interim figures. Pre-tax profits rose 3pc to £19.2m with the increase driven by the margin improvement in Social Housing. The balance sheet remains strong, with net debt of £4.2m and the dividend was increased 9pc to 3.10p. Broker Liberum’s target price is 515p. ITM Power buzzed 2.25p higher to 28.12p after the energy storage company confirmed it had officially launched a high-tech gas-to-power plant for RWE in Germany. APC Technology Group plummeted 4.38p or 27pc to 11.88p as the board launched an operational review after warning that underlying operating profit for 2015 will be below market expectations.
Over- excited day traders had supported shares of African Potash up to 2.14p – they were changing hands at 0.3p just over a week ago – before the company said it was not aware of any reason for the share price rise apart from a recent announcement highlighting a deal with Comesa, the free trade union of 20 African countries, to provide 500,000 tonnes of fertiliser over three years. Profittaking ensued and the close was 24pc lower at 1.31p. Bears now await a placing at a significant discount to the current share price.
Mariana Resources firmed 15pc to 2.55p after announcing impressive results of the maiden Mineral Resource estimate for the high grade gold copper Hot Maden Project, eastern Turkey.