Bid talk boosts Skyepharma
BLUE chips put in a buoyant performance in the shortened week after the Easter holidays, mainly thanks to takeover activity, both real – Shell’s mega-bid for BG – and imagined, with deal chatter still surrounding the likes of Burberry and InterContinental Hotels.
However, while the blue chips were the main focus for M&A talk, dealers also noted a revival of speculation for some bid chestnuts further down the tree, notably drug delivery firm Skyepharma.
The small cap group’s inhalation devices enable controlled or timed-release delivery of oral pharmaceutical products, and it has partnerships with a wide range of big drug firms such as Britain’s GlaxoSmithKline, Sanofi of France, and Swiss firm Roche.
Traders’ gossip suggested that one of these groups might be interested in taking control of the business, or given a number of overseas expansion moves by US pharmaceutical firms an offer could come from across the Atlantic.
Last month Skyepharma was awarded both the Best Performing Share and Turnaround of the Year gongs at the 2014 PLC Awards, reflecting strong performance that saw the shares jump in value from 112p to 335p.
The stock has drifted back since then, with last month’s 2014 results showing a widened pre-tax loss, although that was primarily due to costs related to the repayment of bonds, and Skyepharma expressed confidence in its growth prospects for 2015.
The latest vague takeover chatter only helped it add 3p at 304p.
A former pharma bid target was the biggest mover on the FTSE 100, with Shire gaining 5pc or 260p to 5680p – albeit recovering from heavy losses in the previous session – after US regulators vowed to make an early decision by October on the company’s application to market a new drug for dry eye disease.
Shire was set to be bought by AbbVie in a £31bn deal last year, but the US group pulled the plug on the takeover after changes to American tax rules. Since the deal collapsed in October, Shire shares have bounded 58pc higher, surpassing AbbVie’s 5248p-a- share bid and heading back towards an all-time high of 5745p.
The FTSE 100 index reached its second alltime peak in a month at 7089.77 – up 74.41 or 1.06pc, thanks to underlying M&A interest and records by European markets on the back of a weaker euro and some relief in the Greek debt saga.
Meanwhile, the broader FTSE 250 gained 159.57 points at 17875.11.
Broker comment was a spur to other blue chip gainers, with broadcaster ITV jumping to a 15-year high, up 9.3p to 270.6p after Morgan Stanley lifted its target price for the stock to 300p from 240p.
Elsewhere, shares in household products giant Reckitt Benckiser added 115p at 6116p after UBS upgraded its rating for the stock to buy from hold and raised its target price to 6505p from 5500p.
There was also a broker boost for drugs firm Indivior, which was spun off from Reckitt at the end of last year, with Jefferies International upgrading its rating to buy from hold with an increased target price of 225p. Indivior shares gained 10.8p at 211.3p.
Jefferies also gave a lift to the housebuilders after the broker upgraded its stance on the UK residential sector by raising seven stocks from hold to buy and three from underperform to hold.
Blue chip Persimmon was 24p higher at 1757p, Taylor Wimpey rose 3pc or 4.9p to
index 166.1p, and Barratt Developments added 17p to 558p.
Among the blue chip fallers, selected mining stocks were weak as the price of iron ore veered lower again having slid by 30pc in the space of a month.
Anglo American dropped 2p to 1022p, and Rio Tinto was off 15.5p at 2837p. Rio was also in focus on reports that its Canadian iron ore division will cut 150 jobs.
Away from the top flight, PR and communications firm Huntsworth dropped 7pc or 3p lower to 42p after it swung to an annual pre-tax loss of £59.6m in 2014 and cut its dividend as a result of booking heavy impairment charges related to its declining Grayling business.
But Acacia Mining moved higher, adding 4.3p at 278.8p following a deal to expand its land holdings in the Houndé belt in Burkina Faso via two earn-in agreements. The group, formerly African Barrick Gold, is Tanzania’s largest gold miner and one of the largest producers of gold in Africa.
IMAGING technology company OMG jumped 15pc higher on news it has struck a £17m deal to sell its 2d3 defence software business to Insituc, a subsidiary of the US aerospace giant Boeing. OMG expects to make a £11.3m pre-tax profit on the sale and said it intends to use around £5.1m, or about 45pc of the net cash proceeds, to pay a 4.5p a share special dividend to investors. Shares rose 6p to 47p.