Square Mile straps in for the ride as IAG lines up Norwegian takeover
SHARES in International Airlines Group were flying as investors prepare themselves for a takeover battle for Norwegian Air Shuttle.
Yesterday IAG set pulses racing when it said it had bought 4.6% of low-cost carrier Norwegian with a view to starting takeover discussions.
But analysts warned that IAG will have to break the bank to make it happen as Norwegian has racked up €5.5 billion (£4.8 billion) in debt, with its rapid expansion putting it under considerable financial strain.
But there were question over the deal. Daniel Roeska, at Bernstein said: “We wonder why IAG has deviated from the industry-expected let-them-go-bankrupt-and-buy-them-then strategy. Possibly to pre-empt other buyers of distressed assets.”
Nevertheless, investors believe it is on the cards and shares in IAG gained 10p at 618.6p. There was also plenty of action in the UK tech sector after Sage shocked the Square Mile by revealing a fall in revenue and sales. Its shares lost 92.4p at 579.6p.
But rival Micro Focus was enjoying a better session on news that activist investor Elliott Management had taken a stake in the tech giant.
Investors will be hoping Elliott can shake up Micro Focus, which has performed badly after it admitted falling sales at its freshly acquired HPE Software business.
Elliott is one of the world’s most ruthless investors and shares in Micro Focus added 68.5p at 1327p. The FTSE 100 barely moved, down 5.81 points at 7252.53. Pharmaceuticals giant Shire was among the fallers as speculation cooled about a possible takeover with Takeda, Japan’s largest drugmaker.
Takeda has until April 25 to submit a bid or walk away, but many in the market question if it has the appetite to pull off the $40 billion (£28 billion) M&A deal. Shire shares lost 32p at 3653.5p.
XP Power is upping its first-quarter dividend after the power products supplier reported order intake for the first quarter at £51.2 million, a 9% increase on the same period last year.
The company is declaring a dividend of 16p per share, a 7% rise on the prior year. Investors cheered the news and its stock rose 170p at 3690.1p.
Among the small caps Air Partner, which was forced to admit on Wednesday it had made an accounting error in previous results, has today seen its chief financial officer Neil Morris resign.
Morris paid the price for a seven-year accounting foul-up, which has opened a £4 million hole in the books of the quoted private-jets broker, the equivalent of nearly a year’s profits. The shares were up 0.2p at 94.2p.
On AIM, shares in Dekeloil tanked 1.3p at 8.4p after it revealed a sharp decrease in palm oil production in its first quarter.