Abbey sold off ‘on the cheap’
THE share price fall said it all, the company is being sold on the cheap.
Abbey Protection, the aIM-listed supplier of legal and professional fees and insurance to SMEs, lost 4.75p or 4pc to 115p following news of a recommended £116.5m or 115p-ashare cash offer from Markel. The US insurer said that it had obtained irrevocable acceptances from directors and management in favour of the offer, totalling 57pc of the share capital, while canadian investor and 10pc shareholder Mawer had also signed a letter of intent to accept the bid.
Sid Lall, lead fund manager at Hargreave Hale which owns 6pc of abbey Protection, is livid. ‘It is highly unusual to have management agreeing to a bid that is at a discount to the prevailing share price. It is selling a profitable company short and in doing so is showing a total disregard to other shareholders whose aim as always is to maximise shareholder value,’ he insisted.
abbey chairman Tony Shearer said: ‘ The board believes the acquisition by Markel gives abbey an exciting opportunity to build a platform for further growth through Markel’s scale and financial strength.’ Maybe, but not at 115p.
The deal is still subject to shareholder approval and Hargreave Hale will be canvassing support to try to get Markel to bid the right price. That would be at least 15pc higher than the current offer but Markel has stated 115p is its full and final offer.
although patience in the city is beginning to wear thin over the US budget impasse, selling was light. News that well-known dove Janet Yellen, the current vice- chair of the Fed, will take over from Ben Bernanke when he steps down at the end of January provided some solace to dealers and the Footsie closed 27.92 points lower at 6337.91.
Wall Street lost 44 points in the early stages as traders awaited FOMc minutes for the September 17-18 meeting which might reveal more clearly the extent of divisions over the efficacy of the Fed’s quantitative easing programme on the economy.
Housebuilders erected good gains following bullish comments from Goldman Sachs on the Help to Buy mortgage scheme. The US broker has lifted its 2015 earnings forecasts for the sector to some 26pc above consensus and said it expects Uk housing transactions to reach long-run levels by 2016, rather than 2020 as previously thought.
Persimmon jumped 54p to 1131p, Taylor Wimpey 5.1p to 103.8p, Crest Nicholson 13.7p to 343.5p, Bellway 50p to 1324.5p, Barratt Developments 11.1p to 320p and Redrow 6.5p to 235.8p. Investec’s banking guru Ian Gordon upgraded Uk taxpayer- owned Lloyds Banking Group, 0.4p dearer at 72.92p, to buy from hold and lifted its target price to 80p from 76p. He believes banks, and in particular Lloyds, are key beneficiaries of the Government’s Help to Buy scheme.
Gordon says: ‘It is the limited effect he expects the scheme to have in terms of releasing “mortgage prisoners” which should protect back-book margins and underscores his improved margin expectations.’
Morgan Stanley advised clients that online gambling operator William Hill’s current share price offers a ‘compelling entry point’, reiterated its overweight stance and 475p price target. Some took the bait and the close was 5.5p better at 402.5p.
Zytronic, which makes touch sensor products, jumped 24.5p to 187.5p after forecasting results for the full-year will be ahead of market expectations.
Director share sales dragged technology group blur 31.5p down to 430p. chief executive Philip Letts sold 900,000 shares at £4 a pop and director Richard Bourne-arton 95,000 shares at the same price. The fact it was the first time Letts had sold shares since he founded the company over seven years ago and the main purpose of the sale was to increase institutional liquidity, cut no ice with other much smaller shareholders.
Iofina firmed 3.25p to 171p after announcing that its much-anticipated third facility in Oklahoma is in the final stages of construction. an application for its atlantis water project in Montana has been verified and moves on. Investec’s target price is 230p.
Following a placing of 159m shares at 1.1p, onshore US oil and gas exploration and production company Northcote Energy closed 0.08p off at 1.15p. The £1.75m cash raised will help increase reserves in Oklahoma.
Buyers chased consultancy and technology specialist Quindell Portfolio 1.5p higher to 16p following sizeable contract wins. It has won a major three-year outsourcing contract with Direct Line, worth an estimated £50m per year, as well as a number of other new contracts with a collective value of more than £150m per annum. canaccord Genuity’s target price is 41p. PRIVATE jet charter company Air Partner nosedived 27.5p to 442.5p on scrappy selling but Liberum Capital has initiated coverage with a price target of 555p. The broker believes it is a fundamentally attractive and sound business with a clear strategy to deliver structural growth. Management has identified the US as being the biggest and highest priority opportunity, where it is poorly represented.