US takeover talk pumps up Weir By Geoff Foster
WHEN Weir Group walked away from its £3.7bn bid for Finnish rock crushing group Metso last May, its shares were changing hands at not far short of £26. As far as industry analysts were concerned, the decision to exit had left the Glasgow-based valves and turbine maker itself open to a foreign takeover. Nothing corporate has yet materialised although with the stock now many pounds lower and under the kosh after a shock profits warning in February, dealers are hearing that US predators could at last be ready to pounce.
Buyers certainly pumped up the volume yesterday, chasing Weir 47p higher to 1739p amid rumours from across the Pond that a cashrich US private equity consortium is working on a £25-a-share break-up offer for the group which narrowly missed being booted out of the elite Footsie index this month.
Chief executive Keith Cochrane warned the market last month that the recent fall in oil prices would hit revenues this year. He said that cost-cutting measures would only partly offset the impact of substantially lower demand. The slump in demand had been caused by many oil and gas exploration and services companies slashing capital spending in response to lower oil prices.
Professional punters who were buying Weir had earlier banked hefty profits after Abbvie, the group which walked away from a £32bn bid for Shire, 50p off at 5200p, confirmed recent intense speculation by launching an agreed bid for US cancer drug-maker Pharmacyclics. Gossip now suggests the next company to lose its independence in the red-hot global biopharma sector is Italy’s CTIC. Major shareholder Baxter International, Novartis and GlaxoSmithKline, up 5p at 1571p, were all mentioned in the same breath as the company which is focused on cancer treatments.
‘Buy, buy, buy’ was the shout in dealing rooms as European Central Bank Mario Draghi came up with the goods required to push the fabulous Footsie above the magic 7000 level. Draghi announced the newly christened ‘Public Sector Purchase Programme’, confirming quantitative easing will comprise monthly bond buying beginning on March 9 until next September, at a rate of €60bn (£43bn) a month, with the option that if inflation is not approaching the targeted 2pc the stimulus could continue.
The ECB’s stimulus came on the sixth anniversary of the introduction of QE and nearzero UK interest rates. The MPC yesterday left policy unchanged – rates at 0.5pc – and the asset purchase target at £375bn.
The lunchtime news set bulls on the rampage again and the Footsie marched up to an intra- day record of 6974.26 before closing 41.9 points up at an all-time high of 6961.14, The FTSE 250, which has soared 20pc from its October low, jumped 174.66 points to 17,310.31.
Wall Street joined in the fun and traded nearly 40 points higher although fund managers on the Street of Dreams were not getting too carried way ahead of today’s US non-farm payroll (employment) figures.
Betfair led the FTSE 250 field higher, crossing the tape at 2105p, up 319p, after excellent quarterly results. Revenues jumped 20pc to £114.6m in the three months to the end of January. The sports division grew revenues by 16pc and gaming revenues rose 30pc as 80pc of punters used their mobile phones to place bets. Chief executive Breon Corcoran expects the May’s general election to bring ‘record levels of political betting’. He revealed £2.2m has already been wagered on the company’s exchange, with a hung parliament the most likely outcome.
Celebrating a 120p-a-share special dividend after a stellar second-half trading, Spirax
Sarco Engineering soared 327p to 3407p. Numis’s target is £34.
Gene and therapy company Oxford Bio- Medica rose 0.62p to 9.28p after US bank ROTH Capital initiated coverage with a price target of 18p. It believes Oxford presents an attractive investment case to US investors based on broad-based physician and investor enthusiasm for gene therapy.
Car accessories group Halfords, 17.2p up at 453.2p, stepped on the gas amid growing speculation John Browett is about to be appointed chief executive, replacing Matt Davies who is off to be managing director of Tesco’s UK and Ireland operations. Browett recently ran Tesco’s online delivery business before becoming chief executive of Curry and PC World owner Dixons.
Nationwide Accident Repair Services reversed 2p to 81.5p after scandal-hit Quindell, 0.25p off at 90.5p, raised £7.1m by selling its stake in the company.
Sellers were all over Wm Sinclair like a rash – it closed 11.5p or 24pc down at 37p. They ran for cover after a profits warning and news that chief executive Peter Rush has resigned to be replaced by interim boss Stuart Burgin. ÷ RESPIRATORY drug firm Synairgen rose 5p to 33p on news entrepreneur Richard Griffiths has increased his stake to 6.1pc from under 3pc. FinnCap is a fan with a target of 108p. The broker says that since an exclusive global licence agreement with AstraZeneca for SNG001, an inhaled treatment for all respiratory issues, worth up to £147m with tiered royalties, was signed shares are off 60pc, significantly undervaluing the deal.