Imperial lights up on deal talk
SMOKE signals spouting from City dealings rooms suggested Imperial Tobacco could soon set the market alight.
With the window for mega merger and acquisition activity arguably closing as we approach a US interest rate tightening cycle, rumours were rife that at least another two blockbuster deals will follow hard on the heels of Wednesday’s intoxicating news that Peroni brewer SAB Miller, up 6p more to 3620p, had received an approach from Anheuser-Busch InBev to create a brewing monster worth £177bn.
Gossip that Imps could be one of them helped shares of the Lambert Butler and Embassy cigarette manufacturer puff up to 3396p before closing 17p higher at 3369p.
It was again suggested that Japan Tobacco, which acquired Gallaher in 2007 and controls well over 60pc of the fags market in Japan, could be interested in a multi-billion pound break-up bid for the Bristol-based group run by Alison Cooper. She became only the second woman appointed to run a Footsie company when she took over the reins from Gareth Davis in May 2010.
Cooper took the plaudits in June when she completed the £4.6bn acquisition of four brands – Winston, Kool, Salem and Maverick – from Reynolds and Lorillard which enabled the two rivals to merge. In doing so, Imps became the third biggest tobacco group in the world with almost a quarter of revenues coming from the US.
Dunhill and Lucky Strike group British American Tobacco, which has often been mentioned in the same breath as Imps, rose 3p to 3578p.
Worries about whether or not the Fed would hike US interest rates for the first time in almost 10 years were a drag on the main market. The Footsie drifted 42.22 points down to 6186.99, while the FTSE 250 shed 18.52 points to 17043,45. Wall Street closed down around 65 points after the nail-biting Fed decision.
Car parts group GKN accelerated 3.3p to 285p after RBC Capital upgraded to outperform from sector perform and lifted its target price to 335p.
Costa coffee-to-Premier Inn group Whitbread rose 29p to 4680p. New chief executive Alison Brittain joins this month before assuming the full role in early December. Broker Credit Suisse says with medium-term growth well established it believes her immediate focus needs to be on mitigating the new National Living Wage.
Rotork’s shock profits warning left the stock 23.4p lower at 192.6p and other engineers in the doghouse. Investec is a seller and has a target price of 170p. Analyst Michael Blogg commented that the purchase of Bifold, for up to £125m, increased the group’s oil and gas exposure and that it is probably responsible for the second-half delays and earnings warning. Smiths Group fell 47p to 1082p and Melrose Industries 6.6p to 267.8p. Recently popular on revived US bid talk, Hunting declined 32.4p to 438.7p.
Selling by tracker funds ahead of its relegation from the Footsie left Weir Group 34p off at 1284p.
Shrugging off the threat of competition from Amazon Fresh, clients of Morgan Stanley filled their shopping baskets with shares of online grocer Ocado after the US broker initiated coverage with an overweight recommendation and target price of 420p. The close was 26.9p better at 346.4p after analysts said they view Ocado as a disruptive long-term winner in online grocery and prefer it to other UK listed food retailers.
Mark Dixon’s office rental group Regus put on 8.4p more to 314.3p on continuing private equity takeover speculation.
DCD Media jumped 90p to 492.5p after its production subsidiary Rize Television won a major commission from CBBC for a unique new singing contest ‘ Got What it Takes?’. The show features mothers and their tal- ented 11-14 year-old children as they undertake challenges against one another in an Apprentice-style musical boot camp.
AIM-listed investment company Teathers Financial edged up 0.25p to 3.75p after an agreement with Proactive Investors, a leading multi-media news organisation, investor portal and events management business. Teathers’ unique crowd equity App will receive content from Proactive Investors.
Buyers chased mobile communications company IMImobile 4p higher to 150.5p following an in-line trading update and news of the £3.3m acquisition of a South African mobile business called Archer Digital. Broker WH Ireland has a target price of 187p and says the deal gives it reach into important new verticals in Africa.
Technology solutions company Crimson Tide improved 0.05p to 1.9p on contract news. It has entered into a landmark contract with one of the country’s leading retailers. It is expected to bring in around £1.1m over the 36-month term of the deal. ÷ HEAVY buying lifted aesthetics and skincare company Sinclair IS Pharma 6p. or 17pc. to 40.75p. Punters got excited by a report in the Indian press that Lupin, the country’s third-largest drugs maker by sales and owned by billionaire Desh Bandhu Gupta, is about to bid £323m, or 65p a share. Sinclair owns Silhouette, a company which manufactures Silhouette Soft, a £1,200 antiageing treatment.