Bovis and Berkeley rise after takeover rumours

HOUSEBUILDER Bovis shot up after one of its largest investors urged a merger with rival Berkeley.

Schroder Investment Management is reported to have written to London-focused builder Berkeley advising it to consider a merger with its smaller counterpart.

Schroder is understood to hold a 6.4pc stake in Bovis through its funds. It’s been a rough time for Bovis. Its chief executive quit earlier this month after issuing a profit warning at the end of the year. The firm warned that profits were likely to be flat this year after a slowdown in building and sales.

Opinions are mixed as to whether the merger would be a good idea.

Berkeley is believed to have dismissed the proposal, while analysts have suggested that other builders, such as Redrow or Persimmon, could take advantage of the fall in Bovis’s share price and make a bid for the business.

Chris Beauchamp, chief market analyst at IG Group, said: ‘The housebuilder sector could do with a bit of movement, if only to help distract from the ongoing worries about whether house prices will maintain their march higher. If there is to be a bid, Bovis is a good candidate – the recent dip in performance masks what is still a healthy company.’

Stockbroker Jefferies said Bovis and Berkeley were ‘unlikely bedfellows’. It added: ‘While a profit warning, operational issues, a CEO exiting stage left and a company trading at a 32pc discount to the sector has all the ingredients for an exciting tale, in our view it lacks a credible plot.’

Bovis leapt 3pc, or 23.5p, to 820.5p. Berkeley gained 1.5pc, or 42p, to 2829p.

The FTSE 100 continued its fall, down 0.66pc, or 47.26 points, to 7151.18.

Antofagasta was top of the pile for the day after Citigroup raised the stock to a ‘buy’. The copper miner climbed 3.6pc, or 27.5p, to 789.5p.

Paddy Power Betfair was the greatest faller after it revealed revenue in the last three months of the year was down 3pc. The bookies tumbled 4.4pc, or 380p, to 8295p.

Hochschild scaled the All-Share as it revealed a dispute at its Pallancata mine in Peru has been resolved and operations would restart by Wednesday. Production had been stopped after community members set up a road blockade in December. Shares soared 12.2pc, or 27.6p, to 253.4p.

Essentra slipped after it warned that full-year results could be lower than expected. The essential components and solutions provider said problems in its health and personal care packaging business had led to a fall in revenue and profitability in the final two months of the year.

Chief executive Paul Forman has promised remedial action and a specific short-term focus on the division. He recently began a strategic review of the entire company.

Essentra forecast operating profit between £137m and £142m for the year. Yesterday it said it would likely come in at the bottom end or slightly below that guidance. Shares plunged 11pc as the market opened but regained ground to finish down 2pc, or 8.9p, at 433.8p. Elsewhere in the property sector,

Land Securities leapt after selling a leisure property in Nottingham.

The real estate investor has offloaded the 201,000sqft Cornerhouse, which contains a cinema, 11 restaurants, two bars, a nightclub and a casino, for £65m. Shares rose 1.5pc, or 15p, to 999.5p.

Support services group Restore has acquired Bedfordshire-based secure shredding business Reisswolf London.

Reisswolf, which was founded in 2002, reported revenue of £1.3m in the year to May 31.

The purchase comes just a fortnight after Restore bought fibrebased waste recycling business Reisswolf Wales. Restore has not revealed how much it paid for the business. Shares surged 0.7pc, or 2.5p, to 364.5p.

Toople tumbled after it announced the launch of new internet-based services for small businesses.

The telecom service firm hopes it will attract new customers. Shares, however, toppled 3.5pc, or 0.12p, to 3.5p.