Scottish Power lights up a gloomy day with bid talk
ENERGY group Scottish Power was chased to a new four-year high yesterday as dealers hoped a bid for the company would be announced shortly.
On a day when only 15 blue-chip stocks managed to rise, Scottish Power advanced a further 4¾ to 574p on continued heavy volume.
Takeover chatter has been rife since Eon, the German power group that owns Powergen, admitted last week it was mulling its options on a possible offer.
Yesterday’s story was that it had agreed a bid at around 600p a share for the company. The offer is thought to be dependent on the sale of Scottish Power’s US subsidiary Pacificorp to MidAmerican Energy being approved by US regulators.
Scottish Power provided cheer on a gloomy day of trading which saw the FTSE 100 fall 37.1 to 5338.0 on profit taking. The FTSE 250 slipped 68.1 to 7833.3.
Angus Campbell of spread betting group Fin Spreads said technical analysts were reckoning the index could fall further if it did not break through 5386 in the next few days.
“The FTSE 100 appears to be forming a ‘ double top’ – meaning it is trying to set a new high for the second time. But if it fails again, this could lead to a period of decline as sellers take control.
“The last time the index formed a similar double top was in April 2004, when it twice failed to set new highs above 4600. It did not break through this level until the end of September 2004.”
Investors turned to defensive stocks. Tobacco giant Gallaher ticked up 4 to 855p and consumer products group Unilever rose 2 ½ to 570½p.
The banking sector was in focus. Renewed bid hopes saw Barclays up a penny to 572p, with some traders suggesting that Citigroup might be an interested party. Previously, US giants WellsFargo and Bank of America have been rumoured to be potential predators.
Traders said investors were switching out of other banking stocks and into Barclays. Morgan Stanley was believed to be placing 5.5m shares in Royal Bank of Scotland at £ 16.11 and 12m shares in Lloyds TSB at 450p. RBOS fell 16p to £ 16.12 and Lloyds lost 5¾ to 474½p.
The same broker was also rumoured to be behind the placing of 23m shares in Marks & Spencer at 348½p a share – a holding representing 1.4pc of the high-street retailer. The shares fell 5½ to 348p.
Reuters eased 7 to 375½p after smaller fi nancial information provider Knight Ridder warned of a 20pc fall in third-quarter earnings.
Aerospace group Cobham topped the list of FTSE 250 gainers, surging 14¾ to 158p on the back of better than expected fi rst-half figures.
Volumes in Rank Group were heavy with 26.4m shares traded compared to the usual daily average of nearer 7m. The talk was that private equity group Blackstone had launched a 320p-a-share bid for the owner of the Mecca Bingo and Hard Rock Cafe chains.
However, Seymour Pierce was sceptical of the tale. Analyst Paul Leyland said: “There is now only 4.2pc upside to the supposed bid price and no party has officially commented.” Rank rose 19 to 310p.
Laird Group, a global electronics and securities systems group, advanced 3½ to 345p – a four-month high – on the back of its interim results. UBS repeated its buy rating in a note entitled “Strong results confirm our view of undervaluation”.
Premier Oil fell 35 to 750p after disappointing results for three of its exploration wells. Bridgewell cut its rating on the stock from buy to neutral and trimmed down its target price.
However, Premier Oil chief executive Simon Lockett said: “We are still only midway through our exploration programme for the year.”
Project partners BG fell 12¾ to 504¾p and Hardman Resources shed 4½ to 91p.
Oil services company Wood Group was also unpopular, falling 10¾ to 209p. It plans to raise $ 92.5m to fund acquisitions and cut debt through the placing of 24.2m shares at 210p, representing around 5pc of the company.
On Aim, Image Scan Holding surged 3¼ to 11 ½p after winning a $ 396,000 order for its 3D X-ray inspection system with an unnamed US-based supplier.
Cambridge Mineral Resources rose 0.38p to 4.75p after the mining and exploration group announced that gold production had commenced at its mine in southern Peru.
It is thought that the group will also reveal shortly that more gold can be found in the same region.
Centurion Energy International upped its Egyptian reserves from 45.3m barrels to 88m. The shares rallied 35 to 610p.