MARKET REPORT: Shares of perennial takeover target Croda rise 6 per cent from recent year low
Punted more times over the years than a rugby ball at Twickenham, shares of perennial takeover target Croda – which makes raw materials that go in to sun cream, shampoos and deodorants – have risen 6 per cent from a recent year’s low.
They touched 2107p yesterday before closing 38p better at 2093p on revived gossip that the East Yorkshire-based group’s days of independence could at last be numbered.
Talk of a £3.9bn or £29 a share cash bid did the rounds with Dow Chemical and Dupont once again mentioned as possible bidders and could now pounce before Croda itself goes on the acquisition trail. It is said to have firepower of as much as £1bn.
Following Croda’s shock profits warning in July, Berenberg said that Croda was an attractive bid target and a perfect fit for cash-rich Solvay, the Belgian group which swallowed France’s Rhodia for £3bn in April 2011. The broker then suggested Solvay could generate synergies of £25m on earnings and £100m on sales, increasing its divisional earnings margin by 700 basis points.
Solvay was in the news recently when reports suggested that it had won a contract to provide plastic for Apple Inc’s latest smartphone iPhone 6 handsets.
The rot stopped at Shire as the stock rallied 98p to 3848p on a report that Botox manufacturer Allergan’s shareholder Paulson & Co was urging the drugs firm to merge with Shire as an alternative to do a deal with hostile bidder Valeant Pharmaceuticals.
That’s no surprise as the hedge fund group has lost an absolute arm and leg following AbbVie’s decision to walk away from a £32bn buyout of Shire.
Shire’s performance gave the Footsie a lift and the close was 105.26 points higher at 6,372.33 although the volume of business once again left a lot to be desired. The closure of many sizeable bear positions helped the FTSE 250 rebound 269 points to 15,024.97.
Wall Street closed 215.14 points higher at 16,614.81, boosted by better-than-expected results from technology giants Apple and Texas Instruments.
Receding eBola fears helped travel firms perk up. TUI Travel advanced 16.5p to 365.7p, cruise giant Carnival 101p to 2347p and Thomas Cook 7.7p to 117.8p.
Buyers switched on to BT, 6.6p up at 369.8p, after Goldman Sachs reiterated its buy stance. It believes it could launch consumer mobile before the end of the year, driving growth and acting as a positive catalyst. Mobile phone giant Vodafone, which many people still believe will one day be swallowed by AT&T, buzzed 4.2p higher to 193.75p.
Informa jumped 31.4p to 479p after Westhouse Securities upgraded to buy from neutral following a reassuring trading statement. Current trading remains on track with full-year expectations. This despite growing problems with the division which publishes insurance bible Lloyd’s List.
Ophir Energy rose 11p to 201p after saying it was confident on its Equatorial Guinea project after a successful flow-testing of its Fortuna-2 well.
Aerospace and defence giant Meggitt added 10.7p at 449.3p after landing a multi-million dollar contract to supply an advanced wheel and braking system for Gulfstream Aerospace’s new G500 and G600 business jets.
Accident prone oil services group Lamprell put on 14.25p to 151.25p as buyers appeared on the announcement it expects a financial windfall after completing construction of a second oil and gas rig for an unidentified client.
The group said it had finished erecting the Caspian Sea jack-up drilling rig, the Mercury, ahead of time, which meant it would be able to release contingencies for the project which will have a ‘significant positive impact’ on its 2014 results. Controversial Quindell rose 22p to 162.5p after winning a five-year contract with one of the top three insurers in Canada to exclusively supply their telematics technology solution.
Apparently, the insurer represents over 3m customers, 1,700 broker and has a significant market share of the Canadian automobile insurance market. Broker Daniel Stewart has a target price of £7 which many bears in the City would say to be a trifle ‘generous’.
On hearing the energy storage and clean fuel company had taken delivery of one of the first Hyundai ix35 fuel cell vehicles to arrive in the UK, buyers chased ITM Power 1.75p higher to 22.5p.
On a heavy volume of almost 11m shares, StratMin Global Resources soared 3.62p or 80.56 per cent to 8.12p after reporting its first Off-take agreement for its large flake high carbon content graphite with one of the world’s largest independent processors and merchants of graphite. StratMin is the first AIM-listed graphite producer, and now supplier.
Good drilling results from Canada lifted Northern Petroleum 2.62p or 19.44 per cent to 16.12p. Its first well targeting the Keg River edge reef tested at a constrained rate of more than 1,300 barrels of oil per day.
The group expects to raise production from its three initial wells targeting Keg River to up to 250 barrels per day by the end of the year from a current combined restricted rate of about 140 barrels a day.
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