MARKET REPORT: First group hits the cache when buyers leave
Shares of First Group fell into a buffer zone as the private equity bidder abandoned plans to buy a train and bus operator.
Shares fell 11.4%, or 14.7 points, to 114.2 points after Miami-based private equity group I Squared walked away seeing several bids rejected.
First Group, whose work includes running the West Coast mainline Avanti and South West Railway, rejected a 118p share offer in June for £1.2 billion.
Canceled: First Group drops 11.4% after Miami-based private equity group I Squared walks away seeing several bids rejected
The company, which also operates around a fifth of local bus services outside London, yesterday revealed I Squared had made a final offer of 135p a share on Monday.
But it said this still ‘significantly underestimates’ the company.
Mining shares helped drag the London stock market to a two-month high.
In another steady day of blue-chip gains, the FTSE 100 index gained 0.4%, or 26.91 points, to 7536.06.
However, the FTSE 250 underperformed, falling 0.2%, or 46.35 points, to 20336.41.
Heavy mining stocks are on the upswing as BHP posted its biggest profit in 11 years thanks to soaring coal and copper prices.
The Australian company, which left Footsie earlier this year after moving its main listing to Sydney, reported a 26 per cent increase in profits to £17.6 billion in the year to the end of June – the highest level since 2011.
In further good news, the mining giant beat analysts’ forecasts to declare a final dividend of £7.4 billion. Shares rose 5.5 per cent, or 122.5p, to 2360p.
BHP’s bumper results sent shares of Glencore up 4%, or 18.4p, to 482.9p, coin giant Antofagasta up 3%, or 34p, to 1164.5p and Anglo American up 3.5 %, or 101.5p, to 3002.5p.
There’s also good news for Rio Tinto, up 3.9%, or 182.5p, to 4918p.
Among mid-cap miners, Ferrexpo rose 2.5%, or 3.5p, to 143.8p but Fresnillo lost 2.1%, or 15.6p, to 722.8p after early increase.
While BHP expects China ‘to emerge as a steady source of commodity demand next year’, analysts have issued a cautious note.
Susannah Streeter at Hargreaves Lansdown said: ‘Weaker commodity prices, particularly industrial metals, remain a risk for miners ahead, especially given concerns about China’s property sector. , although strong cost controls and low-cost operations will make it resilient amid uncertainty.’
With takeover activity on the horizon again – including at Darktrace (24.2%, or 100.4p, to 515.2p), Ted Baker (16.9%, or 15.7p, to 108) .8p) and Sage (down 0.75%) cents, or 5.6p, to 738.2p) – Mondi is on the cusp of a buyback.
Packaging company FTSE 100 has agreed to buy the Duino plant near Trieste in Italy from the Burgo Group for £34 million. Mondi expects to close the deal in the second half of this year.
The company plans to convert the factory’s paper machine to produce about 420,000 tons of recycled cartons a year. Shares fell 2.8%, or 46.5 points, to 1627.5 points.
Pharmaceutical giant GSK has expanded its reach in the US after founding Massachusetts-based vaccine company Affinivax. GSK will pay £1.7 billion at the close of the deal, with two further payments of £500 million if clinical development targets are met.
GSK said it wanted to build a ‘strong portfolio’ of specialty drugs and vaccines as shares rose 1.4 per cent, or 19p, to 1425p.
The ill-fated figure for pharmaceutical giant Haleon – which owns consumer healthcare brands including Sensodyne, Panadol and Centrum – rose 0.9 per cent, or 2.4p, to 269.1 points after listing on the London Stock Exchange at 330 points last month.
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