Takeover talk about the steel group Corus, and a genuine bid for music business EMI, gave the London market a lift yesterday, helping mitigate overnight falls in Asia.
Corus climbed more than 6% in early trading as word went round about a possible 520p-a-share offer. Traders said a consortium led by the Russian steel firm Severstal was considering a bid, following the group's failure to seal a deal with Luxembourg's steelmaker Arcelor. This week Arcelor agreed a takeover by the Mittal steel business leaving Severstal's hopes of a merger in tatters.
As the day progressed the excitement faded and Corus closed 5.75p higher at 434p, a 1.34% increase. A Severstal spokeswoman in France said only that the company was considering its options. Later comments attributed by a French MP to the Russian company's owner, Alexei Mordashov, hardly clarified matters. Apparently Mr Mordashov indicated that Severstal might raise its offer for Arcelor or could make a bid for another company. More than 35m shares in Corus changed hands during the day as investors bet on a bid. Corus refused to comment, but it had said in March it was keen for a partnership to develop low-cost production in countries like Russia, India or Brazil.
Meanwhile, an equally complicated takeover battle concerned EMI. The company had a bid for its smaller US rival, Warner Music, rejected last month, and yesterday Warner tried to turn the tables with its own £2.5bn offer for the UK company. EMI turned this down, of course, and raised its bid for Warner from $28 to $31 a share. The Warner bid values EMI at 320p a share, and in the market EMI jumped 23.75p to 307.5p.
The news lifted media shares in general, with ITV up 2.25p to 104p. Publishers Pearson, up 11p to 706.5p, and Reed Elsevier, 16p better at 537.5p, also benefited from a recent positive analyst note from Citigroup.
With all that, the FTSE 100 ended 26.3 points higher at 5678.6, despite a 2% fall in the Nikkei overnight and a drop in the Dow Jones Industrial Average on worries about interest rates. The US Federal Reserve is set to decide today whether to raise US rates, and markets are likely to be nervous until the deed is done.
Software group Sage added 5.75p to 225.25p after Goldman Sachs upgraded its stance on the company from sell to neutral. It rates Sage as a well-managed company with attractive defensive qualities but believes it will continue to make acquisitions when investors might prefer some cash to be returned to them as dividends or share buybacks.
Marketing and advertising business WPP recovered some ground after Tuesday's disappointing trading statement. Its shares added 6.5p to 632.5p as Panmure Gordon advised clients to buy, saying the company was still an attractive blue-chip prospect.
Broking group Icap added 15.75p to 500p on news it would replace the airports operator BAA in the FTSE 100 index. BAA will leave on June 30 after nearly 19 years following its takeover by Spain's Gruppo Ferrovial.
A positive trading update from the engineering group Morgan Crucible led to a number of upgrades from analysts, including ABN Amro, and the shares rose 17.25p to 244.25p.
But United Utilities fell 21.5p to 630p as its shares traded for the first time without the right to the latest dividend, while Carphone Warehouse lost another 2.75p to 308.5p after Tuesday's £3.2m share sale by the chief financial officer, Roger Taylor, and a negative note from Cazenove. The transport group Stagecoach slipped 1.25p to 112p, despite better than expected full-year profits, driven largely by the UK rail business. Panmure analysts put a 125p target on the shares after the results.
Retailer Burberry was 7.5p weaker at 417.5p. Analysts at Morgan Stanley recently met the company's new chief executive, Angela Ahrendts, and came away impressed. They said the company had strong growth potential and room to improve its margins; they were impressed, they said, by the Cruise and Prorsum pre-collection seen at the London showroom. They gave the shares an overweight rating and set a price target of 500p.
Lower down the market, Azure Dynamics, the electrical components business, was unchanged at 46.5p. The shares have drifted lower from the 65p they reached last month, mainly because there has been a lack of news about a rumoured takeover at between 85p and 100p. Word was that a deal was expected some time in June; now traders believe there are unlikely to be any developments for another two months. In the meantime, a couple of key contracts are likely.
Plus Markets, which provides market services and owns the Ofex exchange, added 1p to 30.75p after it received clearance to compete with the London Stock Exchange to provide quotes for Aim-quoted companies.
The mining group Weatherly International was 2.875p better at 14.625p. Its shares resumed trading after a placing at 17p a share to raise £6.4m, associated with its reverse takeover of Namibian copper mining and smelting business Ongopolo.
Gap plugged
Shares in the troubled software company iSoft added 0.75p to 85p as it announced the appointment of Bill Henry as group chief operating officer, filling some of the void left by the ousting of chief executive Tim Whiston this month. A spokesman for iSoft said it has been looking for a chief operating officer for some time and the search for a chief executive goes on. Mr Whiston left after the company was forced to restate accounts for the past three years, wiping out profits. The consequent share price collapse, plus continued speculation about the firm's finances, has caused talk that iSoft is a bid target. Mr Henry used to work at MessageLabs, the e-mail filtering company whose chairman was also one of the senior advisers at private equity firm Carlyle.