Yesterday's trading: Pearson sell-off talk
Hold the front page. According to one of the rumours flying around about Pearson last night, its very own 'pink 'un' could be the splash headline today.
As shares in the media giant advanced strongly to 839p before closing 24½p higher at 824½p, dealers heard a jackanory that Dame Marjorie Scardino plans to commemorate her 60th birthday next Thursday with confirmation that the (now) profitable Financial Times and its website is to be put up for sale at around £650m.
Management buy-out and KKR break-up rumours also did the rounds, but buyers preferred to focus on the possibility of the City bible at last being offloaded. It returned to a £2m profit in 2005 after a reduction in costs and following a more benign advertising market helped it wipe out a loss of £9m incurred in 2004.
Scardiono has been at Pearson for 10 years and fund managers expect a corporate restructuring soon. She recently raised £286m from the sale of Pearson's government arm which handles applications from US students for financial aid. If the FT was sold, analysts say it would boost earnings by 7% and enable Scardino to continue building a leading position in the US education business.
In March 2002 she said the FT will be sold 'over my dead body'. Now considered to be well past her sell-by date, shareholders are ready to force her hand.
The Footsie was on its knees at lunchtime, down 52 points on continuing worries about another ¼% hike in interest rates next month. Renewed weakness in the oil price, which traded as low as $50.75 a barrel, its lowest level since May 2005, also depressed sentiment. However, some bargain hunters appeared when Wall Street reversed an initial 32-point fall and the London close was only 11.2 points off at 6204.5.
The Dow came under early pressure when news of a stronger-than-expected gain in core wholesale prices weakened the case for an early cut in US interesrt rates.
Morgan Stanley believes there is a 30% more up side at Man Group and so shares of the hedge fund giant rose 9¾p to 531¾p. AHL, its flagship fund, last week reported at 4.3% gain, its biggest rise since April.
Cautious comments on the sector from UBS unsettled banks as did the trend towards dearer money. Lloyds TSB shed 6p at 584p, while Alliance & Leicester dropped 29p to 1104p.
Let the good times roll, at least for Plant Health Care. Shares of the agricultural technology company soared. 54½p to 244p after signing a transformational global licensing deal with German chemicals giant Bayer for its lead product, Myconate. Who would have thought it possible back in 2004 when PHC withered to a low of 42p after a shock profits warning was wheeled out only three months after the stock was floated on Aim at 52p?
Shop broker Evolution was heavily criticised in some quarters at the time but has stood steadfastly by the company and its support was vindicated by the Bayer deal. Analyst Michael Aitkenhead swiftly upgraded his target price to 305p from 250p and advised clients to keep on buying.
Myconate is a soil additive that is proven to help crops like corn and soyabeans produce better yields, especially under adverse environmental conditions. Aitkenhead believes PHC has a potential blockbuster on its hands. Bayer is the idea licensee due to its market-leading position, global reach and marketing enterprise.
Media company Mecom, run by former Mirror Group chief executive David Montgomery, edged up ½p to 75p on massive turnover of 418m. Brokers Cenkos Securities and Numis Securities placed Norwegian conglomerate Orkla's near-20% stake at 68p a share with some old and new institutional investors. Mecom acquired Orkla for £675m last July.
Mecom is one of ABN Amro's recommendations for 2007. Montgomery has bought up newspapers in Norway and Germany and is said to be doing all the right things.
Now trading 50p below the year's high, oil services group Abbot (¼p off at 290p) is trongly believed to be attracting the attention of a cash-rich private equity group.
A lumpy 12m Billing Services changed hands and the close was 1p dearer at 29¼p. Dealers are convinced at 35p-a-share cash bid for the telecoms specialist is just around the corner.
• Ouch! broker Evolution says Proteome Science's share price has been driven by rumours and speculation and not events. It estimates the company, which analyses proteins to see if it can identify them as markers for illnesses, is surviving by virtue of a loan from chief executive Christopher Pearce. A deal has been 'imminent' for more than 18 months now. Its target price is 25p compared with 3 1 yesterday's close of 50¾ p, down 41 4/p.
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