Yesterday's trading: Help for FTSE from Mears
Domiciliary care - home help to you and me - is essential for pensioners. To be able to remain in your own home in old age is a godsend, with the alternative an admission to a nursing home. There are 5,000 providers in the fragmented care market place, which is currently worth around £2bn. Consolidation is on the cards.
Social housing leader Mears, one of the biggest and most successful companies on AIM, has realised the market's vast potential and agreed to fork out for Careforce, a provider of domiciliary care services, predominantly to the elderly, to local authorities. News of the 160p share exchange offer or 150p per share cash alternative lifted the stock 37p to 148½p.
Mears is partly financing the £25.2m purchase via the placing of 7.5m shares at 334p. New institutional investors M&G, Insight and Majedie all took stock in the placing which left the underlying shares 5p easier at 346½p, after 335p.
Careforce boss Mike Rogers, after selling his 16.3% stake, trousers £3m-plus and joins the Mears board. Meanwhile, it yesterday reported a 28.2% rise in annual profits to a record £12.5m and a 27% dividend increase to 3.3p. The order book also stands at a record £1.1bn. Analysts forecast current year pre-tax profits of £15m on turnover of £300m.
The fragile Footsie was in need of some tender loving care after heavy overnight falls in the Far East exerted further downward pressure on the friendless London market. Down 285 points, or 4% last week, it lost a further 126.6 points to trade below 6,000 before elevenses. It later rallied to close 57.5 points off at 6,058.7. The FTSE 250, down 553 points last week, fell 188.2 points more to 10,857.9.
Wall Street lost 75 points at the outset, not helped by news that sub-prime lender New Century Financial is under investigation by federal regulators. The index later rallied to trade 32 higher.
As the price of copper slumped to just under $5,850 a ton compared with the recent peak of £6,250, Lonmin slumped 96p to 2966p. Vedanta Resources fell 37p to 1178p and Antofagasta was 12½p to 445½p.
Cairn Energy slipped a further 43p to 1550p as it braced itself for relegation from the prestigious Footsie tomorrow. Marks & Spencer, which in the short term has ruled itself out of launching a bid for Sainsbury's (3p off at 525p) unless CVC-led private equity consortium shows its hand, retreated 17½p to 659½p. Buying in anticipation of a healthy dividend increase with the annual results on Thursday helped Royal & Sun Alliance climb 5 ¾p on an otherwise dull day to 154p.
Life insurer Resolution improved 2½p to 615½p amid continuing speculation about a possible bid from AIG. Apparently the American insurer, which sponsors Manchester United, has between £7 and £10bn of surplus cash and intends to return £4bn to shareholders. The rest will be used for acquisitions. Resolution is valued at £4.5bn.
Still hoping that 3i (21½p easier at 1100p) will counter the approved £1bn takeover by U.S. buyout firm Apollo, estate agent group Countrywide rose 20p to 600p.
Merrill Lynch advised clients that spreadbetter IG Group is now looking a lot cheaper and put a 12 month target price of 310p on the stock. They piled in and the close was 5p dearer at 265p.
Awaiting further developments following the board's strong rejection on Friday of Warner's new 260p a share offer, music giant EMI lost 10½p to 235¾p. Punters still hear that a private equity consortium bid north of 275p a share could soon be tabled.
Disappointed with the delay in returning cash - 13p a share - to shareholders, Filtronic shed 7¾p to 134p.
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Pinewood Shepperton fell 6¼p to 229¾p after warning that new tax legislation may affect film start-up financing. Her Majesty's Revenue and Customs signalled on Friday that there would be a significant change to the treatment of trading losses of individuals in partnerships. This will affect the ability of individuals in partnerships to claim sideways loss relief with immediate effect.
Profit-taking following the results left IP video and alarm management solutions group IndigoVision 112½p lower in a thin market at 850p.
Toledo Mining rose 7p to 138½p on hearing that a second shipment of laterite ore departed the Berong anchorage area on Friday. The 51,000 tons was loaded in under a week and is destined for the Chinese market.
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