Market report: Friday close
A ripple of excitement went through the Square Mile today on talk that Benfield, which boasts of being the world's leading reinsurance broker, has received a bid approach from none other than Goldman Sachs.
The mutter from the gutter claimed Goldman's private-equity arm had made an offer worth 313p a share, which would have valued the Bishopsgate-based insurer at almost £700m. Benfield responded to the speculation with a jump of 20p to 290p, after briefly touching 305p.
But it seems the talks broke down last week after Goldman failed to secure the finance. Not everyone was able to work up much enthusiasm for the deal. Seymour Pierce reckons that if Goldman Sachs couldn't raise the funds, then it was unlikely other private-equity bidders could either.
The broker reckons Benfield's long-term growth prospects are 'considerable'. It did not believe the management, which holds 17% of the shares, would accept any price under 400p a share. At current levels, Benfield's management might consider a share buyback.
Investors generally decided to take profits having enjoyed some useful gains this week. This combined with an uninspiring performance on Wall Street overnight, left the FTSE 100 index nursing a loss of 19.6 at 6466.8.
Deutsche Bank has repeated its hold rating on bid candidate J Sainsbury, 2p lighter at 577½p, but cut its target by 50p to 600p ahead of the supermarkets chain's second-quarter results. The broker blamed its downgrade on the credit crunch which has reduced the options for the Sainsbury board.
Trucker Christian Salvesen this week conceded that it had received several takeover approaches. The shares fell 1½p to 63p, still shy of the 71½p peak reached in April, but they have come up from a low of 51p in the past week.
Rival Wincanton, up 7¾p at 389½p, is the closest suitor Salvesen's board can see in the rear-view mirror. At these levels, Salvesen is valued at £171m.
Tom Cross, the silver-tongued chief executive of Dana Petroleum, up 69p at 1162p, is still talking the talk for his acquisitive explorer and producer. It made £55m of profits from 26,000 barrels a day of production in the first half of the year and plans to be up to 45,000 barrels a day by the end of the year.
More importantly, Dana is sinking wells at its 100-owned Rinnes field in the northern North Sea this autumn and after the turn of the year at its interests in the Nile Delta, which it shares with Gaz de France.
Meanwhile, oil explorer Sibir Energy, the biggest company on Aim, has announced plans to graduate from the junior market to a full listing. It rose 7p to 512½p on the back of doubled first-half net profits.
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Taking stock – sectors at a glance
BANKING AND FINANCE
Bear Stearns says clients should stock up on Prudential as the business continues to expand in Asia. The investment bank has upgraded the insurance company from peer perform to outperform and set a 900p price target, up over 20% on the current share price.
CONSUMER
Starbucks and PepsiCo are expanding their joint venture, which will enable them to provide Starbucks ready-to-drink beverages to Cina via PepsiCo's distribution channels. There are currently 540 Starbucks stores operating in Greater China.
ENGINEERING
Dresdner Kleinwort has raised Smiths Group from hold to buy with a target of 1089p. The broker says times are changing for the company. The disposal of the aerospace business has altered Smiths, but the change of chief executive may prove to be 'transformational'.
HEALTH
Landsbanki considers Sinclair Pharma a buy following full-year results, believing the stock looks undervalued. The pharmaceuticals company, which acquires medical products and prepares them for sale, is set to launch a number of new lines.
LEISURE
'Absolutely awful'; was an analyst's verdict on SCi Entertainment's results after it failed to sell any major titles. The news was not all bad though, as the computer games producer, famed for the Lara Croft franchise, reported receiving a number of takeover approaches.
TELECOMS
Alex Tupman, the chief executive of AIM listed AT Communications Group, has picked up a further 330,000 shares at 45p each, making the buy worth a total of £135,000. It increases his stake in the business communications specialist to 12.07 million shares, or 15.6% of the company.
NATURAL RESOURCES
Venture Production chief operating officer at Jonathan Murphy has bought 10,100 shares for £69,286, or 686p each. He now owns 1.4m or almost 1% of the oil and gas production company. Chief executive Michael Wagstaff has bought 7,500 at 698¼p and now owns 2.41m (1.69%).
TRANSPORT
British Airways is flying high after purchasing 12 Airbus A380 and 24 Boeing Dreamliner planes. Analysts believe the airline must have received a substantial discount on the aircraft, which will be delivered from 2010 to 2014, and will replace some ofthe long-haul fleet.
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