Yesterday's Trading: Takeover tales distract dealers

By Geoff Foster for MailOnline
Updated: 03:31 EDT, 24 April 2009

Anything to take dealers' minds off the parlous state of the UK economy was welcomed with open arms following the calamitous Budget.

Geoff Foster: Rounding up yesterday's events on the stock market

Thankfully, a couple of takeover tales did. Speculators chased testing group Intertek 131p higher before the shares closed 78p better at 1004p on rumours of a £2.2bn, or £14 a share, bid from SGS, a Swiss rival and one of the world's largest consumer goods testers.

Acquisitive Intertek inspects, audits and tests for safety defects in many products and has benefited from US legislation that insists that imported toys be safety checked before they go on sale.

It reported a strong set of full-year results in March, which resulted in broker Altium upgrading current year pre-tax profit estimates to £165m from £148m.

Although a significant global recession would affect the business, the broker believes its global diversification will help mitigate the impact and provide the opportunity for growth.

If SGS does have Intertek on its radar, it will need to come to some arrangement with Lone Pine Capital, which owns 12.1pc of the equity. The hedge fund is run by Steven Mandel who surely would take £14 a share for his stock yesterday.

Hyperactive punters also homed in on Shire, sending shares of Britain's third biggest pharmaceuticals group up 50p before they ended 23p better at 868p. Viagra maker Pfizer is known to be on the acquisition trail and it was revived gossip that it could be about to fork out £15 a share for Shire, which sent pulses racing.

Shire has been popular with fund managers after recently entering at three year deal with GlaxoSmithKline ( 32 1 2 p easier at 987p) to copromote Vyvanse in adults, the treatment for attention deficit hyperactivity disorder. GSK is to provide 600 representatives, doubling the Vyvanse sales force, and introduce the product to 70,000 new doctors.

Showing plenty of Bulldog spirit on St George's Day, the Footsie advanced a further 51 points by lunchtime. But profit-takers moved in when Wall Street traded 82 points lower at the outset, leaving the close in London 12.43 points lower at 4,018.23. The Street of Dreams was rocked by data showing the pace of sales of existing homes in the US fell 3pc in March to a sharply lower-thanexpected 4.57m units.

Platinum giant Lonmin soared 118p to 1357p following a 30pc rise in second-quarter platinum sales and news of a £390m refinancing.

The funds will be used to lengthen the tenure of existing facilities. Investec advises clients to now take profits ahead of the interim figures on May 11.

Already up a staggering 50pc since December, the retail sector was given a further lift by much better- than- expected firsthalf profits from heavily indebted department store Debenhams, 13 3 4 p up at 77 1 4 p.

The figures lifted Next 94p to 1529p. Looking forward to the start next months of its 125th anniversary celebrations, Marks & Spencer rose 10 3 4 p further to 340p. Argos catalogue company Home Retail advanced 15p to 279p.

Acutely disappointing first- quarter figures from private banking and asset management group Schroders left the close 56 1 2 p down at 760 1 2 p. Pre-tax profits after exceptional items were 71pc lower at £12.2m. Funds under management, which started the year at £110.2bn, ended the first-quarter at £103.1bn. Shore Capital downgraded to 'sell' from 'hold' and advised clients to switch into Man Group, 11p off at 238 3 4 p, and/ or Henderson Group, 1p dearer at 84 3 4 p.

Clipper Windpower, which manufactures wind turbines, jumped 10 1 2 p to 76p after the Budget offered an additional £525m investment for offshore wind as part of a wider £1.4bn low carbon recovery plan.

Support services group Lavendon slumped 20p to 140p on a shock profits warning. The company has negotiated relaxed banking covenants with lenders in return for a 125 basis point increase in credit spread and a 1pc arrangement fee (£1.8m).

Almost 33m Vialogy shares were traded as they touched 6 3 8 p before closing 7 8 p up at 5 3 8 p.

Buyers piled in on hearing it has identified a second successful oil well in Texas using its proprietary QuantumRD data analysis technology.

Drilling on a third well is expected to start before the end of the second-quarter.

Speculative buying on takeover hopes helped mining minnow Sunkar Resources climb 2 1 8 p to 11 1 2 p.

SEMI-CONDUCTOR specialist Cyan improved 0.3p to 1.375p on a hefty turnover of 4.5m shares. Chief executive Kenn Lamb told investors that prospects are 'exciting'. The company now has the products, partners, customers and prospective customers that have more than sufficient capacity to drive growth and profitability for the business. He expects revenue growth to grow strongly in 2009.

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