FTSE in-depth: Takeover talk lifts Fiberweb
Corporate activity in the mid-cap area of the market is certainly alive and kicking, and dealers are aware that several mouth-watering deals are close to fruition.
Geoff Foster: Profit-taking was the order of the day.
Disposable nappies and sanitary towels company Fiberweb jumped 8½p to 65¾p amid vague gossip that Israeli rival Avgol, which tabled a 100p a share offer in April 2008, before walking away because of the credit crunch, is having another look.
The company is enjoying a new lease of life after enduring a disastrous period shortly after its split from parent BBA, which took in profit warnings.
Fiberweb is the one of the world's leading producers of non-woven fabrics, ranked sixth largest in revenue terms behind names such as DuPont and Kimberley-Clark. In a pre-close trading statement yesterday it said that it expects to 'exceed expectations for the full year to end-December 2009'.
Broker Killik is a buyer because of its defensive qualities and its 6.6% dividend yield. Analyst Mike Savage reckons the group has found its personal hygiene product to be particularly resilient during the recent downturn. Times will need to be extremely hard indeed for such products to be sacrificed on account of economic necessity.
Profit-taking was the order of the day as blue chips gave back some of the gains attained over the past few days. The Footsie closed 29.57 points off at 5,285.77 after Wall Street traded 17 points lower in the early stages on revived inflation concerns. The New York State Manufacturing index dived, putting a question mark over the momentum of the recent factory revival.
Legal & General topped the Footsie tree with a 2p gain at 77.3p on a revival of the ancient Resolution (0.3p easier at 78.7p) takeover tale. A Citigroup investment recommendation for 2010 lifted BG Group 6½p to 1092p. The broker points out that BG's performance since April has stagnated, lagging the oil sector by 16% and the UK market by 27%. It now looks heavily oversold and it lifted its target price to £13 from £12.50p.
HSBC fell 18.1p to 704.47p after credit ratings agency Fitch warned that UK banks could face downgrades because of their exposure to the commercial property sector as loan losses soar next year. Barclays shed 7.1p to 292.56p.
British Airways was sold down to 194.4p and landed 4.4p off at 196.6p as the struggling airline decided to take legal action to try and avert a disastrous 12-day cabin crew strike which is set to begin on December 22.
Rumours that an up-beat broker's tome will land on fund managers' desks this morning helped construction company Morgan Sindall erect a gain of 34½p to 580.7p.
Carillion, one of the leading players in UK outsourcing, put on 4.2p to 303½p. Citigroup upgraded to buy and raised its target price to a 'conservative' 365p, believing the current valuation is simply too low.
In the dig-house for months, housebuilders remained friendless with Barratt Developments ¾p lower at 109.2p. Sentiment was not helped by the RICS survey of estate agents. Broker Investec said the November survey indicates sales rates have flattened, the rate of improvement in buyer enquiries is slowing down and instructions to sell are up for the sixth month running, suggesting supply and demand are starting to balance out.
Consumer finance company International Personal Finance rose 12.4p to 214p. If present trends continue into the last three significant trading weeks of the year, full-year results will exceed expectations.
Meanwhile, finance house Private & Commercial Finance edged up ¼p to 6¾p on positive half-year figures. Total borrowings have been reduced by £8.2m and its supportive banks have committed facilities of £126m.
Private client stockbroker Brewin Dolphin lost 10p at 138.7p following a £14.3m placing at 135p a share. The fund-raising is line with the board's policy to maintain a significant margin above the required level of regulatory capital.
Profit-taking in the wake of the trading statement left support services group Connaught 11½p off at 365.6p. The group is performing in line with management expectations, with new contract wins of £312m and a record pipeline of £4.5bn.
Wallpaper and fabrics company Walker Greenbank jumped 2p to 20¼p on a bullish trading update.
AIM-listed HR software and solutions provider OneClickHR improved ⅞p to 10½p on news of an agreed 10½p a share cash bid from ADP Network Services, a subsidiary of Automatic Data Processing, one of the world's largest providers of business outsourcing solutions.
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