FTSE in-depth: AZ float makes Goldman proud

By Geoff Foster for MailOnline
Updated: 03:26 EDT, 8 March 2011

The once great Wall Street behemoth Goldman Sachs may have had some disastrous Initial Public Offerings in recent times but AZ Electronic Materials is definitely not one of them.

Foster: Footsie advanced 53 points before drifting lower after Wall Street opened 30 lower.

In complete contrast to the mega-flops which were classroom technology group Promethean World and online retailer Ocado, the group which makes chemicals used in Apple's iPad has been a big success.

Floated last October at 240p, the shares last week touched a high of 327.6p but yesterday succumbed to profit-taking to finish 4.9p cheaper at 304.5p.

Sellers of the stock could live to regret it. Rumours doing the rounds suggest that not only are some big contracts coming the group's way, but a major US electronics group is running the slide rule over the company.

Private equity group Carlyle bought AZ from Clariant in 2004. Carlyle, along with Vestar Capital Partners, which each owned 41.8% stakes in the company, both banked £51.5m when AZ floated last year. Each retained a 21.5% stake in the company.

AZ must look attractive to any cash rich predator. It is the only global flat panel display (FPD) materials supplier with full service manufacturing, distribution, research and development, sales and customer service capabilities in all of the key flat panel display countries in Asia.

It is also the only major FPD materials supplier with local manufacturing capabilities in China.

Shrugging off escalating tension in Libya and a hike in the oil price to above $117 a barrel, the Footsie instead initially focused on upbeat corporate news including impressive figures from testing equipment group Intertek, 95p higher at 1995.5p.

It advanced 53 points before drifting lower after Wall Street opened 30 lower. The close was 16.61 points off at 5,973.78.

Luxury goods group Burberry strutted its stuff with a gain of 42p at 1203p. Dealers were impressed with the generous £3.18bn price paid by LVMH, the world's largest luxury goods company, for Italian jeweller Bulgari.

LVMH is buying 50.4% of Bulgari, issuing 16.5m shares in exchange for 152.5m shares held by the Bulgari family.

Profit-taking left Supergroup 48p easier at 1490p. Famous for its Superdry fashion brand, the company last month reported a 87% leap in total sales to £81.7m in the three months to £81.7m. Chief executive Julian Dunkerton said that the firm's youth demographic was the least affected by the UK's gloomy macro economic outlook.

He does not expect growth to slow. Worries about trading dragged online retailer Ocado 5.5p lower to 207.15p.

Confirmation of a £16.30p plus 20p dividend or £745m bid approach from its largest shareholder, Arcus Infrastructure Fund, helped Tilbury Docks owner Forth Ports steam 82p ahead to 1604p.

Kalahari Minerals soared to 309p on news of a bid approach, possibly from China, before closing 24.75p better at 285p. Dealers heard the take-out price could be nearer 325p a share.

The situation is complex with Rio Tinto, which owns 11.5% of Kalahari, currently in talks to merge its subsidiary, the Rossing Uranium Mine, with Extract Resources, in which Kalahari has a 43% stake. The buyer, rumoured to be Rio, wants to get its hands on Kalahari's Namibian assets.

After Charles Stanley Securities lifted its target price to 440p from 370p, Ricardo firmed 3p to 393p.

Analyst Richard Hickinbotham expects earnings upgrades in the short term and says that emissions and CO² legislation is strengthening and permeating new sectors and this provides a positive long term framework for one of the world's leading automotive consultants.

News of a £90m placing at 250p a share left Chariot Oil & Gas nursing a 35.5p fall at 269.75p. Broker Matrix said that raising equity now makes complete sense and the market now awaits news of a farm-out agreement by the end of the first-quarter.

After announcing it has temporarily suspended its operations at its Angovia mine in Côte d'Ivoire, due to the political situation in the country making it difficult to sustain operations, Cluff Gold was sold down to 101p before closing 11.75p lower at 109p. Seymour Pierce reassured shareholders with a buy recommendation.

Analyst Asa Bridle said the mine is significantly the smaller of Cluff's two operations having produced only 20,000 ounces in 2010.

With production continuing at Kalsaka and significant exploration ongoing around that mine and at Baomahun in Sierra Leone there is plenty to keep the Cluff story interesting in addition to the continuing strength of the gold price.