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FTSE in-depth: All aboard Stagecoach on bid talk

By Geoff Foster for MailOnline
Updated: 03:31 EDT, 15 April 2011

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Green lights flashed at Stagecoach as punters stepped on the gas after hearing revived talk of a £2.3bn or 320p a share cash bid from Singapore's ComfortDelGro, the world's second largest transport group.

Shares of the UK's bus, coach and rail giant, accelerated to 233.50p before closing 11.1p higher at 228.80p amid whispers that Brian Souter, the 57-year-old multi-millionaire co-founder, has been approached to name a price for his 10.8m shares, or 15.1% stake in the company, currently worth around £237m.

ComfortDelGro owns SBS Transit, one of the leading bus operators in Singapore.

It also owns the Metroline, Armchair and Thorpes subsidiaries which run London Bus Services but apparently wants to expand its services in the UK.

Stagecoach has 16% of the bus market and 25% of the rail market, including its 49% stake in Virgin Trains.

It operates around 8,100 vehicles and covers over 90 major towns and cities in the UK, carrying 2.5m passengers daily.

Renewed bid speculation accompanied an upbeat note from Liberum Capital. It waxed lyrical about Stagecoach's balance sheet potential ahead of the pre-close trading statement on Thursday.

The broker believes the probability of Stagecoach returning capital to shareholders is increasing. It could return £290m, or 40p per share, in the form of a buy-back, special dividend or, as it has previously, a B share scheme. A B share scheme is favourite as it returns capital immediately.

Liberum also says Stagecoach could be a large winner out of the current franchising round. It has been short-listed for both the Greater Anglia and the West Coast mainline franchises.

The Footsie was slammed into reverse by overnight losses in the Far East and afternoon news of a surprising jump in US jobless claims, which rose 27,000 to 412,000 in the week to end 11th April.

A nasty fall of 251p or 7.5% to 3115.50p in constituent Reckitt Benckiser following the shock retirement of chief executive Bart Becht did it no favours either. It closed 46.64 points lower at 5,963.80 after Wall Street traded 29 lower in early trading.

Reports of a pending bullish broker circular ahead of Rolls-Royce's AGM in early May helped shares of the aerospace group climb 9.50p to 633p. A revival of private equity takeover gossip lifted security group G4S 3.8p to 272.4p.

Strongly supported earlier in the week on relief that the Independent Commission on Banking Report was a lot less onerous as feared, Bob Diamond's Barclays succumbed to profit-taking and lost 7.05p to 301.80.

Financials in general were a little queasy on growing concern that Greece will have to restructure its debt.

There was no stopping Asos as shares of the online fashion retailer advanced £1 further making a two-day surge of 343p to a alltime high of 2050p on further consideration of excellent first quarter figures.

International sales jumped a staggering 161 per cent to £48.4million, leapfrogging UK sales for the first time.

Gulf Keystone initially gushed to 182p and closed 11.75p better at 166.50p following an upward revision of the oil in place for the Shaikan field in Kurdistan, Iraq. I

t increased the most pessimistic estimates from 1.9bn barrels to 4.9bn, and the most optimistic from 7.4bn to 10.8bn. Broker Mirabaud Securities' target price is 215p.

Electronic equipment group Volex rose 14.25p to 294.25p following a strong trading update. Operating profits for 2011 will meet market expectations of £16.8m and the board expects profits growth to increase in line with forecasts for 2012.

Broker Charles Stanley Securities reckons a return to the dividend list must be on the cards. Its target price is 420p.

Engineer Renold eased 0.75p to 36p despite reporting that full-year profits and net debt will be ahead of expectations.

Founder Samuel Kaye's purchase of 300,000 shares at 31p a pop failed to excite restaurant chain Tasty, 0.50p easier at 34.50p. Kaye now owns 19.1% of the company which operates the oriental-themed DimT and Wildwood pizza restaurants. He is also on the board of Prezzo (0.13p off at 62.75p), in which he has a 3.6% stake.

Kaye founded Tasty with brother Adam in 2006. The two made a small fortune in 2004 by selling the ASK (Adam & Sam Kaye) pizza chain, which they founded in 1993. Tasty will probably go the same way.

Zetar added 2p at 201p after swallowing Derwent Lynton, a chocolate manufacturing business in Derby, for £0.8m.

As its largest 34% shareholder Glencore kicked off plans for London's biggest ever flotation, miner Xstrata appeared unimpressed at 1467.50p, down a penny.

It remains Nomura's top pick in the sector. The Japanese broker has a target price of £22 and says recent site visits to projects in Australia and the Koniambo nickel project in New Caledonia has convinced it that management will deliver major growth.

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