FTSE in-depth: Unilever up on £38bn bid talk

 

For years it was considered by many fund managers to be a sleeping giant or just plain boring, but yesterday consumer goods behemoth Unilever was in good demand.

Geoff Foster

Foster: The resilient Footsie traded above 6,000 again.

It attracted buyers and rose 31p to 1971p amid wild rumours from across the pond that Procter & Gamble could be lining up a mega £38bn or £30 a share break-up bid for one of its biggest rivals.

As sceptics quickly said that anti-trust authorities would not take kindly to such a deal, they heard whispers that P&G has apparently already lined up buyers for parts of Unilever it does not want or would have to sell to placate competition authorities.

Rumours were rife earlier in the year that Unilever - whose brands include Lipton tea, Vaseline, Lux and Domestos - was about to launch a £34bn bid for Colgate.

That would help double its sales from £40bn to £80bn and help accelerate the portfolio shift to personal care, consolidate its emerging markets strength and provide scale in the US.

Unilever's last big purchase was the £2.3bn acquisition of Alberto Culver, the company behind the likes of VO5, Tresemme and Simple.

It made it the number one in hair conditioning.

Cincinnati-based Procter & Gamble, makers of dozens of household staples including Pampers nappies and Fairy washing liquid, is therefore keen to pounce on Unilever before its chief executive Paul Polman can splash any more cash.

P&G's last major corporate deal was the £1.4bn sale of its Pringles crisps business to Diamond Foods. It now wants to expand its range of body-health and beauty products and so is ready to take out Unilever and has lined up Nestlé and Reckitt Benckiser to swallow the unwanted parts of the business.

The resilient Footsie initially traded above 6,000 again following reports that Greece would soon receive its second bailout in order to meet its debt obligations.

But after touching 6,009.98 it drifted on profit-taking to finish 51.12 points higher at 5,989.99 after dealers saw a surprising fall in US consumer confidence in May.

Wall Street shrugged it off to trade 128.29 points up at 12,569.90 by the closing bell.

Precious metals processor Johnson Matthey was top of the Footsie tree, closing 94p higher at 2119p on expectations of record annual results when the group reports tomorrow.

Hoping to hear confirmation today of disposals with solid third-quarter figures, plumbing giant Wolseley jumped 67p to 2058p.

Worries that the bank's decision to place its bonus scheme under review could see its top talent seek pastures new left part-nationalised Lloyds Banking Group 0.76p cheaper at 52.00p.

Drugs giant GlaxoSmithKline improved 3p to 1320p despite a Goldman Sachs sell recommendation and target price of 1110p. The US broker says GSK is trading at a 13% premium to the pharmaceuticals sector, which is unwarranted.

It expects GSK to face headwinds on Advair, as US sales decline on Food & Drug Administration restrictions and increased competition, and European generic launches expected in the next 6-9 months.

Reports of a pending upbeat circular helped online sports betting group Betfair jump 63.50p to 839p. Online grocer Ocado added 12.7p at 222.70p, while online fashion retailer ASOS rose 28p to 2367p ahead of tomorrow's preliminary results. Analysts expect ASOS to report pre-tax profits in the region of £28m, up from £20.3m.

Avanti Communications soared 26.50p to 418.25p after announcing it has signed a three-year contract with Avonline for the sale of capacity on Avanti's HYLAS 1 satellite to supply broadband services across the UK.

Gearbox company Torotrak accelerated 3.50p to 51p following confirmation its continuously variable transmission technology forms part of car giant Volvo's evaluation of flywheel technology.

Obviously gluttons for punishment, punters chased Falklands oil explorer Desire Petroleum up to 13.88p before the shares closed at 12.50p. They were sucked in yet again by positive comments made by chairman Stephen Phipps at the AGM.

He revealed that the company's 3D seismic acquisition programme is now complete and, although it is still very early days interpreting the data, two new leads have been identified so far. The year's high was 180p.

Profit-taking following solid results left life science minnow ValiRx 0.015p easier at 0.72p. Since the year-end the company raised £3.3m to accelerate the development of its therapeutic compound programmes.

Ahead of a name change to Pivot Entertainment, First Artist firmed a penny to 30.25p. The company says the new identity better reflects the restructured business.

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