FTSE-in-depth: Adecco tipped to recruit Hays

By Geoff Foster for MailOnline
Updated: 03:08 EDT, 10 June 2011

Punters piled into Hays an hour or so before the close as mutter from the gutter suggested that ubiquitous Swiss human resources group Adecco could be lining up a £2.2bn or 160p-a-share cash bid.

Geoff Foster: Mutter from the gutter says Adecco could make a play for Hays

Shares of the London-based recruitment firm retrieved an early fall to close 0.6p better at 106.1p as turnover swelled to 7.2m shares.

Hays operates in 30 countries but the lion's share of its business comes from the UK and Australia, where the group has operated for more than 20 years, and Germany.

Chief executive Alistair Cox has been busily building up its presence overseas, particularly in the Asia-Pacific region, which has been ignored by the market, but not Adecco.

The company's first-quarter figures showed that overall fees grew 16% on a like-for-like basis, but in the UK and Ireland fees actually declined by 2%.

Broker Altium Securities said at the time that UK profitability is structurally challenged and surgery is required but unlikely.

Adecco's last major acquisition was its £810m purchase of US staffing group MPS. Dealers will remember that it walked away from a £1.3bn or 400p-a-share bid for Hays's rival Michael Page (9.5p down at 526.5p) in September 2008. Ever since, analysts have said it would one day return for another leading UK player.

Hays has underperformed and looks vulnerable, and recent rumours have suggested that former chief executive Ronnie Frost is a seller of his 5.5% stake.

After the Bank of England, as expected, left UK rates on hold at 0.5% for the 27th consecutive month, the Footsie rallied 47.45 points to 5,856.34.

Sentiment was boosted by an early 98-point recovery on Wall Street as traders in New York celebrated surprise news that the US trade deficit narrowed to $43.7bn (£26.7bn) in April. Economists had been shooting for a figure just short of $49bn (£29.9bn).

Buyers pumped up the volume at Weir Group following an RBC Capital Markets recommendation and the close was 94p up to a 52-week peak of 2050p. It was also announced that Chinese authorities have issued £1m fines to two companies and jailed individuals for making illegal copies of Weir pumps.

Reports of a pending upbeat circular lifted plumbing giant Wolseley 64p to 1971p.

Dragged lower by continuing concern about the escalating cigarette price war in Spain, Imperial Tobacco fell 29p to 2110p. Imperial's Spanish market share was 29% in factory-made cigarettes and 32.3% in fine-cut tobacco in 2010. Broker Matrix expects Spanish profits will fall by a little over 15% in 2011.

Shares of TUI Travel lost altitude following confirmation of its relegation from the Footsie and closed 4.5p lower at 218.2p. Its replacement Tate & Lyle edged up 0.5p to 651p.

Anglo Pacific rose 16.9p to 316p on further consideration that the first royalties from Orvana Minerals Corporation's El Valle-Boinas gold-copper mine in northern Spain are expected to commence in the quarter ending June 30.

Ahead of its FTSE 250 reweighting, Betfair climbed 30.5p to 830p.

Buying on hopes for mouthwatering annual profits on Monday helped Majestic Wine rise 9p to 448p. Collins Stewart has a target price of 490p, with analyst Wayne Brown confident results will be ahead of expectations and there is more for investors to go for.

Chief executive Roger Siddle's purchase of a further 761,150 shares at 6.5362p a pop helped retailer Findel jump 1.74p more to 8.05p. Investors followed Siddle's lead amid hopes that, sooner rather than later, he will float off Kitbag, the group's thriving online retailer of sportswear and official football kits.

Peppa Pig company Entertainment One firmed 0.5p to 161.5p on a Peel Hunt target price upgrade to 190p from 170p. The broker lifted its 2012 earnings forecast by 5% to £47.5m and earnings per share by 2% to 13.9p. It reckons the company remains an exciting growth story in the global contents market.

Monitise added 2p at 28.25p after the global mobile banking and payments company announced a new five-year agreement with Visa. Parseq, which provides mobile and online banking software and outsourcing solutions to clients such as Orange, Lloyds Banking Group and O2, firmed 0.5p to 6.875p on hearing it is set to commercialise its 10,000 sq ft state-of-the-art data centre.

New World Oil & Gas, investor in the oil and gas sector, jumped 3.25p to 8.62p. It has a competent person's report from RPS Energy, which highlights the prospectivity of the Blue Creek project in north-west Belize.