MARKET REPORT: Shares jump as Hikma Pharmaceutical sell-off may be back on
After the Darwazah family put Hikma Pharmaceutical’s injectables business up for sale in March 2013, saying it had received a ‘significant amount of interest’ before surprisingly taking it off the market only weeks later, sector followers were of the opinion that it had effectively hoisted a For Sale sign above the entire group.
Shares of the Jordanian branded and generic drugs group touched 1635p before closing 33p higher at 1620p amid growing speculation that Meda Pharmaceuticals had approached the Darwazah family, which owns a controlling 42 per cent stake, with an offer rumoured to be in the region of £4.3billion or £22 a share. It knows it would take a sizeable premium offer for the family to sell out.
Speculation intensified yesterday after the Meda boss told the world that the group had built a sizeable war-chest for merger and acquisition activity.
The injectables business has always been the shining light within Hikma, with the FDA-approved facilities in Portugal performing well. The company in March guided the City for impressive 20 per cent growth in injectable revenues. Analysts have put a valuation well north of £700million on the unit.
AstraZeneca shed 46.5p more to 4631p on profit-taking and as US bidder Pfizer continued to take political flak on the chin. As far as many people in the City are concerned, Pfizer is working with its army of advisors on a knockout offer of £53-plus for the UK drugs giant that will be tabled by the weekend.
One fund manager said: ‘Forget government interference, Astra’s shareholders will decide its fate. They know that should Pfizer walk away, the shares would revisit £40 or trade even much lower.
‘Chief executive Pascal Soriot would then also come under extreme pressure to meet mega-optimistic forecasts which include increasing its annual sales target to £26.5bn in the next decade from £15.1billion a year ago. No chance. Shareholders should, and will, take what’s put on the table.’
Disappointing trading statements from HSBC, 7.6p easier at 596.5p, and Experian, 74p off at 1060p, while ongoing concerns about the situation in Ukraine made for a dull day among blue chips. The Footsie eased only 2.12 points to 6,796.44 and was helped in the later stages by gains on Wall Street of nearly 120 points.
Quotes stockbroker Numis Securities, 0.75p better at 298.75p, continues to thrive, helped by the buoyant IPO market. First-half profits soared 85pc to £16.7million on revenues up almost 60 per cent to $51.5million. The dividend is hiked 25 per cent to 5p a share. Numis worked on 23 equity issues deals in the first six months, including white goods internet retailer AO World.
Sam Smith’s stockbroking firm finnCap has also benefited from strong trading conditions over the past 12 months. It reported a record 92 per cent leap in operating profits to £5million on revenues 36pc higher at £15.5m. It raised £240million in the year, with 60 completed transactions, including three IPOs, and has now raised more than £1billion since its inception. It is now the number one broker and adviser on AIM by client numbers, with 122.
Bullabulling Gold has already told shareholders to knock back an offer of seven Australian cents per share from Norton Gold Fields, whose largest shareholder is China’s Zijin. Management believe Bullabulling’s major shareholders will hold on for a better offer.
A disappointing update on the performance of one of its acquisitions, Selah Genomics, a US business acquired last month, prompted selling of EKF Diagnostics, 7p or 21 per cent lower at 25.5p. Canaccord Genuity said the fall is overdone and represents a significant buying opportunity.
Trifast jumped 12.5p to 105p as dealers applauded its £22.5million earnings enhancing acquisition of VIC, manufacturers and distributers of fastening systems. Broker Westhouse Securities says its target price remains 125p.
Carphone Warehouse lost 12.7p to 322.8p as dealers awaited confirmation of a ‘merger of equals’ with Dixons Retail, 0.27p dearer at 49.98p before the Takeover Panel deadline of May 19. Dixons is due to update the market on May 15 with its fourth-quarter trading update, so the market might have to wait until then.
Africa-focused oil and gas producer Afren advanced 6.1p to 165.1p on revived takeover gossip, while Hardy Oil & Gas gushed 2.62p to 71.25p for the same reason.
Sellers were all over Mothercare like a rash again and the close was 12.5p down at 163p. Investors remain twitchy even after Monday’s ‘reassuring’ statement from the board that it expects to hit profit targets and has not breached banking covenants. Trading around a year’s low, the group could soon be swallowed by a private equity player.
- Michael Spencer’s interdealer broker ICAP came under selling pressure and closed 22.4p off at 394.4p after reporting a sharp decline in its foreign exchange trading volumes in April. Electronic broking volumes fell 47 per cent to £40.5million a day compared to last year and 23 per cent compared to March. For the 12 months to end-April trading, volumes were down 25 per cent to £52.2million. Full-year results are due next week.
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