A flurry of takeover activity boosted optimism in London today as the FTSE 100 Index soared to levels not seen for more than four years.
A proposed merger between the world’s two largest steel companies grabbed the headlines and sent Corus shares flying in the second tier, while trading in ports and ferries firm P&O and gases giant BOC were boosted by ongoing interest.
The mood sent shares in the FTSE up 64.2 points to 5786.8 its highest level since June 2001 – as the FTSE 250 Index continued its strong run to hit a new high of 9207.9.
In the second tier, shares in former British Steel firm Corus jumped 15% or 9.25p to 72p as investors eyed potential takeover targets in the steel industry.
It followed a daring £12.76bn bid by Mittal Steel majority owned by the UK’s richest man, Lakshmi Mittal – for its main rival Arcelor in a deal which would create a global steel giant worth $40bn (£22.5bn).
Back in the top flight, P&O topped the leaders board after Dubai Ports World upped its takeover offer. Shares rose 5% or 25p to 547p as investors welcomed the £3.9bn bid which trumped the £3.5bn proposed by Singapore-based PSA yesterday.
Industrial gases giant BOC Group was another to be firmly in the takeover spotlight this week after rejecting a 1500p-a-share bid proposal from German industrial rival Linde.
Its shares continued to reflect hopes that a deal can be done, up 30p to 1490p today.
And banking stocks continued their strong run, with Northern Rock leading the way – up 19.5p to 1034p – following optimistic comments earlier in the week while Barclays gained 11.5p to 612.5p and HBOS put on 13.5p to 994.5p.
Oil stocks added further buoyancy to the market, with Royal Dutch Shell and BP making gains of 32p to 1960p and 11p to 665.5p respectively.
But a restraining hand was extended by PartyGaming even though it impressed analysts with a 65% jump in quarterly revenues.
The owner of PartyPoker.com jumped 6% early in the session, but settled back to
stand 4.5p lower at 141p.
One of the most surprising moves came in the second-tier after car dealership Pendragon proposed a three-way combination with Lookers and Reg Vardy.
It made two approaches to Lookers after tabling a £450m cash offer for Vardy last month, but saw its overtures rejected each time.
All three saw their share prices move sharply, with Lookers up 18% or 92p at 601p, Pendragon ahead 11% or 53.5p at 536p and Vardy down 6% or 52.5p at 857.5p.
Shares in software firm Misys rose 7% or 17.5p to 252.5p after broker UBS lifted its target price and trumpeted the view that a break-up of the business could happen in future.
The day’s biggest blue chip risers were P&O up 25p to 547p, Smith & Nephew ahead 24.5p to 571p, Centrica up 10p to 272p and Sage Group up 10p to 274p.
The heaviest fallers were PartyGaming down 4.5p to 141p, Tate & Lyle down 15.5p to 573.5p, Morrisons off 2.5p at 189p and BSkyB 5.5p lower at 485p.
References: EGi News 27/01/06
