FTSE 100 watch: Takeover buzz props up Footsie
iNVEZZ.com, Thursday, May 29: Britain’s blue-chip index has gained ground today, buoyed by takeover speculation.
Artificial hips manufacturer Smith & Nephew (LON:SN) has climbed to the top of the FTSE 100 leaderboard after the chief executive of US orthopaedic implant maker Stryker Corp (NYSE:SYK) confirmed that his company had been evaluating a bid for the UK group.
**FTSE 100 up amid takeover talk**
As of 12:35 BST, the UK’s benchmark index had gained 24.05 points to be 0.35 percent up at 6,875.27.
Shares in Smith & Nephew have rallied today after Stryker’s chief executive told Fox Business that his company had been in the early stages of considering a transaction. (Smith & Nephew share price rises as Stryker CEO confirms interest) The Michigan-based company, however, issued a statement yesterday, confirming that it did not intend to make an offer. Smith & Nephew’s share price currently stands 4.48 percent higher at 1,037.00p.
“The improving economic backdrop and the pickup in business confidence are likely to be supportive for a pickup in M&A activity,” Robert Parkes, equity strategist at HSBC, told Reuters. “In addition, valuations are not stretched and there appears to be an element of pent up demand as a result of the depressed level of deal activity we have seen over the last few years.”
The Weir Group (LON:WEIR) is also among today’s standout Footsie risers, a day after it walked away from a tie-up with Finland’s Metso (HEL:MEO1V). Reuters quoted bankers as explaining that a failure to merge with the Helsinki-quoted company could make Weir, already a frequent subject of takeover speculation, a target for big players such as General Electric (NYSE:GE) or Honeywell (NYSE:HON) which are keen to access the Scottish engineer’s lucrative position in US shale. Weir’s share price has gained 1.11 percent to 2,612.59p so far today.
Investor sentiment has been subdued elsewhere in Europe with the Euro Stoxx 600 having posted modest gains so far today. Investors are staying cautious ahead of the European Central Bank’s (ECB) policy decision due a week from today, while markets in Switzerland, Sweden and Denmark are closed for Ascension Day.
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“The risk remains that markets are overestimating the ECB’s ability to deliver any punch next week,” CNBC quoted Michael Hewson, chief market analyst at CMC Markets, as saying in a note. “Particularly in light of last weekend’s EU election results the likelihood of any form of effective stimulus can be ranked from anywhere to between slim and none.”
Shares in Kingfisher (LON:KGF) are trading deep in the red today after the company posted retail profit of £142 million for the 13 weeks to May 3, 2014, just below the company-compiled consensus forecast of £145 million. (Kingfisher share price: DIY retailer reports strong start to year)
Reuters quoted Cantor Fitzgerald analysts as saying in a note that the results had been “marginally behind market and our expectations because of the margin impact to UK profits and a weaker than expected performance in France and China”. Kingfisher’s share price has lost 4.70 percent to 397.68p so far today.
Shares in Aggreko (LON:AGK) have fallen after the company announced that it had appointed British Gas boss Chris Weston as its new chief executive. (Aggreko share price: Company appoints British Gas chief as CEO) Aggreko’s share price currently stands 3.09 percent lower at 1,695.00p.
**The FTSE 100 was 0.31 percent up at 6,872.30 points as of 13:33 BST on May 29, 2014.**