17.30 (CLOSE): Shares in AstraZeneca have taken a hit as investors digested the announcement that US rival Pfizer had thrown in the towel on its £69billion takeover attempt of the UK pharmaceuticals company.
The formal statement from the US drugs giant over the Bank Holiday weekend sent shares in the UK-based pharmaceuticals maker down 76p, to 4252p, leaving its market value below £54 billion – more than £15 billion under its American suitor’s offer.
The wider FTSE 100 Index was in a better mood after the Bank Holiday weekend, up 29.2 points to 6844.9, as it caught up following gains on European markets on Monday.
German high: Frankfurt’s DAX 30 index hit a record high on Monday helping spur the Footsie higher today.
Investors were buoyed by the hopes that Russia’s acceptance of the election of a new Ukrainian president would lead to an easing of tensions.
Stocks on the continent were also boosted by comments from European Central Bank president Mario Draghi suggesting further stimulus measures may be needed to fend off the threat of deflation.
Germany’s Dax was up while France’s Cac 40 was flat. In New York, the Dow Jones Industrial Average was also up at the time of the close in London.
On currency markets, sterling was down against the dollar, at 1.68, and against the euro, at 1.23, in the wake of uncertainty following European election results and weak mortgage approval figures.
In London, Astra’s price had been boosted in recent weeks by the increasing pressure from Pfizer to make a deal, with a final offer valuing it at £55 per share.
But it repeatedly rebuffed the Viagra maker’s advances and the offer was withdrawn shortly before a deadline under takeover rules was set to expire – despite the urgings of some Astra shareholders that it should enter into talks, though others supported its stance.
Analysts at Panmure Gordon slashed their target price for the UK firm, saying a likely change in US tax rules might hit any plans Pfizer could hatch to come back for a second attempt. It had hoped to re-domicile a merged firm in Britain for tax purposes.
The analysts said they were not expecting an offer of the same size again.
Elsewhere in the top-flight, Intercontinental Hotels Group climbed strongly on reports that it had rebuffed a £6 billion bid. Shares rose 3 per cent, or 76p to 2302p.
Meanwhile, state-backed Lloyds Banking Group climbed nearly 2 per cent, or 1.2p, to 77.2p after it announced it was to float a quarter of its revived TSB business next month.
On the FTSE 250, shares in engineering data and IT systems provider Aveva closed up 8.7 per cent, or 189pp, to 2350p, after a well received set of annual results.
Adjusted pre-tax profits were up 11 per cent to £78.3million while the final dividend was hiked by 13 per cent and profit margin also grew.
Chief executive Richard Longdon said it was confident it could achieve targets for further growth. Analysts at Panmure Gordon said results – for the year to the end of March – were better than expected.
The biggest risers on the FTSE 100 Index were Arm Holdings up 35p to 917p, International Consolidated Airlines Group up 13.5p to 392.9p, Intercontinental Hotels up 76p at 2302p and Travis Perkins up 54p at 1724p.
The biggest fallers on the FTSE 100 Index were Fresnillo down 27p at 822p, AstraZeneca down 76p at 4252p, Randgold Resources down 77p at 4428p and Sainsbury’s down 4.7p at 399p.
15.40: The Footsie headed back towards sessions highs in late afternoon trade as US stocks joined their UK counterparts in playing catch with European gains on Monday following holidays in both markets yesterday.
With just under an hour of trading to go, the FTSE 100 index was 37.4 points higher at 6,853.1, just shy of the morning peak of 6,857.1.
In early trade on Wall Street, the Dow Jones Industrial Average gained 0.4 per cent, or 69.6 points at 16,675.9, while the broader S&P index added 0.5 per cent to hit an intraday record after closing above the 1,900 level for the first time on Friday.
Post-holiday boost: US stocks joined the Footise in playing catch up with gains in European markets after holidays on Monday.
Investors welcomed some better-than-expected US data, with durable goods orders in April boosted by a spike in demand for military equipment, although orders fell in most civilian categories following larger increases in the prior month than previously reported.
Meanwhile, US home prices rose in March for the first time in five month, but annual growth is slowing, according to an S&P/Case-Schiller 20 cities report, with Las Vegas and other ‘boom-bust’ markets posting slower gains.
And the US Conference Board said its consumer confidence index rose to a reading of 83 in May, matching the consensus estimates, up from 81.7 in April.
Takeover interest provided the main boost in London with InterContinental Hotels the top blue chip gainer, up 4.5 per cent or 101.0p to 2,327.0p after reports the Holiday Inns group had rejected a £6billion pound takeover offer from an unnamed US bidder.
Chip designer ARM Holding was also in demand, up 4 per cent or 36.0p to 918.0p as takeover chatter returned for the stock after recent gains following well-received analyst days by the company.
Mike van Dulken, head of research at Accendo Markets said ARM shares were getting a ‘helping hand from weekend digestion of recent speculation’ that the firm could be prey for a big US tech name, with Google thought to have set aside $ 30billion for foreign acquisitions.
‘The recent increase in M&A activity … keeps the tech story an attractive one for investors looking for upside, even more so after a tough start to the year with (ARM) shares falling 25 from all-time highs,’ van Dulken added.
However, drugmaker AstraZeneca was a big faller, dropping 93.0p to 4,235.0p after US rival Pfizer walked away from making a formal bid for the Anglo-Swedish firm after having its final £69billion offer rebuffed by the group.
Among other blue chip fallers, Rio Tinto shares fell 18.0p to 3,239.5p after the global miner signed an ‘investment framework’ with its partners to develop $ 20billion-worth of iron ore deposits in Guinea, representing the largest combined iron ore and infrastructure project ever developed in Africa.
On the second line, Rightmove shed 11.0p at 2,320.0p after its chairman Scott Forbes cashed in on the booming housing market by selling a £7million stake in the online property group, offloading 300,000 shares or roughly half his stake.
The sale comes less than a week after Rightmove’s biggest rival, Zoopla – owned by thisismoney owner Daily Mail & General – confirmed plans for a £1billion float next month.
Shares in last Friday’s big flotation, over-50’s insurer and travel firm Saga continued their lacklustre showing in the second day of conditional trading, falling 3.75p to 181.25p having closed their first day of trading disappointingly unchanged on the bottom-of-the-range offer price of 185.0p.
13.00: The Footsie held firm in lunchtime trade, supported by a takeover chatter boost for Holiday Inns firm InterContinental Hotels Group (IHG) and gains by European bourses as the London market played catch-up after yesterday’s bank holiday.
By mid session, the FTSE 100 index was up 29.1 points at 6,844.8, having just eased back from the session peak of 6,857.10, resuming a push back up to the all-time high of 6,950.60 hit in December 1999.
Germany’s DAX 30 index hit a record high on Monday after strong showings by pro-European forces in Germany and Italy provided an antidote to gains by Eurosceptic parties in France, the UK and Greece.
Float launched: Lloyds Banking Group gained after it announced plans to float a quarter of its revived TSB business next month.
The DAX was up another 0.4 per cent today, while France’s CAC 40 edged 0.1 per cent higher with stocks on the continent also boosted by comments from European Central Bank president Mario Draghi suggesting further stimulus measures may be needed to fend off the threat of deflation.
Investors were as well buoyed by the hopes that Russia’s acceptance of the election of a new Ukrainian president at the weekend would lead to an easing of tensions between the two countries.
In London, Intercontinental Hotels Group was the biggest blue chip gainer, up over 4 per cent or 96.0p to 2,322.0p on reports that it had rebuffed a £6billion bid from an unnamed American firm.
Meanwhile, state-backed Lloyds Banking Group added 1.0p to 77p after it announced plans to float a quarter of its revived TSB business next month.
But on the downside with blue chips, retail giant Tesco fell 1.6p to 302.6p after saying it has terminated talks regarding a potential partnership for its struggling hypermarket chain in Turkey.
The company revealed in February that it was considering a tie-up with a retail group in Turkey in an effort to scale back its exposure to the country and put more focus on its core UK business.
Meanwhile, broker downgrades following results last week weighed on two blue chips, with brewer SABMiller down 12.5p to 3,315.0p after Investec Securities cut its rating to sell from hold, while Smiths Group fell 17.0p to 1,305.0p after the same broker reduced its stance to hold from buy.
Among the mid-caps, engineering software group Aveva led the FTSE 250 risers with a near 10 per cent, or 218.0p jump to 2,379.0p after it revealed an 11 per cent increase in annual adjusted pretax profits to £78.3million driven by higher demand from the Asia Pacific region, particularly Korea.
Luke Dods, senior trader at Prime Wealth Group said Aveva’s ‘increase in profits & revenues, coupled with a bullish outlook all support a recovery to year highs, but in the first instance Prime Wealth expects the stock to regain October/November 2013 highs around 2,600p.’
Irn-Bru maker AG Barr unveiled a sparkling start to its trading year, sending its shares 1.5p higher to 624.0p. The Scottish firm, which also makes Tizer said total sales for the 15 weeks to May 11 rose 5.1 per cent on a year ago, helped by marketing and promotional drives. It said this was well ahead of a wider soft drinks market which grew in value by 1.9 per cent over the same period.
However it warned that the environment remains ‘volatile’ and that it will face tough comparisons with a strong summer in 2013. Last July, the soft drinks group abandoned a planned £1.4 billion merger with rival Robinsons maker.
AG Barr also announced that its chairman Ronnie Hanna will retire on December 31.
But on the downside with second liners, shares in Punch Taverns tumbled 29 per cent, or 4.25p to 10.25p after I tabled a debt restructuring proposal that will see existing shareholders left owning just 15 per cent of the pubs operator.
The proposals have come from a group that owns more than a third of Punch’s debt and more than half of its junior loan notes.The plan would see Punch’s total net debt drop by £0.6billion.
Punch has about 4.300 pubs, but has never recovered from a debt-funded expansion spree that coincided with the UK’s economic problems after the 2008 financial crash.
Numis Securities downgraded its rating for Punch to sell from hold.
And among resource stocks, Ophir Energy shed 4.8p to 255.3p after the explorer said a well off the coast of Gabon did not find significant levels of oil and gas.
10.00: Bid rumours saw InterContinental Hotels Group (IHG) lead the Footsie higher as the morning session progressed, although on the other side of the coin drugmaker AstraZeneca was the top blue chip faller after US predator Pfizer walked away from a takeover deal.
By midmorning, the FTSE 100 index was up 32.1 points at 6,847.9, playing catch up with strong gains by European bourses on Monday after solid election showings for governing parties in Germany and Italy.
However stocks in Europe were more subdued today with the main focus on next week’s European Central Bank council meeting and expectations for some action to boost the flagging Eurozone economy.
Check-in time: Shares in Intercontinental Hotels got a boost from rumours of a rejected US takeover approach.
Markus Huber, senior sales trader/senior analyst at Peregrine & Black said: ‘Equity markets and the Euro are continuing to price in that the ECB will take major action in the upcoming meeting to counteract low inflation and a surging Euro.
‘While there is very little data out in Europe things are expected to heat up in the afternoon with US durable and US consumer confidence scheduled for release.
‘Traders are looking for confirmation that the standstill in economic growth in the first quarter was only temporary and mainly weather related with the US economy being in the process of rebounding sharply in the second quarter.
‘Overall sentiment remains positive, however traders prefer to buy dips at the moment as much of the recent gains were posted with below average volume leaving markets vulnerable to profit-taking,’ Huber added.
In London, IHG shares topped the FTSE 100 leader board by some margin, jumping over 5 per cent or 125.0p higher to 2,351.0p after Sky News reported that the Holiday Inns hotelier has rejected a £6billion takeover offer from an unnamed US bidder, citing unidentified sources.
The sector bid excitement also boosted Premier Inns owner Whitbread, up 80.0p to 4,204.0p.
But on the downside, shares in AstraZeneca dropped over 2 per cent or 92.0p to 4236.0p after Pfizer formally ended its £69billion pursuit of the UK-based pharmaceuticals firm yesterday.
Astra share price had been boosted by the increasing pressure from Pfizer to make a deal, with its third and final offer valuing the UK firm at 5,500p per share.
But Astra repeatedly rebuffed the Viagra maker’s advances and the offer was withdrawn shortly before a deadline under takeover rules was set to expire, despite the urgings of some Astra shareholders that it should enter into talks.
Societe Generale downgraded its rating for AstraZeneca to sell from hold on the news, setting a price target of 3,600p.
Analysts at Panmure Gordon also slashed their target price for the UK firm, saying a likely change in US tax rules might hit any plans Pfizer could hatch to come back for a second attempt.
The US group had hoped to re-domicile a merged firm in Britain for tax purposes. The Panmure analysts said they were not expecting an offer of the same size again.
Away from takeover news, state-backed Lloyds Banking Group climbed nearly 1 per cent or 0.6p higher to 76.6p after it announced it was to float a quarter of its revived TSB business next month.
08.15: The Footsie pushed higher in opening deals playing catch up with strong gains by European equities yesterday, when the UK and US markets were closed for holidays, after solid election showings for governing parties in Germany and Italy.
In early trade, the FTSE 100 index was up 21.2 points at 6,836.9, having closed 4.81 points lower on Friday resuming the recently stalled assault on its December 1999 record high of 6,950.60.
Germany’s DAX 30 index hit a record high on Monday and the euro zone Euro STOXX 50 index reached a new 5-1/2 year peak after strong showings by pro-European forces in Germany and Italy provided an antidote to gains by Eurosceptic parties in France, the UK and Greece.
Investors will keep a wary eye on Ukraine, which launched air strikes and a paratrooper assault against pro-Russian rebels who seized an airport in Donetsk in the strife-torn east of the country on Monday.
But the escalation in the ongoing crisis was tempered by the decisive win for chocolate billionaire Petro Poroshenko in Ukraine’s weekend presidential election, which many hope will help bring some stability to the situation.
Michael Hewson, chief market analyst at CMC Markets UK: ‘The weekend vote in the Ukraine appears to have been one major catalyst for yesterday’s strong European session, with the new Ukrainian President Petro Poroshenko making conciliatory noises towards Russia, as well as the European Union in an attempt to bring together the various factions in an attempt to de-escalate recent tensions.
‘With Russia also appearing to be conciliatory, despite large parts of the eastern part of the Ukraine unable to vote due to the actions of pro-Russian separatists, there appears to be some optimism that some form of deal can be reached, despite Ukrainian forces launching air strikes against Russian militants in the east of the country.
‘While there are some concerns that Russia might intervene to support the separatists the argument for doing so is becoming less obvious by the day, given that Russia can no longer use the argument that Ukraine has an illegitimate President to support its case, despite requests for intervention from pro-Russian separatists.
’The weekend European elections don’t appear to have had that much effect on markets despite a large anti EU vote in a number of countries, particularly in the UK, France, Greece and Denmark..
‘The reality is that the outcome of these elections has very little bearing on what is likely to happen with respect to economic policy in the various European capitals which are striving to engineer an economic recovery, though European politicians will ignore the message being sent by voters at their peril,’ Hewson added.
No important economic data is scheduled for release today in the UK, and there is little on the corporate calendar as many traders remain away from their desks given the school half-term holiday.
Stocks to watch include:
ASTRAZENECA – US firm Pfizer on Monday abandoned its rejected attempts to buy AstraZeneca for nearly £70billion after the takeover launch deadline passed without a last-minute change of heart by the UK drugmaker.
LLOYDS BANKING GROUP – The lender has confirmed it will float about 25 per cent of its TSB business on the London Stock Exchange, with the remainder sold before the end of 2015.
INTERCONTINENTAL HOTELS – The world’s largest hotelier has rejected a £6billio takeover offer from a US bidder, Sky News reported, citing unidentified sources.
BSKYB, JOHNSTON PRESS : -The satellite broadcaster is grabbing a £5million stake in the owner of the Scotsman and Yorkshire Post as part of a big financial overhaul at the newspaper publisher, Johnston Press, according to the Sunday Times. The pay-TV company will end up owning nearly 2 per cent of Johnston Press after a £360million refinancing expected to be agreed this week, the newspaper said.
WPP – The advertising giant has taken a stake in a social network launched by former Burberry and Topshop creative director Justin Cooke, the Sunday Times reported. Through its AKQA subsidiary, Sir Martin Sorrel’s media empire has bought 20 per cent of Tunepics, an app that lets users post photos and music at the same time, the newspaper said.
BABCOCK INTERNATIONAL – The defence contractor is teaming up with Associated British Ports in a bid to run a military harbour on the south coast, the Sunday Times said.
BP – The UK oil firm and Russia’s Rosneft signed an agreement on Saturday to jointly explore for hard-to-recover oil in Russia, the first major deal for the state-run Russian oil company since the West imposed sanctions over Ukraine in March.