News Column

Daily Mail, London, market report column

April 30, 2014

By Geoff Foster, Daily Mail, London



April 30--Everything is up for grabs in this takeover-crazed market.

Accident-prone Edinburgh-based audio chip-maker Wolfson Microelectronics soared 100.5p to 234.5p in response to a recommended pounds sterling 291m or 235p a share cash bid from US competitor, Cirrus Logic.

Wolfson has been in the dog-house for months as it suffered from missing out on a deal to make chips for the 4G version of Samsung Electronics' Galaxy S4 smartphone.

Earlier this year the shares dropped to their lowest level in almost two years after it posted an operating loss of pounds sterling 2.7m for the final quarter of 2013. Cirrus, a major supplier to Apple, said the deal would strengthen its portfolio and add new products such as Wolfson's successful microphones.

Dan Risdale, analyst at Edison Investment Research, said: 'Cirrus have got a good deal. It is buying this business at a trading nadir, and that a recovery in market share primarily at Samsung should drive a strong recovery in the second-half of the year.'

Rival broker N+1 Singer added: 'The premium valuation in today's bid reflects the intellectual property in the product portfolio and the potential which this has in a larger-scale business.'

Smaller chip-maker Imagination Technologies rose 6.2p to 199.5p in sympathy.

The fabulous Footsie reflected the sudden upturn in merger and acquisition activity to trade at a seven-week high. The close was 69.75 points better at 6769.91, while the FTSE 250 gained 70.4 points to 15,896.64. Wall Street traded 86.63 points higher at 16,535.37 following better-than-expected quarterly earnings from Merck and Sprint.

Pfizer's stock was 1.6pc off in early trading on worries that it could eventually pay far too much for UK drugs giant AstraZeneca, 34p cheaper at 4632.5p. Any company with the word pharmaceutical in its name is liable to attract punters in this market and that was the case as shares of Dechra Pharmaceuticals jumped 28p to 697p. Panmure Gordon is a buyer and has a target price of 850p. Analyst Savvas Neophytou reckons the sort of multiples Eli Lilly was prepared to pay for Novartis' animal healthcare business makes Dechra look very cheap by comparison.

Shares of the world's largest cruise operator Carnival steamed 73p ahead to 2370p on a Berenberg buy recommendation and a target price that suggests 30pc upside to the current level. The broker says an improving economic backdrop, combined with a renaissance in two of the major Carnival brands, should result in a recovery in yields. The outlook for fuel prices generally is more sanguine than has been the case for some time. Renewed speculative buying following chief executive Chris Finlayson's shock decision to resign lifted oil and gas group BG Group 34.5p to 1180.5p. Analysts believe the perennial takeover favourite is definitely in play. Other larger industry players would love to get their hands on the group's mega attractive interests in Brazil and east Africa.

Demand on the back of strong first-quarter figures helped Telecity buzz 94p higher to 728p. The data centre operator said that constant currency organic growth accelerated to 9.4pc in the first quarter as demand increased across Europe. Numis is a fan and has a target price of 880p.

Inmarsat lost 28.5p to 735.5p amid ongoing concerns that some commercial satellite launches were at risk of being cancelled because of the new sanctions against Russia. Inmarsat has planned a launch of its Global Xpress satellite the world's first worldwide Ka-band mobile satellite system through the Russian-owned firm International Launch Services.

Genel Energy jumped 27p to 967p after Kurdistan Regional Government PM Nechirvan Barzani said that sales of Kurdish crude oil stored at Ceyhan on the international market would begin on May 2, with or without the consent of Iraq's central government in Baghdad.

Turkish energy minister Taner Yildiz later confirmed this by saying that the flow of Iraq Kurdish oil to Turkey via a new pipeline had resumed two days ago at 100,000 barrels of oil per day. Oil has not flowed from Iraq to Turkey since the start of April.

Aquarius Platinum advanced 2.25p, or 11pc, to 22p following slightly better-than-expected third quarter results. The company's operations continue to be unaffected by strikes at key South Africa platinum mines.

Russia-based gold and iron ore miner Petropavlovsk fell 11.75p to 71.75p following a disappointing widening net loss of pounds sterling 424m for the year ended December 2013. Prime Wealth, a long-term bear of the stock, says the group still has an enormous debt pile, and with questions asked about its solvency, in spite of the considerable revenues, the near-term future is uncertain.

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Source: Daily Mail (London, England)