May 22--It's never over until the fat lady sings. Paul Singer, founder and chief executive of New York-based hedge fund Elliott Management, could yet have a big say in the Astra Zeneca/Pfizer merger saga that has gripped City dealing rooms for weeks.
As shares of UK drugs giant AstraZeneca jumped a further 111.5p to 4420p, rumours were rife that Singer's activist investor was building a strategic stake in order to try to put more pressure on the AZ board to enter talks with the Pfizer management about a pounds sterling 69bn marriage.
Existing AZ shareholders – including Axa and Schroders and accounting for almost 9.5pc of Astra's shares – have already registered their extreme displeasure at its refusal to talk turkey. Should a new shareholder or shareholders appear on the register before Monday's deadline, and call for immediate discussions, or an EGM, AZ could be forced to think again.
Pfizer has been banned by the Takeover Panel from increasing its pounds sterling 55 a share offer – tabled last weekend – because it was described as its 'final' offer. It is also locked into its commitment not to go 'hostile'. Should it walk away, Pfizer will be unable to have another go for six months and AZ's share price is bound to fall.
Elliott Management has engaged in a number of activist positions over the last eight months. Earlier this year it forced US drugs wholesaler McKesson to increase its takeover price for rival German peer Celesio. It also acquired a large stake in ailing supermarket Wm Morrison and pushed for it to hive off its property assets. It also bought a large holding in F&C Asset Management.
Broker BarCap supports the rationale behind a Pfizer/AZ merger, which would create the world's biggest pharmaceuticals group and mark the largest takeover of a British company in corporate history. It combines complementary pipelines, cost synergies and tax benefits. It says AZ's chief executive Pascal Soriot has made a rod for his own back with his new revenue target of $45bn by 2023, which assumes a $15bn contribution from pipeline products yet to be launched. Its price target is pounds sterling 40.
AZ's strength and Wall Street's early gain of 100 points-plus helped the Footsie shrug off talk of a possible earlier-than-expected hike in UK interest rates to close 19.04 points better at 6,821.04. The FTSE 250 rallied 162.95 points to 15,603.2.
Bumper April retail sales figures, which showed volumes jumped 1.3pc to stand 6.9pc ahead of a year ago at the fastest annual pace for 10 years, helped retailers perform. Billionaire Mike Ashley'sSports Direct International, keen to get into the fitness market, featured with a gain of 27p at 751p.
Punters chased underperforming betting shop group Ladbrokes 4.9p higher to 138.5p on revived bid hopes. Playtech chairman Alan Jackson's AGM comments that it is on the acquisition trail led to gossip that it could team up with CVC Partners and launch a knock-out cash offer. Playtech closed 22.5p higher at 607p. Rival bookie William Hill added 8.4p at 333.4p.
Giant microprocessor designer ARM improved 16p to 861p despite an underwhelming response to Tuesday's Analyst Day. ARM flagged that it expects to retain its mobile processor market dominance versus Intel's ambitions, but sees only a 9pc per annum rise in the overall mobile processor market to pounds sterling 11.9bn by 2018.
In demand last week amid talk of a bid from a cash-rich US-led private equity consortium, Wm Morrison declined 4.5p to 205p on a Deutsche Bank downgrade to sell from hold, saying recent share price outperformance is unjustified. The broker cut its target price to 190p from 200p and expects no improvement in Morrisons' sales trends in the coming months.
Multi-utility services supplier Telecom Plus buzzed 149p higher to 1519p following excellent results. It reported a record increase in service customers to 530,639 and a 25pc leap in pre-tax profits to pounds sterling 44.6m on revenues 9.5pc higher at pounds sterling 658.8m.
Buying ahead of today's maiden results helped Royal Mail post a gain of 5.5p to 575p. Dealers heard yesterday that the company is planning to trial a limited Sunday parcels service, the first since the group's inception 498 years ago. The service will begin within the M25 this summer, and if successful, may be expanded nationally.
Housebuilder Mar City rose 3p to 129.5p on chief executive's Tony Ryan's bullish AGM statement. Colindale, its first site in London, is 80pc pre-sold. It has also acquired 112 new plots across four sites in London and the Midlands for pounds sterling 6.5m, putting it on track for its target of a 3,000-plot landbank by the end of 2014. WH Ireland's target price is 160p.
Sellers were all over blur Group yet again and the close was 4.5p down at 122.5p. Rumours of an imminent placing at 90p a pop were rife. If true, shareholders will not be too happy as they have watched the shares collapse like a pack of cards following two disastrous profit warnings. Before the first in April, they were changing hands at 450p.
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