News Column

FTSE flat ahead of central bankers meeting but bid talk lifts Vodafone and AstraZeneca

August 22, 2014

Nick Fletcher, theguardian.com



As shares drifted ahead of this evening's gathering of central bankers in Jackson Hole in the US, there was still a spate of takeover speculation to liven up a quiet morning.

Vodafone has added 1.9p to 204.5p on renewed talk that US rival AT&T might be preparing an offer for the UK mobile phone group. In January AT&T was forced to say it had no plans to bid, ruling it out for six months. That deadline has, of course, now passed.

Meanwhile AstraZeneca is up 34p at 4445.5p, as investors were reminded that thwarted suitor Pfizer could come back next week - if invited to do so by AstraZeneca. However that seems a little unlikely, given the UK group's hostility to the initial offer. Analyst Savvas Neophytou at Panmure Gordon said:

The stock was strong yesterday, on a news story that on 26 August Pfizer may be able to make another approach for AstraZeneca by being invited by Astrazeneca's board to bid (VERY unlikely in my view).

The prospects of renewed hostilities next week are remote, but AstraZeneca remains an attractive bid candidate which may attract interest after 26 November [when Pfizer could return without AstraZeneca's recommendation}. We re-iterate our hold recommendation and 4,400p target price.

Overall the FTSE 100 has edged up 2.10 points to 6779.76, with investors cautious ahead of the US meeting, awaiting signs from both Federal Reserve chair Janet Yellen and European Central Bank boss Mario Draghi on the outlook for rate rises (in the case of the US) or stimulus measures such as quantitative easing (from the Europeans).

Among the other risers, Tesco is up 2.15p at 247.65 on hopes imminent market figures will for once show the struggling supermarket may be edging back in the right direction.

But oil services group Petrofac has fallen 14p to 11.12 after it announced chairman Norman Murray was stepping down for compassionate reasons.

Among the mid-caps Kazakhmys has climbed 11.5p to 302.6p following Thursday's better than expected figures.

But Halfordsis down 14.3p to 481.4p as analysts at Barclays, as part of a general downgrade of retailers, cut its recommendation from equal weight to underweight and its target price from 460p to 400p. They said:

We downgrade our sector view to negative from neutral as tightening monetary policy in the UK will likely pressure the finances of UK households, forcing a reconsideration of spending habits after five years of near-zero interest rates. Historically, in an environment of interest rate increases the general retail stocks have underperformed.


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Source: Guardian Web


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