News Column

Daily Mail, London, market report column

August 28, 2014

By Geoff Foster, Daily Mail, London



Aug. 28--Merger mania in the healthcare sector has kept dealers on their toes during the peak holiday weeks.

Cash-rich pharmaceutical majors are forever looking to acquire their smaller, more nimble counterparts, and are prepared to pay stonking premium prices.

Last weekend, Californian-based InterMune was swallowed by Swiss drugs giant Roche for an eye-watering $8.3bn. The market now hears rumours that at least four international drug groups are stalking a company that is developing an experimental treatment for the deadly ebola virus.

Shares of Tekmira Pharmaceuticals rose 3.24pc to $19.75 following a sharp increase last week on news that it has verbal approval from the US Food & Drug Administration that would fast-track its new drug to treat the virus.

This action may allow the medicine to be used to treat the growing tally of those stricken by the virus. TKM-Ebola is being developed by Tekmira and the US Department of Defence medical team.

Tekmira is capitalised at a measly pounds sterling 400m and would cost a bidder in the region of pounds sterling 1bn-plus, a relatively small mouthful for any cash-rich giant.

Rumours suggest two of the interested parties could be the UK's Shire (22p off at 4894p) and GlaxoSmithKline (15.5p dearer at 1463p. The mega premium paid for InterMune puts a valuation of $40 plus a-share on Tekmira.

The outbreak of ebola in Africa has killed more than 1,000 people since February and is the worst since the disease was discovered in the mid-1970s.

Scrappy small selling became contagious as the day wore on but the Footsie rallied late to close 7.9 points higher at 6,830.66. Wall Street retrieved an initial 14 points fall to close 15.31 points higher at 17,122.01, putting the record 17,138.27 level well within its sights.

Morrisons, which has been one of the worst Footsie performers this year, down more than 30pc, rallied 2.6p to 184.4p on Kantar market research data showing its sales in the 12 weeks to August 17 were better than expected.

Tesco, on the other hand, shed 2.8p to 249.3p following data showing its sales decline had worsened, falling 4pc with its market share dipping to 28.8pc from 30.2pc.

New boss Dave Lewis will have his work cut out to reverse the trend when he takes over from Phil Clarke in October.

United Utilities lost 11.52p to 896.5p on a RBC Capital Markets downgrade to sector perform. Any positives are priced-in, says the broker. Oil services group Petrofac rose 26p to 1149p after maintaining its full-year earnings guidance despite a 44pc fall in interim profits to pounds sterling 82m. The order book hit a record pounds sterling 12.2bn.

Excellent interim results helped high quality ceramic tableware maker Churchill China serve up a gain of 17.5p at 460p.

Sales rose to a record pounds sterling 16.8m in the six months to June as its hospitality business, which supplies crockery to restaurants, pubs and conference venues, traded above expectations due to the buoyant trend of people eating out.

Cantor Fitzgerald has advised clients to load up with motor components giant GKN, 2.8p easier at 356.8p.

The broker points out that the President of Anfavea, the Brazilian National Association of Automobile Manufacturers, has indicated that the pace of new car sales has recovered since the very depressed levels in June arising from the World Cup.

Second half Brazilian sales are likely to be up 14pc. A stabilised Brazil suggests that global auto production will beat general expectations. Its target price is 430p.

Punters were itching to get hold of Tyratech, 0.62p up at 8p, on hearing that it will be providing Sainsbury and Tesco with its Vamousse head lice products. Superdrug and Boots have already been signed up and first products will appear in UK stores in September.

In the US, Vamousse is stocked in more than 4,000 Walmart stores and is available through online retailers Walmart.com, Amazon.com, drugstore.com and Walgreens.com.

Monitise advanced 5.5p to 47.75p after strengthening its tie-up with IBM Corporation. Its mobile banking and payment technology will be enabled, hosted and sold via IBM cloud-delivered solutions, bringing it closer to its target of 200m users using its mobile money products and services by 2018.

AfriAg's agri-marketing division AfriAg Marketing has sold its first refrigerated 40ft sea container, containing a gross weight of about 20 metric tons of South African-sourced frozen fish products, to clients in China. The news lifted the stock 25pc to 0.68p.

Specialist engineering group James Fisher added 15p at 1400p following another strong set of interim results.



Today sees an interesting new arrival on the standard listings market. Shares of General Industries will start trading at 10p and should achieve a small premium. The cash shell raised pounds sterling 1m and is believed to be looking for a reverse takeover in the services sector. Its management has a good track record and its backers include the well-respected Richard Wallenberg, who has had several IPO successes over the years.

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(c)2014 Daily Mail (London, )

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Source: Daily Mail (London, England)


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