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Home Retail rallies as Sainsbury's bid nears

Shares in Argos owner jump on reports suitor Sainsbury's could announce a takeover deal as early as tomorrow.

 
Home Retail rallies as Sainsbury's bid nears

Update: Shares in Home Retail have rallied on reports suitor Sainsbury's is closing in on a deal for the Argos owner, and could announce a takeover as early as tomorrow.

Home Retail (HOME) jumped 9.5% to 149.6p amid reports Sainsbury's (SBRY) could offer more than 160p a share for the retail group. Shares in the supermarket inched a penny lower to 244p.

Under Takeover Panel rules  Sainsbury's has until 5pm tomorrow to announce a firm intention to make an offer or walk away, after it shocked the markets by revealing an earlier rejected bid last month.

Bloomberg said that Home Retail may ask the panel for an extension as talks continue over a bid of between 160p and 165p a share. The Guardian said leading investors in both groups were confident a deal had been reached at more than 160p per share.

Shares in Premier Oil (PMO) meanwhile gave up some of the morning's gains in a return to trading following its deal to buy E.ON's UK North Sea portfolio. But they remained strong up on the day, 85.3% higher at 35.3p.

The FTSE 100 was trading 35 points, or 0.6%, lower at 6,046, weighed down by miners amid disappointing factory data from China.

Premier Oil shares rocket on E.ON deal

(10:17) Shares in Premier Oil (PMO) have more than doubled in value after returning to trading following its deal to buy E.ON's UK North Sea portfolio.

The small oil explorer jumped 125% to 42.8p after the suspension of trading in its shares imposed last month was lifted.

Premier Oil announced the lifting of the suspension alongside its deal to buy E.ON's UK North Sea assets for $135 million (£95 million).

Analysts had hailed the deal when it was first announced as a means for Premier Oil to address balance sheet issues amid the backdrop of the subdued oil price.

Barclays analyst James Hosie said the deal was 'an important step in management's plans to reduce financial leverage'.

'Acquiring cash generative production assets and selling pre-development assets are two ways for an explorer and producer to address a sub-optimal balance sheet,' he said. 'Premier's agreement to acquire E.ON's UK North Sea portfolio follows its sale of its Norwegian business.'

Those likely to be celebrating the deal include Andy Brough, manager of the Schroder UK Mid 250 fund, listed by Reuters as Premier Oil's largest fund shareholder, and Nigel Thomas, Citywire AA-rated manager of the AXA Framlington UK Select Opportunities fund.

Smaller company shares were the day's biggest movers, with construction company Lakehouse (LAKE) more than halving in value, down 56.8% at 36.5p, on a profit warning. The company said it had been hit by a reduction in spending by social housing landlord customers.

The FTSE 100 was down 40 points, or 0.7%, at 6,043, with Prudential (PRU) among the biggest fallers, down 3.2% at £13.24 on news Michael Mclintock, boss of its fund management arm M&G, is to step down.

Mclintock will be succeeded by Anne Richards, chief investment officer at rival fund group Aberdeen Asset Management (ADN). Aberdeen shares fell 1.7% to 242.2p on the news.

BT (BT) was the biggest riser, up 3.1% at 500p after posting the best revenue growth for seven years in its latest quarter.

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Top 10 active investment trusts

by Jennifer Hill on Dec 02, 2016 at 07:14

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