Takeover talk has helped drive the FTSE 100 higher, with shares in Smith & Nephew and Weir Group jumping on speculation they could be subject to bids.
Smith & Nephew (SN) was the biggest FTSE 100 riser, adding 26.5p, or 2.7%, to £10.19 after a manic day of trading. The medical equipment manufacturer had jumped as much as 17% yesterday after a report in the Financial Times that US-based Stryker was preparing a bid. Stryker later denied the reports, but traders are betting renewed takeover speculation will continue to surround the stock.
The FTSE 100 added 13 points, or 0.2%, to trade at 6,864.
Weir Group (WEIR) was another big gainer, as traders sized up its prospects as a bid target after the valve and pump manufacturer's failure to seal a deal to buy Finnish rival Metso. Weir shares jumped 17p, or 0.7%, to £26.01.
Outside the FTSE 100, hedge fund manager Man Group (EMG) jumped 4.5p, or 4.8%, to 99.4p after it confirmed it was in talks to buy US fund group Numeric Holdings. Panmure Gordon analysts said the deal could add 20% to Man's earning potential. 'Acquiring its way out of a tight corner is the right thing to do. This could mark the turning point,' they said.
Tesco (TSCO) rose 3.8p, or 1.3%, to 305.2p after it finalised a deal with the state-run China Resources Enterprise to create the largest food retailer in China. Shore Capital analysts welcomed the deal. 'Tesco had a loss-making and sub-scale venture in China, where visibility towards meaningful profitability was low and the potential need for substantial capital investment was high,' they said. 'The new venture makes for a cut-back in capital allocations and conceptually at least provides a better route map to profitability from this huge and diverse market.'
Kingfisher (KGF) was the biggest FTSE 100 faller, dropping 25p, or 6%, to 392.2p after the home improvements retailer issued a disappointing set of results for the first quarter of the year. 'While the group trading profit has come in at an impressive £142 million these were in our opinion disappointing figures... falling short in the UK where there was some expectation of an upside surprise,' said Tony Shiret, analyst at Espirito Santo Investment Bank. Rival Travis Perkins (TPK) also fell, shedding 35p, or 2%, to £16.83 as investors read across the Kingfisher results to the business.
Aggreko (AGGK) was another significant faller, trading 49p, or 2.8% lower at £17.00 as investors digested a series of managerial changes at the power provider. British Gas boss Chris Weston is to join as chief executive next year, with current interim chief executive Angus Cockburn leaving and Carole Cran, current interim chief financial officer, gaining the job on a permanent basis.
Liberum analysts focused on the loss to the business caused by Cockburn's departure. 'Chris' experience in energy lends some support to his competency to run Aggreko and the appointment of Carole Cran as CFO provides important continuity to the finance function. However, the loss of Angus Cockburn does represent a significant loss for the business,' they said.