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Takeover bids help mid-caps outperform
by Chris Marshall on Aug 19, 2013 at 09:39
Britain’s mid-cap FTSE 250 index was out-gunning most other major European share lists on Monday morning, boosted by M&A activity.
Up 0.3% at 14,885, the mid-cap index was trading ahead of its blue chip counterpart, the FTSE 100, which was down 0.3% at 6,479, in line with other European benchmark share lists.
Though today’s gains come as engineering firm Kentz (KENZ.L) soared 21% to 577p after rejecting takeover bids, the second-tier index of companies continues to outperform its bigger brother over a longer time-scale too.
The FTSE 250 has gained 20% so far this year, managing gains of 1.8% amid the volatility of the past three months. The FTSE 100, on the other hand, is up only 10% year to date, with a loss of 2.8% over the past three months.
Corporate updates were helping the FTSE 250 on Monday morning. Both M+W Group and AMEC confirmed press speculation that they had bid for Kentz, which provides engineering, procurement and construction services for the energy and resources sectors.
The larger of the two bids came from Amec, valuing Kentz at up to £680 million, a premium of around 20% to the current market capitalisation of £560 million.
‘We have said for some time that the Kentz share stands on too low multiples,’ commented Andrew Whittock at Liberum.
‘Our unchanged fair value is 590p and we would expect any acceptable offer to exceed that. Kentz is well placed in a number of Natural Resource markets and could complement the existing portfolios of a number of engineering companies, including AMEC.’
House builders also supported the mid-cap index. Bovis Homes (BVS.L) reported a 50% jump in first-half profits, benefiting from the growing momentum behind the UK housing market. Jefferies analyst Anthony Codling increased his target price on the shares to 995p, rating them a ‘buy’.
Bovis, up 1.6% to 795p, was followed higher by Balfour Beatty (BALF.L), Rightmove (RMV.L) and Countrywide (CWD.L). The gains also came as Rightmove reported a 5.5% annual rise in property asking prices in August.
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- Kentz Corporation Ltd (KENZ.L)
- Balfour Beatty PLC (BALF.L)
- Countrywide PLC (CWD.L)
- Rightmove PLC (RMV.L)
- Bovis Homes Group PLC (BVS.L)
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on Dec 06, 2013 at 14:28