Market Report: Imperial Tobacco hits all-time highs on takeover talk

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With tumbleweed rolling through the Square Mile on a quiet Friday, it was up to the City’s wheelers and dealers to warm up the trading screens.

And in Imperial Tobacco, which has long been stalked by takeover rumours, they found their inspiration.

Renewed speculation that it will be sucked up by British American Tobacco, 7p off at 3853p, sent Imperial’s shares to all-time highs, up 72p, or 2%, to 3564p, with its larger rival rumoured to be putting together financing before launching a mammoth bid.

“The rumour hasn’t been confirmed but it would make a lot of sense to pool their resources in the context of the Reynolds-Lorillard merger this year,” Jasper Lawler at CMC Markets said.

Aside from that flicker of excitement, traders were left twiddling their thumbs with little to inspire them at the end of a strong week for the Footsie as the City shrugged off the Paris terror attacks.

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Investors’ gazes have been firmly fixed across the pond where Federal Reserve policymakers look set to raise interest rates next month for the first time in nine years, thanks to a healthier US economy.

The FTSE 100 edged down 14.87 points to 6315.06 after a 200-point rise this week, but the feeling is that the so-called Santa Rally could be derailed at any time.

Investors raised a glass to Diageo, the maker of Smirnoff vodka, which flowed 20.5p higher to 1923p, as broker JPMorgan Cazenove lifted its target price to 2140p.

The shares have been on a tear since August on hopes it can join the wave of deal-making in the sector that has already engulfed SABMiller.

Johnnie Walker barrels.jpg

Diageo also owns Johnnie Walker (Picture: Reuters)

G4S was on the losing side, sliding 4.8p to 221p, after Credit Suisse cut its rating to neutral, compounding the security giant’s recent misery on the stock market.

Industrial turnaround specialist Melrose Industries put on 1p at 280p after the company said it is optimistic it can find a suitable acquisition.

The firm, which recently offloaded Elster Group to US firm Honeywell for £3.3 billion, said its Brush business had improved in recent months but revealed sales so far in 2015 were down 17%.

Trouble in America took its toll on technical controls and instruments designer Spectris, which was down 15p at 1689p, after revealing a 1% fall in like-for-like sales in the four months ending October. 

Lifesciences firm OptiBiotix, whose shares have rocketed close to 300% making it one of the small-cap stars of the year, edged up 0.5p to 78p after signing a deal with Italy’s CSL, which will fund the development of a new product.

The company is working on a range of products to tackle obesity, high cholesterol and diabetes.

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November 20, 2015 |
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