London's FTSE 100 index of leading shares closed higher today as strong gains in the mining sector and in Rentokil Initial offset jitters in heavyweight pharmas in the wake of the Merck ruling in America.
Wall St boosted by mergers
Across the Atlantic, American markets were higher by London's close, as the market drew momentum from merger developments.
At 4.30pm the Dow Jones was up 59.6 at 10,618.5, while the Nasdaq was 9.76 higher at 2145.32.
With a dearth of economic reports, investors were tracking the mergers and acquisition. The biggest deal of the day was China’s CNPC International Ltd’s $4.18 billion deal to acquire PetroKazakhstan. The purchase price equates to $55 a share and represents a premium of 21 per cent above Friday’s closing price.
On Sunday OSI Pharmaceuticals , which is developing lung and pancreatic cancer treatments, announced its $935 million deal to buy Eyetech, a developer of therapies for eye diseases.
There also were indications that the long-running soap opera takeover battle for Maytag is nearing its end. The Wall Street Journal reported that Whirlpool appears to have won Maytag in the wake of Ripplewood Holdings’ decision not to raise its bid for the appliance maker. Whirlpool has bid $1.7 billion for Maytag.
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Supply concerns send oil price higher
World oil prices moved back above $65 a barrel today as supply worries remained prominent after last week’s halt in Ecuadorean crude exports as well as jitters after a failed strike against American warships in Jordan.
US light crude was up 24 cents at $65.59 by 4.30pm, having jumped more than $2 a barrel on Friday. In London, Brent crude was up 46 cents to $64.82.
Global production and refining constraints combined with political tensions in oil producing countries have kept US light crude at an average $53.79 this year versus an average $41.47 in 2004.
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Miners in demand
Back in London, miners remained in demand, carrying over strong gains in Australia overnight amid expectations BHP Billiton is set to post record second half results on Wednesday.
Shares in BHP Billiton gained 25.5p at 844.5p as Numis upgraded the diversified miner to "add" from "hold" with a raised price target of 904p from 840p, ahead of the full year results.
Sentiment in the sector was further boosted by talk that the death of Andronico Luksic, Antofagasta’s major shareholder and honorary president, could renew speculation that the copper miner could be subject to a bid.
Antofagasta gained 43p at 1,469p, while Rio Tinto gained 58p at 2,049p, and Xstrata was 34p to the good at 1,324p.
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Rentokil leads London's blue chips
The best performing blue chip, however, was Rentokil, with the stock surging over 10 per cent after Raphoe Management, the acquisition vehicle controlled by former Granada chairman Sir Gerry Robinson, confirmed that it is planning to make a bid approach to the UK support services company.
According to weekend press reports, disgruntled shareholders in Rentokil Initial want Robinson to take control of the group.
Rentokil closed 15.25p higher at 166.5p.
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Bid speculation buoys market
Unilever was 9.5p higher at 563.5p after the Sunday Times reported that the consumer group is conducting a review of its frozen-food arm that could lead to the sale of Birds Eye fish fingers and Carte d’Or ice cream brands.
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Meanwhile, Cadbury Schweppes took on 9.5p at 553.5p on talk private equity Carlyle Group is eying a bid for the confectionary giant’s £1.5 billion European soft drinks business, with ex-Pepsico executive Nish Kankiwala from rival KKR hired to spearhead the bid.
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The weekend press also provided a fillip to Man Group, 2p firmer at 1678p, after the Mail on Sunday said the fund manager is weighing up splitting off its brokerage arm in a move that could create a £2 billion FTSE 100 business.
For detailed data on Man Group shares click here.
Drug stocks weigh on safety fears
Drug stocks were weak with sentiment in the sector hit by Friday’s news a Texas jury found US pharma giant Merck liable in the sudden cardiac death of a man who had used the company’s recalled pain killer Vioxx.
The decision sets what could be a damaging precedent for the drug company which faces thousands more lawsuits over its former blockbuster drug.
The gloom in the sector was also deepened by reports GlaxoSmithKline’s anti-depressant drug Seroxat has been linked to a seven-fold increase in suicide attempts.
The Times today said an analysis carried out by Oslo University on Seroxat involving more than 1,500 patients found seven suicide attempts among those taking the drug and only one among those taking a placebo.
Glaxo finished the day 11p lower at 1,335p while Shire lost 6p to 675.5p
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Greene King slides on Belhaven news
Outside the top flight, Greene King, the drinks giant, lost 10p to 1,307p after it unveiled an agreed offer to take over Belhaven, the Scottish independent pubs and brewing business, for £187 million in cash.
Belhaven, on the other hand, surged 84.5p higher to 625.25p - a rise of 15.6 per cent - within minutes.
Greene King said this morning that its 625p a share offer for Belhaven represents a 15.6 per cent premium to the closing price of the shares on Friday.
It argued that the takeover gave it "instant scale in a market in which it has little presence currently" - Belhaven is Scotland's largest independent regional brewer.
The group believes it can save £3 million of costs in the first full year after the takeover, rising to £5 million over the following two years.
Shares in Greene King ended the week at 1,312p, valuing the group at just over £945 milliion.
For detailed data on Greene King shares click here.
For detailed data on Belhaven click here.
Greene King will be placing £47 million of shares to raise part of the cash for the acquisition.
Elsewhere
Acambis, one of Britain's largest biotechs, lost 5.75p to 245p after Danish rival Bavarian Nordic, sued it in the United States over the intellectual property rights to its MVA smallpox vaccine.
Acambis said this morning it had yet to receive full details of the claims, in which Bavarian accuses it of using its research and technology to develop MVA, but said based on preliminary information, they are "without foundation".
The Cambridge based company reiterated its view that it had the freedom to research, develop, manufacture and sell its vaccine candidates and argued that the Bavarian legal action should change nothing.
For detailed data on Acambis shares click here.
World markets
London may be boosted by Wall Street ending the week in positive territority on Friday and gains on the Asian markets on overnight trading last night.
As the oil price dropped away from its $67 a barrel highs of midweek, the Dow Jones closed up 4.3 at 10,599.20. Wall Street's confidence overflowed into the Asian markets as trading kicked off this week, with the Nikkei in Tokyo closing up 160.78 points to end at 12,452.51, the highest closing level since July 2001.
In Hong Kong, the Hang Seng closed up 180.02 points at 15,218.63.
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