BP’s slide after $7bn deal helps drag FTSE lower

BP has unveiled plans for a $7bn spending spree in the Brazil and the Gulf of Mexico.

It has agreed to pay that amount to US producer Devon Energy for assets in the region which will help it meet its production growth target and also give it entry into Brazil. At the same time BP is selling Devon a 50% stake in its Kirby oil sands venture in Canada for $500m. Analysts said it was difficult to tell whether BP was paying a good price since the assets included fields which were still being explored. In addition the Brazil operations are in the Campos basin, rather than Santos where some major discoveries have been made.

So BP’s shares have slipped 5.3p to 619.6p, knocking nearly 4 points off the FTSE 100. Overall the leading index is pausing for breath after its recent gains, falling 18.05 points to 5622.52. Owen Ireland at ODL Securities said:

The markets are taking a breather and it appears that traders are using this time to plot the next move. There is an air of uneasiness – the run up has slowed, and has almost come to a standstill. It feels as if we are at a pivotal point of the year – will the run continue, or are we set for a leg down?”

Other fallers included Smith and Nephew. The medical equipment group is down 21p to 674.5p after news last night that a US court had ruled against the company and in favour of Kinetic Concepts in a patent dispute. S&N said it would seek to overturn the ruling.

Insurer Old Mutual has fallen 2.6p to 121p after it announced a shake-up including disposing of its US life and asset management businesses via a sale and flotation respectively, to reduce its debt by £1.5bn. Eamonn Flanagan at Shore Capital said:

The issue is that the group remains highly vulnerable to market conditions both in terms of the likelihood of disposals and IPO (proceeds to be used to pay down debt) but also on the issues in its Bermuda business. Hence, despite the 32% discount to our 2010 forecast MCEV net asset value of 180p, we reiterate our hold recommendation.

Connaught climbs on 3i takeover talk

The takeover talk among the mid-caps continues, with Connaught, the support services group, the latest name in the frame.

Traders heard suggestions that private equity group 3i might be looking to raise €350m in the bond market to help buy the company. Earlier this year Connaught announced the surprise departure of well respected chief executive Mark Davies. Connaught is currently the biggest riser in the FTSE 250, up 8.5p at 311p.

Meanwhile Tullett Prebon, the interdealer broker, fell 17.9p to 372.1p after yesterday’s bid inspired run. The company said it was in offer talks, with analysts suggesting Macquarie, Bank of China, New York-based GFI or one of the stock exchanges as possible purchasers. Panmure Gordon said:

We believe one of the exchanges to be the most likely bidder given the strategic rationale and their apparent intentions to increase presence in OTC markets, particularly in credit and interest rate swaps. However, we would not rule out an MBO. We value Tullett’s equity at £930m, equivalent to 10.4 times prospective earnings, in line with the current valuation for the interdealer broker sector. We have raised our target price from 365p to 430p to reflect bid interest and following yesterday’s 26% move in the share price, we move from buy to hold.

Connaught climbs on 3i takeover talk

The takeover talk among the mid-caps continues, with Connaught, the support services group, the latest name in the frame.

Traders heard suggestions that private equity group 3i might be looking to raise €350m in the bond market to help buy the company. Earlier this year Connaught announced the surprise departure of well respected chief executive Mark Davies. Connaught is currently the biggest riser in the FTSE 250, up 8.5p at 311p.

Meanwhile Tullett Prebon, the interdealer broker, fell 17.9p to 372.1p after yesterday’s bid inspired run. The company said it was in offer talks, with analysts suggesting Macquarie, Bank of China, New York-based GFI or one of the stock exchanges as possible purchasers. Panmure Gordon said:

We believe one of the exchanges to be the most likely bidder given the strategic rationale and their apparent intentions to increase presence in OTC markets, particularly in credit and interest rate swaps. However, we would not rule out an MBO. We value Tullett’s equity at £930m, equivalent to 10.4 times prospective earnings, in line with the current valuation for the interdealer broker sector. We have raised our target price from 365p to 430p to reflect bid interest and following yesterday’s 26% move in the share price, we move from buy to hold.

Connaught climbs on 3i takeover talk

The takeover talk among the mid-caps continues, with Connaught, the support services group, the latest name in the frame.

Traders heard suggestions that private equity group 3i might be looking to raise €350m in the bond market to help buy the company. Earlier this year Connaught announced the surprise departure of well respected chief executive Mark Davies. Connaught is currently the biggest riser in the FTSE 250, up 8.5p at 311p.

Meanwhile Tullett Prebon, the interdealer broker, fell 17.9p to 372.1p after yesterday’s bid inspired run. The company said it was in offer talks, with analysts suggesting Macquarie, Bank of China, New York-based GFI or one of the stock exchanges as possible purchasers. Panmure Gordon said:

We believe one of the exchanges to be the most likely bidder given the strategic rationale and their apparent intentions to increase presence in OTC markets, particularly in credit and interest rate swaps. However, we would not rule out an MBO. We value Tullett’s equity at £930m, equivalent to 10.4 times prospective earnings, in line with the current valuation for the interdealer broker sector. We have raised our target price from 365p to 430p to reflect bid interest and following yesterday’s 26% move in the share price, we move from buy to hold.

AstraZeneca advances into emerging markets with Torrent deal

AstraZeneca is linking up with Indian group Torrent Pharmaceuticals to boost its presence in emerging markets.

In its first partnership with a generic drugs manufacturer, Astra will initially buy 18 products from Torrent and brand and market them in nine countries. Other medicines and countries may be added later. The motivation for the deal becomes clear from Astra’s forecast that “the emerging markets are forecast to contribute 70% of pharmaceutical industry growth in the next five years, and branded generics represent approximately 50% by value in these emerging markets.” Shore Capital analyst Brian White said:

Ahead of its Emerging Markets Day on March 16, and fulfilling one of the commitments given at the full-year results announcement, Astra has announced a license and supply agreement with Indian generics company Torrent Pharmaceuticals. These undisclosed generics will be branded by Astra and marketed them in several (currently available in 18 countries) of its emerging markets territories.

While there has been a perception that Astra has perhaps been slower to capitalise on the emerging markets opportunity than some of its peers, we believe it is worth highlighting that circa 13% of the company’s revenues are already derived from this source. With 85% of the world’s population residing in emerging markets, the industry has identified this area as a priority, capitalising on the emerging wealthy middle class where branded generics represent around 50% (by value) of the established market. For Astra it is all part of its strategy to mitigate the widely anticipated loss of revenues to generics and attain its long term 2010-2014 guidance ($28bn-$34bn in sales).

In a market drifting lower, however, the news has failed to inspire Astra’s shares, which are down 6.5p at 2943.5p. The shares came under pressure earlier this week following the failure of one of its experimental cancer treatments.

Overall the FTSE 100 is now down 9.31 points at 5631.26. Miners are weaker on worries about possible monetary tightening in China after signs of strong loan growth in the country and inflationary pressures.

So Fresnillo has fallen 22.5p to 844.5p while Xstrata is off 26.5p at £11.84.

Retailers are moving higher after reasonable results from Argos and Homebase owner Home Retail, up 4.8p at 272.6p, while Thomas Cook has climbed 7.6p to 248p following a well received investor day yesterday. Panmure Gordon said:

Yesterday Thomas Cook hosted an investor day outlining how the group intends to move towards being a 5.5% 6.0% EBIT margin business over the next three to five years. Whilst there was no news on the group’s refinancing, there were enough encouraging signs for us to remain positive on the stock with around 14% upside potential to our long-term earnings per share forecasts. The next catalyst is the group’s AGM trading statement on 25 March and we retain our buy recommendation and 315p price target, implying 31% upside potential.

AstraZeneca advances into emerging markets with Torrent deal

AstraZeneca is linking up with Indian group Torrent Pharmaceuticals to boost its presence in emerging markets.

In its first partnership with a generic drugs manufacturer, Astra will initially buy 18 products from Torrent and brand and market them in nine countries. Other medicines and countries may be added later. The motivation for the deal becomes clear from Astra’s forecast that “the emerging markets are forecast to contribute 70% of pharmaceutical industry growth in the next five years, and branded generics represent approximately 50% by value in these emerging markets.” Shore Capital analyst Brian White said:

Ahead of its Emerging Markets Day on March 16, and fulfilling one of the commitments given at the full-year results announcement, Astra has announced a license and supply agreement with Indian generics company Torrent Pharmaceuticals. These undisclosed generics will be branded by Astra and marketed them in several (currently available in 18 countries) of its emerging markets territories.

While there has been a perception that Astra has perhaps been slower to capitalise on the emerging markets opportunity than some of its peers, we believe it is worth highlighting that circa 13% of the company’s revenues are already derived from this source. With 85% of the world’s population residing in emerging markets, the industry has identified this area as a priority, capitalising on the emerging wealthy middle class where branded generics represent around 50% (by value) of the established market. For Astra it is all part of its strategy to mitigate the widely anticipated loss of revenues to generics and attain its long term 2010-2014 guidance ($28bn-$34bn in sales).

In a market drifting lower, however, the news has failed to inspire Astra’s shares, which are down 6.5p at 2943.5p. The shares came under pressure earlier this week following the failure of one of its experimental cancer treatments.

Overall the FTSE 100 is now down 9.31 points at 5631.26. Miners are weaker on worries about possible monetary tightening in China after signs of strong loan growth in the country and inflationary pressures.

So Fresnillo has fallen 22.5p to 844.5p while Xstrata is off 26.5p at £11.84.

Retailers are moving higher after reasonable results from Argos and Homebase owner Home Retail, up 4.8p at 272.6p, while Thomas Cook has climbed 7.6p to 248p following a well received investor day yesterday. Panmure Gordon said:

Yesterday Thomas Cook hosted an investor day outlining how the group intends to move towards being a 5.5% 6.0% EBIT margin business over the next three to five years. Whilst there was no news on the group’s refinancing, there were enough encouraging signs for us to remain positive on the stock with around 14% upside potential to our long-term earnings per share forecasts. The next catalyst is the group’s AGM trading statement on 25 March and we retain our buy recommendation and 315p price target, implying 31% upside potential.

AstraZeneca advances into emerging markets with Torrent deal

AstraZeneca is linking up with Indian group Torrent Pharmaceuticals to boost its presence in emerging markets.

In its first partnership with a generic drugs manufacturer, Astra will initially buy 18 products from Torrent and brand and market them in nine countries. Other medicines and countries may be added later. The motivation for the deal becomes clear from Astra’s forecast that “the emerging markets are forecast to contribute 70% of pharmaceutical industry growth in the next five years, and branded generics represent approximately 50% by value in these emerging markets.” Shore Capital analyst Brian White said:

Ahead of its Emerging Markets Day on March 16, and fulfilling one of the commitments given at the full-year results announcement, Astra has announced a license and supply agreement with Indian generics company Torrent Pharmaceuticals. These undisclosed generics will be branded by Astra and marketed them in several (currently available in 18 countries) of its emerging markets territories.

While there has been a perception that Astra has perhaps been slower to capitalise on the emerging markets opportunity than some of its peers, we believe it is worth highlighting that circa 13% of the company’s revenues are already derived from this source. With 85% of the world’s population residing in emerging markets, the industry has identified this area as a priority, capitalising on the emerging wealthy middle class where branded generics represent around 50% (by value) of the established market. For Astra it is all part of its strategy to mitigate the widely anticipated loss of revenues to generics and attain its long term 2010-2014 guidance ($28bn-$34bn in sales).

In a market drifting lower, however, the news has failed to inspire Astra’s shares, which are down 6.5p at 2943.5p. The shares came under pressure earlier this week following the failure of one of its experimental cancer treatments.

Overall the FTSE 100 is now down 9.31 points at 5631.26. Miners are weaker on worries about possible monetary tightening in China after signs of strong loan growth in the country and inflationary pressures.

So Fresnillo has fallen 22.5p to 844.5p while Xstrata is off 26.5p at £11.84.

Retailers are moving higher after reasonable results from Argos and Homebase owner Home Retail, up 4.8p at 272.6p, while Thomas Cook has climbed 7.6p to 248p following a well received investor day yesterday. Panmure Gordon said:

Yesterday Thomas Cook hosted an investor day outlining how the group intends to move towards being a 5.5% 6.0% EBIT margin business over the next three to five years. Whilst there was no news on the group’s refinancing, there were enough encouraging signs for us to remain positive on the stock with around 14% upside potential to our long-term earnings per share forecasts. The next catalyst is the group’s AGM trading statement on 25 March and we retain our buy recommendation and 315p price target, implying 31% upside potential.

Barclays dips on US acquisition talk

Banks are mostly edging higher at the moment but an exception is Barclays on talk it is interested in a US acquisition.

Barclays shares have dipped 2.7p to 343.1p after reports it is eyeing a US retail operation to help diversify away from its booming investment banking business. Danny Clarke at Shore Capital commented:

The acquisition would help rebalance the group’s operations away from Barclays Capital, towards its longer term target of around one-third contribution from Investment Banking operations. Recent acquisitions of US Retail operations by UK Banks (notably, the acquisition of Household International by HSBC) have had somewhat mixed success. The strategy is in its early stages, with formal proposals expected to be put before the board in the coming months. It is possible that the news has emerged ahead of the board proposal to assess how receptive the investment community would be to the deal.

It is possible that reaction will be lukewarm at first, particularly given regulatory uncertainty and fragile economic recovery – however, noting Barclays’ successful acquisition and integration of Lehman’s US operations, we would be supportive of the right deal at the right price (with the right structure). We also take comfort from the board’s confidence in considering a transaction on this scale, at this time. No formal targets have been identified, but those speculated in the report – SunTrust, PNC Financial Trading and US Bancorp - appear likely given circumstances and size. Trading at a 5% discount to 2010 tangible book, we continue to rate Barclays a buy.

Elsewhere Royal Bank of Scotland has risen 1.16p to 40.14p and Lloyds Banking Group is 1.15p better at 54.33p despite the government proposing tougher steps on disclosing bankers pay.

Overall the FTSE 100 has reversed earlier falls to edge up 4.53 points to 5606.83. The pound slipped below $1.49 for the first time in a week before recovering slightly, following yesterday’s UK trade figures and warnings from Fitch ratings agency about the country’s deteriorating credit situation. Industrial production numbers are due shortly, with analysts expecting a 0.3% rise.

Tullett Prebon shares climb on bid approach news

Terry Smith’s Tullett Prebon has jumped around 17% after confirming market speculation about a takeover by saying it was in talks with a possible bidder.

Although it described the discussion as preliminary, the interdealer broker’s shares have jumped 52.6p to 362.8p, valuing the business at around £780m. A number of names have been linked with a takeover, including Australia’s Macquarie Group, Bank of China and New York based GFI Group.

Earlier this week Tullett’s shares came under pressure after it unveiled a 1% rise in full year pre-tax profits to £157m.

Tullett Prebon shares climb on bid approach news

Terry Smith’s Tullett Prebon has jumped around 17% after confirming market speculation about a takeover by saying it was in talks with a possible bidder.

Although it described the discussion as preliminary, the interdealer broker’s shares have jumped 52.6p to 362.8p, valuing the business at around £780m. A number of names have been linked with a takeover, including Australia’s Macquarie Group, Bank of China and New York based GFI Group.

Earlier this week Tullett’s shares came under pressure after it unveiled a 1% rise in full year pre-tax profits to £157m.

Next Page »