Investors eyeing a potential £7.2bn takeover of drinks giant Allied Domecq helped stir the London market back into life today.
The prospect of some much-needed merger and acquisition activity, following the emergence of bid talks involving French group Pernod Ricard, sent the FTSE 100 Index up by 46.2 points to 4942.9 at its close.
A positive opening from the Dow Jones Industrial Average, coupled with relief at an easing in the price of oil, were among other positive factors.
Allied shares unsurprisingly topped the Footsie risers board, up 18% or 96p at 633p, as the company confirmed media reports of interest from Pernod. The talk in the City said the Beefeater gin owner could yet attract an approach worth 650p a share, equivalent to £7.2 bn.
After the news from Allied, rival Diageo – which has reportedly shown an interest in Allied’s wine brands – ticked up 3% or 21.5p to 779p. Other drinks groups to make headway included brewers Scottish & Newcastle and SABMiller, which rose 4% or 20p to 479p and 22p to 844p respectively.
In other sectors, pharmaceuticals stocks were making headway with AstraZeneca ahead 65p at 2146p, Shire Pharmaceuticals up 18.5p at 620p and GlaxoSmithKline 26p stronger at 1227p.
The brighter session also benefited shares in retailer Marks & Spencer, which closed more than 2% higher, 7p stronger at 346p.
But shares in Yell Group plunged nearly 10% or 46p to 422.75p after the Office of Fair Trading (OFT) said the classified advertising directory market was not working effectively.
Referring the market to the Competition Commission, the OFT said the Yellow Pages – owned by Yell Group – and Thomson local directories accounted for more than 90% of supply in the UK and this effectively prevented others from entering the market.
Miners were also on the slide as investors took profits despite broker upgrades for BHP Billiton and Xstrata. BHP lost 12p to 707.5p and Xstrata was down 13p at 995p.
Outside the top flight, parcels group Business Post slipped more than 5% or 33p to 610p, despite announcing a strong start for its new postal delivery service UK Mail.
The progress for the rival to the Royal Mail was offset by a warning that profits for the group would be slightly below market expectations.
Software group Autonomy fared better, surging 13% or 22.75p to 199.25p, after the former blue-chip company forecast first quarter results “considerably” ahead of market and its own internal forecasts.
Shares in Eurotunnel closed unchanged at 15.25p after the beleaguered Channel Tunnel group said it had moved closer to starting its long-awaited debt restructuring. The stock had earlier lifted by as much as 2%.
The biggest Footsie risers were Allied Domecq up 96p at 633p, Rentokil Initial ahead 7.5p at 173.5p, Scottish & Newcastle up 20p at 479.5p and BAT ahead 32p at 957.5p.
The biggest fallers were Yell Group down 46p at 422.75p, Antofagasta off 24p at 1219p, BHP Billiton down 12p at 707.5p and Tate & Lyle off 7p at 522.5p.