Blue-chips Cadbury and International Power saw contrasting fortunes today with both firms under the takeover spotlight.
Cadbury shares passed 800p as investors bet on a higher offer from US giant Kraft tomorrow, but IP slid more than 3% as talks over a possible tie-up with France’s GDF-Suez ended.
The wider FTSE 100 Index made decent progress, up 39 points to 5494.4 although there was little direction from US markets, which were closed for a public holiday.
The pound meanwhile was trading above 1.63 against the dollar, while worries over Greece’s fiscal position helped it hit a four-month high of almost 1.14 against the euro.
But it was M&A activity which grabbed attention in dealing rooms with Kraft thought to be preparing an offer of between 820p and 830p a share, which would value Cadbury at up to £11.4bn (€12.9bn)
Cadbury shares were 14p or 2% higher by mid-morning, but at 807.5p this was below the rumoured price as investors cast doubt on Kraft’s chances of success. Major shareholder Standard Life Investment said Kraft would need to pay 900p.
Takeover speculation also caused shares in International Power to rise by 10% at one stage before plummeting back down in a reversal of fortune.
The majority owner of the Rugeley coal-fired power station in Staffordshire was the subject of talk about a tie-up with France’s GDF-Suez, including a possible takeover.
IP shares were at the top of the risers board, but finished the day as the leading faller after it said the talks were over. Shares fell 11p to 311p.
Elsewhere, miners enjoyed another strong session after Eurasian Natural Resources lifted 38.5p to 1030p, and Anglo American cheered 86.5p to 2809p.
And retailers were on the risers board even though broker Citigroup reduced its price target on six retail stocks. Marks & Spencer shares, which have been battered in recent days, recovered 11p to 360.6p, while Home Retail Group added 6.7p to 267.8p.
In other retail news, internet fashion firm ASOS slipped 7% as it reported a slowing in sales growth over the five weeks to the start of January.
Sales were up 30% for the period, but analysts noted this was below the trend reported in November. Shares were 33p lower at 435p.
Back in the top flight, BSkyB fell 1% – down 6.5p to 567p – after BT said it planned to undercut its rival on the price of its Sky Sports channels if a regulatory probe forces the pay-TV firm to drop its wholesale charges.
And Tullow Oil featured on the FTSE 100 Index risers board after the oil explorer said it was close to the biggest deal in its history by exercising rights to buy £800m (€908m) of Ugandan oil fields. Shares lifted 30p to 1369p.
The biggest Footsie risers were ENR ahead 38.5p at 1030p, Anglo American up 86.5p at 2809p, Lloyds Banking Group up 1.8p at 58.58p and M&S ahead 11p at 360.6p.
The biggest Footsie fallers were International Power down 11p at 311p, Man Group off 4.4p at 288.3p, BSkyB down 6.5p at 567p and BAE Systems down 3.3p at 364.7p.