MARKET REPORT: First Group hits buffers asbidder walks away


Shares in First Group hit the buffers as its private equity suitor abandoned plans to buy the train and bus operator.

The stock fell 11.4 per cent, or 14.7p, to 114.2p after Miami-based private equity group I Squared walked away having seen a number of bids rejected.

First Group, whose work includes running the Avanti West Coast mainline and South Western Railways, rejected a 118p a share offer in June which valued it at £1.2billion.

Cancelled: First Group fell 11.4% after Miami-based private equity group I Squared walked away having seen a number of bids rejected

Cancelled: First Group fell 11.4% after Miami-based private equity group I Squared walked away having seen a number of bids rejected 

The company, which also runs around a fifth of local bus services outside London, yesterday revealed I Squared tabled a final offer of 135p a share on Monday.

But it said this still ‘significantly’ undervalued the company.

Mining stocks helped drag the London stock market to a two-month high.

On another day of steady gains for the blue chips, the FTSE 100 index rose 0.4 per cent, or 26.91 points, to 7536.06. 

The FTSE 250 fared less well, however, slipping 0.2 per cent, or 46.35 points, to 20336.41. 

Heavyweight mining stocks were on the march in the top flight as BHP posted its biggest profit for 11 years on the back of soaring coal and copper prices.

The Australian firm, which left the Footsie earlier this year after it shifted its main listing to Sydney, reported a 26 per cent rise in profits to £17.6billion for the year to the end of June – the highest since 2011.

In a further dose of good news, the mining giant surpassed analyst forecasts to declare a final dividend worth £7.4billion. Shares shot up 5.5 per cent, or 122.5p, to 2360p.

Stock Watch – Watches of Switzerland

Rolex seller Watches of Switzerland has cashed in on demand for its products as showrooms reopened following the end of lockdowns.

The UK’s largest luxury watch retailer reported a 25 per cent rise in revenue to £391m in the 13 weeks to the end of July.

The FTSE 250 firm said its ‘strong performance’ during the quarter was helped by pent up demand as customers returned to showrooms. 

Sales of luxury watches jumped 32 per cent to £342million as shares rose 1.6 per cent, or 14p, to 898p.

 

BHP’s bumper results sent shares in Glencore up 4 per cent, or 18.4p, to 482.9p, copper giant Antofagasta rose 3 per cent, or 34p, to 1164.5p and Anglo American climbed 3.5 per cent, or 101.5p, to 3002.5p. 

There was also good news for Rio Tinto, which added 3.9 per cent, or 182.5p, to 4918p.

Among the mid-cap miners, Ferrexpo added 2.5 per cent, or 3.5p, to 143.8p but Fresnillo lost 2.1 per cent, or 15.6p, to 722.8p after early gains.

While BHP expects China ‘to emerge as a source of stability for commodity demand in the year ahead’, analysts issued a note of caution.

Susannah Streeter at Hargreaves Lansdown said: ‘Weaker commodity prices especially for industrial metals remain a risk for the miner ahead especially given worries about China’s property sector, although it’s strong cost control and low-cost operations should give it resilience amid the uncertainty.’

With takeover activity coming to the fore once again – including at Darktrace (up 24.2 per cent, or 100.4p, to 515.2p), Ted Baker (up 16.9 per cent, or 15.7p, to 108.8p) and Sage (down 0.75 per cent, or 5.6p, to 738.2p) – Mondi was on the acquisition trail. 

The FTSE 100 packaging firm has agreed to buy the Duino mill near Trieste in Italy from the Burgo Group for £34million. Mondi expects to complete the deal in the second half of the year.

The company plans to convert the mill’s paper machine to produce around 420,000 tons a year of recycled containerboard. Shares fell 2.8 per cent, or 46.5p, to 1627.5p.

Pharmaceutical giant GSK expanded its reach in the US after snapping up the Massachusetts-based vaccines company Affinivax. GSK will pay £1.7billion upon closing the deal, with two further payments of £500million if clinical development targets are reached.

GSK said it wants to build a ‘strong portfolio’ of speciality medicines and vaccines as shares rose 1.4 per cent, or 19p, to 1425p.

The drug giant’s ill-fated spin off Haleon – which owns consumer health brands including Sensodyne, Panadol and Centrum – edged up 0.9 per cent, or 2.4p, to 269.1p having tumbled since listing on the stock market in London at 330p last month.

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