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Shares in Wolseley, the world's biggest plumbing-equipment supplier, soared 107p to 1456p today after American investor Gores Group took the lossmaking US subsidiary Stock Building Supply off its hands.
Wolseley is putting SBS into Chapter 11 bankruptcy protection and selling 51% of the company to Gores, leaving it with the remaining 49% and a bookful of construction loans. Gores will also put up $75 million (£50 million) of new finance and provide a $125 million bridging line.
The UK firm says the deal will enable it to spread SBS's losses around and conserve cash.
Wolseley shares have slumped from a peak of 5500p in July 2007, hammered by a series of profit warnings. Thousands of jobs have been shed after the collapse in the US housing market. Goldman Sachs is a buyer of Wolseley, jacking up its target price from 1212p to 1602p.
Shares generally continued to build on yesterday's strong gains after a slow start. The FTSE 100 index climbed back above 4400 in thin trading for the first time since January, with a rise of 74.07 to 4411.01.
The index shrugged off the ill effects of a large number of blue-chip companies going ex-dividend. Dealers said it was the equivalent of a nine-point fall in the Footsie.
The firms included Drax, down 31½p at 484p, Antofagasta, 40p off at 605p, Whitbread, 14p cheaper at 937p, Admiral, 18½p easier at 888½p, Bunzl, 21½p lighter at 524½p, Wm Morrison, ¾p lower at 239p, and Royal Dutch Shell, down 11p at 1567p.
Evidence of a slowdown in the pace of private sector unemployment gave a further lift to Wall Street this afternoon. The Dow Jones rose 33.85 to 8444.5.
BAE Systems shaded 6p to 358¾p on the back of its latest update, which said trading was consistent with expectations. Europe's largest defence and supplier of subsystems for the F-22 stealth fighter aircraft is looking for good growth and will be topping up its pensions funds in the US and the UK.
Business services supplier Capita rose 4½p to 692½p after a trading update said it has performed well during the first four months and has generated strong cash flow despite the volatile economic climate.
Hotelier Millennium & Copthorne was the subject of a bear squeeze after reporting a halving of first-quarter profits and difficult trading conditions. The shares jumped 60½p to 281½p.
The banks remain high on the brokers' agendas.
Some take the view a recovery is now under way, and there is more to go for. Others believe their recent strong run sees them up with events. UBS is among the latter.
It has cut its recommendation on Barclays, down 12¼p at 285¾p, which will give a first-quarter trading update tomorrow, and Royal Bank of Scotland, 0.2p lighter at 47.8p and reporting on Friday, to sell. Its target for RBS is tweaked 5p higher to 35p while Barclays is kept unchanged at 260p.
Lloyds Banking Group, off 1.3p at 119.8p, is its sole buy among the UK lenders, with a 140p target. HSBC, up 24¾p at 542¼p, is rated a buy and is its preferred pick among the global banks.
ING has raised its target on Barclays from 150p to 260p and its rating from sell to hold. It also raised its sights on Lloyds from 105p to 180p, saying it will be America's best-capitalised bank but with the biggest losses.
Heritage Oil rose 94½p to 495½p after striking it rich at its Miran West-1 well in Iraq. The oil explorer estimates the well has reserves of between 2.3 billion and 4.2 billion barrels with a recovery factor of between 50% and 70%.
Heritage remains one of Hanson Westhouse's favourites, oil analyst Malcolm Graham-Wood saying “keep buying it”.
Speculative buying continued to drive Carluccio's higher, shares in the restaurant chain adding 4½p at 97p in the wake of yesterday's 17% gain. The company has received a takeover approach, and City speculators say it could fetch up to 120p a share.
ITV put on 3p at 39p. The shares have come up from 31p since Michael Grade gave up day-to-day running of the independent broadcaster two weeks ago.
