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J Sainsbury whetted City speculators' appetites today as revived talk of a takeover added almost £1 billion to the stock market value of the UK's third-biggest food retailer.
The shares blazed a trail surging 39p (12%) to 350½p, after briefly touching 373p. The talk in the Square Mile claimed that its 26% shareholder Qatar's sovereign wealth fund had made an offer of 420p a share to the Sainsbury family, which still owns 15% of the company. An offer of that size would value Sainsbury's at £8 billion.
The number of shares changing hands had reached a staggering 40 million shares by lunchtime — almost six times the previous day's entire turnover. Sainsbury's declined to comment.
The Qataris paid around 595p a share for their original stake back in June 2007, when they came in as white knights to fend off an unwanted bid of 600p a share from a consortium led by venture capitalist CVC Partners. Since then Sainsbury's share price has come rattling back as the chain's management struggles to claw back market share in a fiercely competitive market and restore margins.
But the excitement surrounding Sainsbury's failed to be reflected in the rest of the market where profit taking on the back of yesterday's sharp gains saw leading shares give up ground. The FTSE 100 index was left nursing a loss of 20.84 at 5235.26.
Among the miners, profit-taking left Randgold Resources 111p lower at 4561p and BHP Billiton 41p cheaper at 1800½p. Speculators are asking if Xstrata, down 18p at 1013p, will turn its fire power on Lonmin, 38p lower at 1706p, now it has dropped plans for a merger with Anglo American, down 99½p at 2211½p. Deutsche Bank does not seem to think so. It has a sell rating and 1279p target on Lonmin despite the platinum producer's positive comments at its annual market seminar.
The broker says the operating environment in South Africa with safety stoppages and a stubbornly strong operating currency could result in increased costs and impact on production volumes. “In this environment, Lonmin's operational turnaround may take longer than the market expects”, it says.
Trading conditions remain difficult for brewer SABMiller, 2p firmer at 1632p. Lager volumes for the first six months, on an organic basis, fell 1% compared with the previous year, while soft drinks volumes were 1% ahead. Group revenue was supported by price increases taken last year. The group said its financial performance was in line with its own expectations.
Brewer Marston's says sales over the past six months are running pretty much at even-stevens against the same time a year ago — not bad given the changed economic environment. Analysts applauded its guidance that it was comfortable” with their current full-year profit forecasts.
The shares, which have flattened somewhat since September's 110p, today were treading water at 93.5p.
Hovis-to-Branston pickle maker Premier Foods is seeing sales volumes grow as we go into the Christmas season and says it is confident of meeting City profit forecasts, currently ranging between £162 million and £186 million. Mr Kipling's mince pies should be a big seller this year despite belt-tightening in many households. Premier's shares, which have outperformed fellow British food producers by about 24% so far this year, dipped 0.97p to 41.91p.
Third-quarter profits from GKN came in unchanged at £36 million but the motor and aerospace parts supplier warns that considerable uncertainty remains in a number of its markets. Shares fell 6.4p to 121.1p.
OMG put on 5½p to 26p after signing a licensing deal with Microsoft. OMG will use Microsoft wizardry SenseCam in its new camera which hangs around the neck of Alzheimer sufferers, taking photos of their movements and helping them to remember where they have been and what they must do.
