Market Round-up: Rumour of French connection for Aegis has traders excited

Rosamund Urwin
4 Mar 2010

Is French financier Vincent Bolloré eyeing up media group Aegis? Long-running speculation that the chairman of Aegis's French rival, Havas, could be plotting a bid was today picking up the interest of traders.

Bolloré has a 29.8% stake in Aegis and the rumour is he may be reviewing his options. The talk has long been that he could seek to merge the businesses.

Hobart Capital is advising clients to buy the shares even without any bid speculation.

“Although the stock has moved up with the sector in the last five days, it seems that they remain undervalued. The top line performance could be better than expected,” it said.

The media group delivers results on 18 March. Today Aegis added 0.1p to 122.6p.

Shares in London dipped as losses from commodity stocks weighed on the FTSE 100. The index fell 5.3 points to 5527.86 in light trading ahead of the widely-watched US unemployment figures tomorrow.

“Everyone is waiting for non-farm pay-rolls on Friday for direction,” said Manoj Ladwa, senior trader at ETX Capital. “It's very quiet out there.”

One dealer was taking a common tack on a quiet day in the Square Mile — returning to talk about a possible bid for International Power. The FTSE 100-listed energy generator held talks with France's GDF Suez last year, but the discussions ended without an agreement being reached.

As GDF posted full-year figures, the utility group's chief executive and chairman, Gérard Mestrallet said the company's growth model was “fundamentally organic” and that it favoured asset swaps, but this wasn't enough to convince everyone in the City.

“There have been a couple of big buyers piling in again — some people seem to be betting there could still be a deal ahead,” said one trader. “Definitely one to keep an eye on.”

The shares fell 1.6p at 327.4p today.

But it was Amec which topped the Footsie loser list after the oil services and engineering group warned 2010 will be another challenging year.

On the mid-tier, SVG Capital was the biggest winner after the biggest investor in private equity house Permira's funds said its net asset value increased by 30% in the second half of last year. Its shares shot up 12¼p to 146p.

Arriva was also on the rise thanks to some positive broker sentiment and continuing speculation about a takeover of the buses and trains operator.

The company has already attracted the attentions of France's Keolis, with whom it is in preliminary merger talks, but the rumour is Arriva could be eyed up by other potential suitors, such as KKR and ComfortDelGro.

Japanese broker Nomura has raised its target price for the shares to 590p. Today they added 7p to 570p.

Among small caps, AssetCo, which supplies London's fire engines, climbed 10½p to 63½p after winning a £40 million contract with the UAE. It will provide the Arab country with fire-fighting services for three years.

Analysts at stockbroker Arden said: “This can be considered a trial contract with the long-term potential to roll out this model across the UAE.”

Arden has raised its forecasts for next year's earnings and recommends buying the shares.

Trader talk

Artemis Venture Capital Trust managers Andy Gray and Lindsay Whitelaw have bought another 200,000 shares in Pressure Technologies — parent company of seamless steel gas cylinder manufacturer Chesterfield Special Cylinders — bringing the trust's stake to 5.9%, worth £1,477,677.40.

The move follows Pressure Technologies' announcement that it had splashed out £2.25 million to Al-Met Limited — a niche maker of specialised, precision-engineered valve-wear parts used in the oil and gas industries. Pressure Technologies also owns Chesterfield BioGas, which was formed in November 2008 in a co-operation agreement with Greenlane Biogas Limited. Greenlane upgrades raw biogas to vehicle-quality fuel and Pressure Technologies has exclusive rights to market Greenlane equipment in the UK and Eire.

Tomorrow's agenda

Headhunter Hays said it was hiring staff for the first time since 2008 when it reported last month. Analysts said that was a sign of improvement in the battered recruitment sector. But it still posted a 70% plunge in pre-tax profit, a figure that will weigh on the mind of Michael Page International investors ahead of its preliminary results tomorrow.

Michael Page is more focused on overseas markets and has less of a hand in finding public sector jobs, so analysts at Charles Stanley reckon it will report an improving picture.

“We believe Michael Page is among the best placed of the staffers to achieve considerable earnings growth over the next cycle,” they said. “With the potential of the group in our view still not fully priced in, we anticipate further positive share price performance as the cycle matures.”

The non-farm payroll figures will show recruitment levels in the US. Experts forecast a 50,000 drop in unemployment levels for February.

Portfolio

BUY: PERSIMMON
Splurge on housebuilder Persimmon, Panmure Gordon says. Yesterday it posted full-year results with pre-tax profit of £77.8 million for 2009, after plunging to a £780 million loss the previous year. Panmure says those figures beat expectations and its analysts reckon they will upgrade their forecasted figures for 2010. It names a 555p target price.

SELL: PROVIDENT FINANCIAL
Collins Stewart tells shareholders in doorstep lender Provident Financial to get shot of the stock. Analysts note that Provident's pre-tax profit came in £5 million below its forecast, and say that the outlook is “negative” because market conditions are unlikely to improve. Collins Stewart analysts say they see no future for dividend growth.

HOLD: ROTORK
Hang on to shares in engineer Rotork, say analysts at Altium Securities. The industrial valve controls firm posted pre-tax annual profit of £91.5 million yesterday, “comfortably ahead” of Altium's estimate. But analysts note that Rotork's order book is down 16%.