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Is Arriva in talks with a possible bidder? The whisper on traders' lips today was that the buses and trains group has attracted the attentions of a new suitor, rumoured to be German transport giant Deutsche Bahn. A price of 700p a share was mentioned, pushing Arriva's shares up 13p to 580¼p.
Recent speculation has also kicked up private-equity house KKR and Singapore's ComfortDelGro as being interested in a takeover of Arriva, which this month ended talks with France's Keolis over a possible merger.
Today's speculation around Arriva came as analysts predicted that investors could have a flurry of mergers and acquisitions activity to look forward to later this year. Stockbroker Arden Partners said that despite an apparent lack of funding, deals could be a big feature of the coming nine months.
“Quoted corporate UK is generally in good financial health, unlike the consumer or Government,” said analyst Ewen Stewart. “In an environment where only relatively modest organic growth is probable for Western countries, M&A is likely to prove an increasingly attractive option.”
The City's rumour-mongers are fond of Argos and Homebase owner Home Retail Group as a potential takeover target, with Wal-Mart owned Asda and private equity both being touted as possible bidders. Despite chief executive Terry Duddy's attempts to play down takeover talk last week, the gossip was once again doing the rounds today and the retailer's shares gained 1.9p to 277p.
Chatter around computer games retailer Game Group was also revived ahead of Thursday's fourth-quarter results from its US peer GameStop, long whispered in the Square Mile as a logical suitor for Game. Arden's retail expert Nick Bubb sets a 100p price target for Game's shares, which today added 1p to 88p.
Shares in London bounced back from yesterday's sell-off, helped higher by a strong showing from the heavyweight financial and mining stocks. The FTSE 100 climbed 29.24 to 5623.09.
Royal Bank of Scotland extended its recent rally on talk that the state-backed bank is planning to restructure up to £10 billion of its debts. The move is intended to improve its position with bond investors and boost its capital strength. Investors took this as a good sign and the shares rose 1p to 43.7p. But Seymour Pierce remains a seller, warning that RBS's investment banking revenues could disappoint.
The City seemed more optimistic about the prospects for Barclays' investment-banking arm. Morgan Stanley's boffins predict that Barclays Capital could deliver a £7 billion profit in the next financial year.
Barclays put on 8p to 356.7p, while its rivals were also helped higher with HSBC gaining 8.4p to 689.4p and Lloyds Banking Group rising 0.25p to 57.8p.
JD Wetherspoon may be loved for its cheap pub grub and low-cost drinks but some in the City reckon that it is looking expensive. Shares in the boozer chain shed 21p to 504½p as HSBC said that it looks dear compared with its pub sector peers.
Tomorrow's agenda
The latest set of official unemployment figures are expected to show a slight rise in the number of jobless Brits in the three months to January, from 7.8% to 7.9%. The number on Jobseeker's Allowance over last month is also expected to have grown by 6,000 to 1.641 million.
Dubai-based generic drugmaker Hikma Pharmaceuticals updates the market, and analysts reckon on nearly $94 million (£62 million) in annual pre-tax profits.
Members of oil cartel Opec are to meet in Vienna to talk about oil production levels. Opec's output targets have not changed since December 2008, and currently stand at 4.2 million barrels per day.
Black cab-maker Manganese Bronze Holdings issued a profits warning at the start of the year. Shareholders will want to know whether its problems have lessened in the past few months, and will be looking for an upturn in sales — which were down during the recession — when Manganese reports its full-year results.
Portfolio
BUY: LOOKERS
Investors in car dealership chain Lookers should expect a solid year ahead, say analysts at KBC Peel Hunt who name the stock a buy. They flag up Lookers' parts division — which has a turnover of more than £150 million — and say shares are undervalued.
SELL: CARLUCCIO'S
Seymour Pierce says get shot of stock in Italian deli chain Carluccio's. It has the lowest margins of its peer group because of its small scale, say analysts, who prefer rivals Prezzo and The Restaurant Group. The broker gives Carluccio's a target price of 72p.
HOLD: ITV
Nomura says hang on to shares in broadcaster ITV — rating it neutral. “Strength in the UK ad market has continued and the ITV family could be up as much as 30% in April and 25% in May,” it says, giving the stock a 65p target price.
Reader views (1)
I travel on the train regularly from Shrewsbury to London. One service (Wrexham and Shropshire) is owned by Deutsche Bahn - trains are clean and punctual, staff interested and well informed. They so obviously have good management.
Arriva Trains Wales is the main operator from Shrewsbury. Everytime I travel there is at least one very late running train. Never travel on a Sunday as Arriva run two coach trains when at least four are needed. They are unresponsive to customers. staff are surly or not present at all. If DB take over Arriva the current management should be very frightened but the staff and passengers can have some optimism.
- Mike Skinner, Sutton, GB, 16/03/2010 13:26
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