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Market week Takeover on the cards for AstraZeneca
(Guardian (UK) Via Acquire Media NewsEdge) Recent boardroom upheaval at AstraZeneca, including the announcement that longstanding chief executive David Brennan would leave in June, could prompt a bid for the business, analysts suggested yesterday.
Despite GlaxoSmithKline ruling itself out as a possible predator on Thursday, UBS said Astra was increasingly likely to see major strategic changes this year. The bank's analyst Gbola Amusa saw three possibilities, not mutually exclusive: Astra buys low cost medicines to distribute through its existing geographical network; it makes bolt-on acquisitions to help mitigate competition from generic drugmakers; the company is sold, perhaps at a 30% premium to its current price. UBS raised its price target on Astra from pounds 34 to pounds 35, but in a slumping market, its shares edged 16.5p lower to pounds 27.11.
Overall the FTSE 100 dropped 111.49 points yesterday to 5655.06, a 1.9% decline, its lowest for three weeks, and the biggest one-day fall since 10 April. Until yesterday the market had reacted fairly calmly despite a host of downbeat economic data from Europe and America. But yesterday's poor European service sector surveys and, most importantly, a disappointing US non-farm payroll number unnerved investors, who decided not to take risks ahead of the weekend's Greek and French elections and the UK bank holiday.
Mining companies dominated the fallers, on worries that recent data indicated growing signs of a global slowdown. Antofagasta, which reported disappointing copper production figures on Thursday, fell 36p to pounds 10.72, Kazakhmys closed 51p lower at 774p and Eurasian Natural Resources Corporation dropped 33p to 520p.
Tullow Oil lost 88p to pounds 14.69 following disappointing drilling news from its Teak-4A appraisal well off Ghana. Tullow's partner Kosmos Energy said the well had encountered thin, non-commercial reservoirs and was being plugged and abandoned. BG fell another 60.5p to pounds 13.64 on continuing worries about the gases group's balance sheet.
But pump specialist Weir recovered 19p to pounds 16.35 after recent falls. The company had been hit by concerns about its prospects, with mining companies such as Rio Tinto and BHP Billiton cutting expenditure adding to worries about future growth in the oil market.
Elsewhere Aviva, where shareholders rebelled against the insurer's pay policies at Thursday's annual meeting, fell 9p to 302.3p.
Marks & Spencer lost 11p to 344.5p after it launched a low key sale, which helped push Debenhams down 5.05p to 80.4p. Liberum Capital cut its recommendation on Debenhams from hold to sell. Ahead of fourth quarter sales figures due next week, Dixons Retail dipped 0.52p to 18.3p, although Panmure Gordon's Philip Dorgan issued a buy note with a 28p price target. Home Retail continued its decline, closing down 2.1p at 81.25p. But HMV jumped 12% to 4.15p as it predicted a return to profit.
Among the mid-caps, disappointing trading statements left electronics group Laird 14p lower at 198p and Rentokil Initial down 3.45p to 83.15p. Rentokil's struggling parcels business City Link lost pounds 12.7m in the first quarter, meaning overall profits rose just 1.1%. The company claimed City Link would improve in the second half.
Drax dipped 6.5p at 564p, despite the power group being tipped earlier in the week as a possible takeover target for the likes of Germany's RWE or Centrica, while bid talk also returned to engineering group Invensys, down 13.3p at 202.7p. Siemens, China's CSR and ABB have all been mentioned as possible predators.
Cable & Wireless Worldwide slipped 0.19p to 32.76p on continuing jitters about Vodafone's 38p a share offer. Fund manager Orbis, which owns around 19% of CWW, said the deal undervalued the business.
A 2.4% fall in house prices in April, according to the Halifax, pushed building shares lower. Taylor Wimpey lost 3.96p to 47.69p and Barratt Developments dropped 10p to 124.3p.
Yesterday's drop in the FTSE 100 taking it to 5655, its lowest for three weeks, after poor figures from Europe and the US
1.9%
(c) 2012 Guardian Newspapers Limited.
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