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London afternoon: BG bid talk gets louder

20 Aug 10

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  • LONDON (ShareCast) - Leading stocks trimmed their losses over the lunch time session. Footsie remains in negative territory, however, despite a strong showing by index heavyweight BG Group, which is the subject of bid speculation.

    Oil giant BG, the fourteenth largest publicly quoted UK listed company by market value, is in demand on rumours that it is being stalked by bigger players in the sector. Anglo-Dutch oil giant Royal Dutch Shell has been mentioned as one company that might be preparing a bid of 1600p per share but other names are also being bandied about, such as Petrobras, Gazprom, Sinopec and Exxon.

    While traders liven an up an otherwise dull day by playing “guess the potential BG bidder” South Korean state-run oil company KNOC has given them a confirmed bid to think about. KNOC has launched a hostile £18 a share cash bid for Dana Petroleum, valuing the Aberdeen-based oil company at £1.87bn.

    “We believe that we have no alternative other than to put our attractive proposal directly to shareholders given the inability to reach a private agreement with the board of Dana,” said Seong-Hoon Kim, senior executive vice president of KNOC.

    Panmure Gordon thinks KNOC’s bid will inevitably succeed, “given that 48.62% of shareholders are supporting the offer.”
    With the takeover of Dana by KNOC looking, in Panmure Gordon’s words, “done and dusted”, speculation has turned to who might be next on the chopping block in the oil sector, with FTSE 250 stocks Premier Oil, JKX Oil and Soco International all attracting speculative stalk.

    Panmure Gordon, meanwhile, draws attention to Dana Petroleum’s 27.5% stake in Faroe Petroleum, and suggests that this could be used as “a potential springboard for a bid for the company whether by KNOC itself or if it is sold on to another potential predator.”

    A proposed settlement of litigation relating to hedge fund manager Man Group’s bid for GLG Partners will lead to changes to the merger agreement. The changes include a reduction in the break fee payable to either GLG or Man from $26m to $48m. The period the break fee is payable will be cut from 12 months to nine months.

    Mitchells & Butlers (M&B) is selling a portfolio of 333 non-core pubs for £373m in cash to a private equity firm so that it can focus on the informal eating out market.

    All Bar One and O’ Neills owner M&B said the sale to Stonegate Pub Company Limited, run by TDR Capital, is part of its strategy, announced in March, to withdraw from the lower price, drinks-led market and late night high street bars and venues.

    Defence products group Cobham has won a contract worth up to $18m to provide breathing kits for the US Air Force. But the shares are down after broker Nomura downgraded the company to 'reduce' from 'neutral' saying it prefers rivals Thales and Meggitt.

    Transport and logistics group Stobart has become the latest company to warn of the impact of government spending cuts, with its rail division hit by uncertainty over future expenditure. While overall trading at the company is in line with expectations, the rail division’s overall performance is slightly below expectations, the company said.

    'Due to uncertainty over future government expenditure demand from Network Rail remains flat,' the company said.

    Higher crude palm oil (CPO) prices helped Anglo Eastern Plantations, which produces the commodity in Indonesia, post a rise in profits in the six months to June 30.

    Pre-tax profits were up to $26.7m from $24m over the same period the previous year, as revenues jumped to $77.9m from $57.6m. The average price for CPO during the period was $805 a tonne, up from $650 a tonne in the first half of 2009.

    SkyePharma has been handed back the US marketing rights to asthma treatment Flutiform after Abbott Respiratory scrapped its deal with the UK drug developer. The decision follows the verdict in January by the US Food and Drug Administration that it could not approve the New Drug Application (NDA) for Flutiform in its present form.

    Note 1: Prices and trades are provided by Digital Look Corporate Solutions and are delayed by at least 15 minutes.


    Market Data

    Currency UK Pounds
    Price 580.00p
    Change Today 3.00p
    52 Week High 617.00p
    52 Week Low 427.50p
    Volume 8,511
    Shares Issued 39.64m
    Market Cap £229.89m


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