UK Stocks Surge; Friends & Provident Rejects Bid

Trupti Mehta
13 Jul, 2009
New York City

UK stocks closed higher after merger talks heated up and stocks in New York closed up on the speculation that Goldman Sachs is likely to report profit that will match its record in 2007. Friends & Provident surged on a bind from Resolution that the insurance company rejected.

[R]6:00 PM London, 1:00 PM New York – UK stocks closed higher after merger talks heated up and stocks in New York closed up on the speculation that Goldman Sachs is likely to report profit that will match its record in 2007. Friends & Provident surged on a bind from Resolution that the insurance company rejected. British Airways is exploring to raise £500 million in rights offering.[/R]

UK stocks rebounded and closed sharply higher on the back of a rise in Wall Street.

The two takeover deals also lifted the trading sentiment. Resolution proposal to acquire Friends & Provident and Venture Production received a bid for $1.45 billion. Both the bids were rejected.

In London FTSE 100 Index closed higher 74.96 or 1.82% to 4,202.13,

Gainers & Losers

Friends Provident surged 12.6% to 68 pence and Resolution decreased 2.8% to 87.75 pence after Resolution said that it received “constructive feedback” from the board of directors of insurance company. But, Friends and Provident rejected the £1.7 billion bid as too inadequate.

Old Mutual increased 6.5% to 79.8 pence after two brokerage firms recommended the stock. The other insurance companies stocks edged higher. Legal & General Group surged 8.7% to 54.23 pence and Aviva Plc added 7.4% to 297.24 pence.

Experian Group declined 0.4% to 447.50 pence after it reported quarter ending in June revenues declined 8%. UK and Ireland revenues fell 22% for the credit rating firm.

British Airways surged 5.5% to 126.60 pence on the media reports that the company is working to raise £500 million in a rights issue.

Dunelm Group increased 12.1% to 235.75 pence after it reported first half sales increase of 10.7% and same store sales surged 5%.

Ladkom International soared 18% o 13.25 pence after the company struck a deal with biofuel maker Sunfuel Ukraine to develop non-edible oil seed for biodiesel.

Savile Group surged 17% to 59.50 pence after it reported estimated sales ahead of expectations for the year.

Spice Plc increased 2.2% to 67.25 pence after it reported full-year revenues increased 24% and profit jumped 40%.

Earnings Review

Dunelm Group plc, a specialist homewares retailer said first-half total sales rose 10.7% to £215.2 million. Like for like sales for first-half rose 5%. Full-year like-for-like sales fell 0.5%. Total sales for the full-year rose 6.3% to £417 million.

GB Group plc, an identity management specialist said full-year revenues fell 12.3% to £5 million from £5.7 million a year ago. Profit before tax in the year rose 229% to £135,000 compared to profit before tax £41,000 a year ago.

Huntsworth Plc, a public relations and healthcare communications firm said that “the group expects to meet management''s profit expectations in the first half of this year and with 86% of forecast revenues committed for 2009. We remain confident in respect of our full year result.”

Kier Group plc, a construction company said that “it expects underlying pre-tax profit for fiscal 2009 in line with the current market expectations, despite the challenging market conditions for both housing and property development. Net cash balances ended the year at above £90 million compared to £144 million last year.’’

Low & Bonar plc, a specialist materials group said first-half revenues fell 11.4% to £139.5 million from £157.5 million a year ago. Net loss in the first-half was £3.7 million or 1.77 pence per diluted share compared to net profit of £5.5 million or 3.51 per share a year ago.

Savile Group Plc, a human resources consultant said that “the results for the year are expected to be significantly ahead of market expectations. The group has finished the year with a strengthened balance sheet and net cash and investments of over £3 million and no debt.’’

Spice plc, utility support services provider said full-year f revenues rose 24% to £386 million from £309.80 million a year ago. Net profit for the full-year rose 40% to £17.2 million or 5.17 pence per diluted share compared to net profit of £12.3 million or 4.19 per share a year ago.

FTSE 100 Index Movers

Of the stocks in the FTSE 100 index, 94 increased, 7 declined and 1 were unchanged.

Fresnillo Plc decliners in the FTSE 100 index with a loss of 2.39% followed by losses in Xstrata plc of 2.35%, in Lonmin Plc of 1.40%, in Associated British Foods plc of 0.71%, in Kazakhmys PLC of 0.51%.

Friends Provident plc led gainers in the FTSE 100 index with a rise of 12.58% followed by increase in Legal & General Group Plc of 8.68%, in Aviva Plc of 7.41%, in Old Mutual Plc of 6.54%, in British Airways Plc of 5.50%.

Europe Markets Review

In London FTSE 100 Index closed higher 74.96 or 1.82% to 4,202.13, in Paris CAC 40 Index increased 68.98 or 2.31% to close at 3,052.08 and in Frankfurt DAX index higher 146.03 or 3.19% to close at 4,722.34. In Zurich trading SMI increased 77.48 or 1.48% to close at 5,315.29.