A few days after InterContinental Hotels Group was tipped as a potential takeover target, an American activist investor with a pedigree of stirring things up has taken a chunky stake.
Nelson Peltz, the man who chivied Cadbury Schweppes into a demerger in 2007 and Cadbury’s subsequent sale to Kraft, has picked up 4.27 per cent of IHG through his Trian Fund Management, making him the fifth-biggest shareholder.
Once he was forced to show his hand, because his stake exceeded 3 per cent, IHG was chased 81p higher to £15.19 — the best performance by any Footsie constituent — by other investors excited by even the possibility of corporate action.
IHG, for its part, had nothing to say about Mr Peltz’s involvement. The New York billionaire, 70 this month, has taken stakes in companies from Heinz to PepsiCo to agitate for change, though not always holding on to the investment for the long run.
This week Wyn Ellis, of Numis Securities, cited IHG as a likely bid target in an industry consolidation he thought inevitable. He placed Marriott International, of the United States, at the top of the list of logical suitors. One theory held that Mr Peltz believed that IHG was trading at a discount to its American peers, including Marriott and Starwood.
Advertisement
One big-money deal was agreed yesterday. Logica, one of the largest suppliers of IT services, nodded to a sale for £1.7 billion in cash to CGI, a Canadian rival valued at twice that. Logica shares jumped 45¼p to 111p, a 6p premium to the offer.
That was enough to spur Sage, a supplier of accountancy software to small businesses and itself a longstanding subject of bid speculation, 6p to 256½p.
Markets tend to draw comfort from mergers and acquisitions, with traders reasoning that there is still the odd opportunity to make a turn, and it was a better day for the FTSE 100. The leading London index, more than a little bruised recently, toiled 9.67 points higher to 5,306.95, although it still suffered its worst month since 2009.
If it has been Europe’s problems that have held markets hostage these past few months, it was the United States that prompted the latest markdown. Disappointing snapshots of the US jobs market and business activity in the Midwest were but the latest triggers for concern for the global economy.
As usual, miners and industrials offered the best barometer of that concern. Demand for their goods increases when economies are more buoyant, and vice versa.
Advertisement
RBC Capital Markets turned more cautious about Weir Group. The Glasgow-based company, which makes heavy-duty pumps to remove mining waste, equipment for the oil and gas industry and kit for new nuclear reactors, fell 46p to £15.44. Neither was sentiment towards Weir much helped by cheaper oil.
News of a competition investigation into car insurance premiums sent Admiral skidding 80p lower to £10.39.
Liberum Capital cautioned that recent conversations with media buyers suggested that July and August may not be as lucrative for ITV as had been expected, with reports that some advertisers had cancelled campaigns. The broadcaster of The Only Way is Essex fell 4½p to 73p in response.
Hobart Capital looked at Liberum’s research and suggested that WPP may also be under pressure. Sir Martin Sorrell’s advertising and marketing group lost 4½p to 73p.
Daily Mail and General Trust fell 7½p to 380½p a day after declaring that Paul Dacre, Editor-in-Chief of the Daily Mail, had sold nearly three quarters of his holding, 100,207 shares, at 400p each.
Advertisement
The City tends to credit bosses with knowing best how the companies they run are performing. That is why many investors follow directors in or out of a share. Deutsche Bank ran the numbers on 600 European companies in 17 countries and found that buying by directors had jumped sharply in the past three weeks, reporting significant buying in 93 companies against significant selling in 38. Granted, in March buying had reached a two-year low.
There was applause for a 37 per cent jump in annual profits from Gable Holdings. The non-life insurer’s muscular performance came from writing more business in Britain and France. Shares dipped ¼p on profit-taking.
Other smaller companies have been trading for technical reasons. Changes to the closely followed MSCI Global Small Cap indices, run by Morgan Stanley, took effect after markets closed yesterday. In the UK, 11 companies joined and 13 were deleted. Among those in was the power supply company XP Power, which jumped nearly 9 per cent on the day its inclusion was announced last month when funds that track that index started to buy. Shares eased 24p to £12.19 yesterday.
Meanwhile, Trinity Mirror, the troubled newspaper publisher, fell another 1½p to 25½p, making a 25 per cent decline in barely a fortnight.
Prices by Proquote
Advertisement
New York: Although Facebook shares rallied by 5 per cent after the recent drubbing, the market as a whole was weak on dull jobs and growth data. The Dow Jones industrial average closed 25.73 points lower at 12,394.13. The S&P index fell 2.93 to 1,310.40