Yahoo Finance Market report: Incoming Japan Tobacco boss sparks talk of Imperial Brands takeover
Imperial Brandspulled off a two-year low after Japan Tobacco’s incoming wheeler dealer chief executive reignited takeover talk by admitting that he is on the hunt for deals, no matter the size.
JT’s incoming boss Masamichi Terabatake, who has a penchant for deal-making, said the firm will reverse the current chief executive’s preference for smaller bolt-ons, paving the way for a mega deal for Imperial that would create the second-largest tobacco firm in the world by market share.
The FTSE 100 firm is the most obvious solution for a JT spending spree given its exposure to markets in the US, Middle East and Africa, Jefferies analyst Owen Bennett argued.
A deal is made even more enticing by Imperial recently stepping up its investment in vaping to claw back lost ground on bigger peers British American Tobacco and Philip Morris International, which is also snapping up JT’s share of the alternative tobacco market in its own back yard.
The City lapped up the prospect of a huge tobacco consolidation play to lift Imperial 103p higher to £31.30.
Imperial’s heavy weighting on the FTSE 100 helped offset a slew of companies sinking on disappointing results, with Babcock International’s failure to soothe investor jitters over the defence sector sending it down 51p to a six-year low of 703.5p, and Intertek’s hurricane-hit results dragging it down 4.3pc to £51.75.
The UK’s blue-chip index gained 21.88 points at 7,411.34, while stocks in Europe brushed aside political uncertainty in Germany with the DAX in Frankfurt jumping 0.8pc.
Healthcare provider Mediclinicslipped to a fresh all-time low as investors digested its botched bid for peer Spire Healthcare, with broker Macquarie heaping on the pressure with a ratings downgrade to send it sliding a further 31p to 507.5p.
Energy provider SSE nudged up 11p to £13.42 after analysts at Jefferies gave the proposed spin-off of its UK retail business and merger with Npower its seal of approval with an upgrade to “buy”. A deal would create “material synergies” and result in “more focused business models”, analyst Ahmed Farman told clients.
Engineering turnaround group Melrose Industries tumbled 10.8p to 204.5p after admitting that its turbine manufacturing business Brush is battling a “very difficult” market and that the firm will face strong currency headwinds next year.
Finally, oil explorer Cairn Energy endured a rollercoaster day of trading over reports that BP is looking to snap up a 30pc stake in its deepwater SNE field off Senegal, which is thought to be worth $600m (£453m). Cairn pared most of its 5.6pc gain after dismissing the report but investors decided that there is no smoke without fire and the mid-cap firm closed up 7.4p at 214.2p.
