UK Markets close in 6 hrs 38 mins

Market report: Takeover chatter swirls around inhaler maker Vectura

Tom Rees
Takeover talk has swirled around Vectura in recent months  - PA

The City rumour mill moved back into full swing today following the Christmas lull, speculating that asthma inhaler maker Vectura could be in the crosshairs of pharma giant GlaxoSmithKline, looking to capitalise on its recent share price slump.

City chatter mooted that GSK is preparing to deliver a knockout bid in excess of 175p per share, which would value the company at close to £1.2bn.

Vectura has become vulnerable to a swoop after its share price tumbled 14pc last year and traders have speculated that GSK could be the first to launch an opportunistic bid.

One analyst noted that Vectura’s smart inhaler technology could prove alluring for GSK but added that a move would be a step change as new boss Emma Walmsley attempts to put her stamp on the company.

Vectura’s strategy shift towards partnerships elicited a tepid response from shareholders last week and the company was highlighted by City analysts as one of a handful of mid-cap pharma stocks that are sitting ducks for takeover action. Its shares have been put under pressure by its dispute with US regulators over receiving approval to launch a generic copy of GSK’s Advair drug, as generic drugs snap up more market share.

A final decision is expected from the US Food and Drug Administration during the first quarter of this year. Vectura’s shares were still under the cosh from the looming verdict on Thursday, finishing up 0.5p at 113.9p.

Elsewhere, takeaway pioneer Just Eat’s expansion from the curry houses of Britain to the beaches of Brazil could drive growth in 2018, analysts at Barclays theorised, pushing the FTSE 100’s newest entrant to the top of the blue-chip leaderboard.

The Brazilian takeaway market was larger than that of the UK’s in 2014 and Just Eat has a 32pc stake in iFood, a delivery business that dominates the market in the Latin American country.

In an upgrade to “overweight”, Barclays told clients that revenue could exceed £240m in two years’ time as investors tucked into Just Eat shares, lifting it 36.2p to 803.8p.

Distribution company Bunzl jumped 45p to £20.50 after it added two more acquisitions to its spending spree and revealed that Donald Trump’s tax cuts will reduce its tax rate to 24pc in the 2018 financial year.

Bunzl spent £600m on snapping up smaller companies in 2017 and its spree showed no sign of letting up as it swooped for California-based safety equipment distributor Revco and catering equipment supplier Aggora. Aim market newbie Footasylum slipped 9.5p to 243.5p despite reporting a 33.4pc jump in revenue in the run-up to Christmas, while online electrical goods retailer AO Worldclimbed 10p to 141p after Black Friday and games consoles boosted revenue.

AO World’s share price had halved since its IPO as investors fretted over its earlier-than-expected expansion into new regions and slipping consumer confidence in the UK.

But the company is finally starting to see its financial performance catch up with its ambitions, Peel Hunt told clients in a “buy” note.

Mining heavyweight Anglo American gained 60.6p to £17.61 after Morgan Stanley upgraded it to “overweight”, citing a return to “modest growth” and a more “stable investment backdrop” in its back-to-basics strategy shift.

Brent crude briefly touched over $70 per barrel for the first time since 2014 as sentiment on the oil market remained buoyant, underpinned by US oil stocks continuing to tumble amid a cold snap over in North America.

The rise in commodity prices saw London’s heavy weighting of mining and energy stocks offset falls among retailers, helping the FTSE 100 grind out another record high, up 14.43 points to 7,762.94.

Meanwhile, European bond yields continued to rise after the ECB hinted that monetary policy will be tightened sooner than expected.