A quiet day in the market did not stop another round of takeover speculation.
United Utilities was in the spotlight, up 19.5p to 883p, valuing it at around £6bn, on renewed talk of possible bid interest from Canada’s Ontario Teachers Pension Fund or perhaps Kuwaiti investors, with a price of up to £12 a share mentioned.
Overall the FTSE 100 finished 16.15 points better at 6627.40 amid fairly low volumes and ahead of Wednesday’s Bank of England quarterly inflation report and UK unemployment and wage figures.
But Vodafone accounted for the bulk of the gain. After better than expected results, the mobile phone group ended 11.2p higher at 219.05p, adding nearly 12 points to the leading index.
But smaller rival TalkTalk dropped 15.8p to 280.8p after it warned of higher than expected costs for adding new customers.
Elsewhere J Sainsbury recovered 14.4p to 269.1p ahead of Wednesday’s update and strategic review.
InterContinental Hotels jumped 84p to £25.37 as hedge fund Marcato, which owns a 4% stake, urged it to merge with a rival such as Starwood, Marriott, Hilton or Accor, claiming it could double the share price.
The San Francisco based fund said it released its analysis after the InterContinental board dismissed its ideas. InterContinental responded with a repetition of its objections, saying:
IHG maintains an active dialogue with all its shareholders and welcomes the feedback it receives. The board regularly considers all options for driving shareholder value. IHG met Marcato on 22 September 2014 and 29 October 2014 and reviewed its analysis. Following this review, the board has concluded that it remains in the best interests of all its shareholders to continue to pursue its current strategy for high quality growth and delivering strong operational and financial performance.
Commodity companies were weaker on worries about slowing demand from China, with Anglo American down 18.5p at £13.42 and Rio Tinto losing 38p to £29.86, not helped by Citigroup cutting its estimates on iron ore prices.
As the oil price continued to slip, Royal Dutch Shell A shares dipped 15p to 2219.5p.
Mike Ashley’s Sports Direct International lost 29.5p to 627p after news it would open a discount gym chain. Jasper Lawler, market analyst at CMC Markets UK, said:
Sports Direct shares fell heavily on news the company will open a discount £5 a month gym chain. There is already a market for discount gyms with many local alternatives, probably the biggest chain is PureGym who charge more like £15 per month, the Sports Direct gyms would be one third of the price. For £5 per month it’s hard to imagine what facilities the gym might offer, perhaps just an empty space with soft mats could cater for those with small living rooms.
Among the mid-caps engineer Renishaw rose 175p to £19.43 following better than expected results, while bid speculation pushed bwin.party digital 5.1p higher to 107.8p.
Taylor Wimpey gained 4.9p to 122.2p after it raised its forecast for profit margins thanks to higher prices and increased sales. In a buy note Numis said:
Taylor Wimpey’s update shows that the new housing market has moderated slightly from last year with the second half sales rate down around 5%, but this is not preventing the group growing margins and maintaining a strong order book. We have increased 2014 estimates by 5% to reflect the improved margin guidance and whilst we have left 2015 estimates unchanged, this still implies 32% pretax profit growth. With Taylor Wimpey stating that its landbank is now at an optimal scale and our forecast that the group will have nearly attained its volume aspirations in 2015, we expect cash generation to progressively improve. On our forecast this should support a dividend payment of £380m in 2016 which equates to a 10% yield.
