LONDON: Yet another M&A deal stole the spotlight in British stocks trading on Friday as a $3 billion bid sent Zoopla owner ZPG surging 30 percent, while the FTSE 100 inched up, scoring its longest winning streak in nearly 13 years.
The FTSE 100 achieved its seventh straight week of gains, its longest winning streak since June 2015, as investors began to warm to UK equities once again.
“Equities should also continue to benefit from growth and we maintain our positive view, adding UK equities to our most preferred markets on restored value, and the market’s defensive nature,” said the Investment Strategy Department of Credit Suisse in a note on Friday.
On the day, the FTSE rose 0.3 percent while the FTSE 250 gained 0.4 percent.
ZPG, the owner of property websites Zoopla and PrimeLocation, surged 30.6 percent to a record high, top of the mid-cap index, after US private equity firm Silver Lake Management offered 490 pence per share for the company, valuing it at 2.2 billion pounds ($3 billion).
ZPG shares were last trading at 490p, just at the bid price.
It marked the latest in a string of overseas acquisitions targeting British companies, especially in the mid and small-cap space.
“We had expected ZPG to continue to execute its M&A strategy, but had not expected a bid for ZPG itself,” said Investec analysts, adding “This looks a good price in our view”.
Liberum analyst Ian Whittaker said “The question now is whether there is a counter-bid.
“If there is one, we think the most likely candidate is Axel Springer, which has a collection of online property classified assets … but nothing in the UK,” Whittaker added in a note.
US buyers of British companies have benefited from the weaker sterling/dollar exchange rate which makes stocks cheaper for them.
Zoopla rival Rightmove climbed 3.8 percent and Auto Trader gained 2.5 percent as the deal improved sentiment across the classifieds sector.
John Wood Group rose 10.4 percent after the oil services group confirmed its outlook for 2018
A target price increase from JP Morgan helped buoy ITV shares up 7.3 percent. The broker said the broadcaster’s valuation was attractive and its viewing share was growing.
Utilities stocks fell to the bottom of the FTSE after Bernstein cut Severn Trent to “underperform” and reduced its target price on United Utilities.
“Regulatory headwinds have intensified in recent months, with two developments of particular concern including dividend caps and mandatory sharing of financing outperformance for companies with high gearing,” wrote Bernstein utilities analysts.
Severn Trent and United Utilities declined 2.2 percent and 1.9 percent respectively.
Randgold Resources led the mining sector up, gaining 3.8 percent. Miners were the biggest boost to the FTSE despite metals prices slipping back slightly.
Source: Brecorder
