Thursday 23 May 2019

Smurfit Kappa takeover tussle drags on London’s top flight

The FTSE 100 Index closed down 33.25 points to 6,888.69.

A view of the London Stock Exchange sign in the City of London (PA)
A view of the London Stock Exchange sign in the City of London (PA)

By Ben Woods, Press Association Chief City Correspondent

The London market started the week on a bum note as it was dragged lower by Smurfit Kappa after the packaging giant rebuffed a sweetened takeover bid from International Paper.

The FTSE 100 Index closed down 33.25 points to 6,888.69, with Smurfit emerging as the biggest faller after knocking back the US suitor for a second time.

The group said a new bid had been tabled on March 22, which comprised 25.25 euro (£22.04) in cash and 0.3028 of new shares in International Paper.

The fresh approach values each Smurfit Kappa share at 37.54 euro (£32.77), up from the previous offer of 36.46 euro (£31.83) made on March 6.

Shares in Smurfit were down 126p to 2,932p, with chairman Liam O’Mahony saying it was in the best interests of investors for the group to remain an independent company based in Dublin.

Across Europe, Germany’s Dax was 0.8% lower and the Cac 40 in France fell 0.6%.

On the currency markets, the pound surged to a seven-week high against the US dollar as traders continued to bet on the Bank of England hiking interest rates in May.

The UK currency was up 0.7% to $1.42. Against the euro, sterling was down 0.1% to 1.143 euro.

The price of oil slipped 0.4% to $70.01 a barrel, but largely held onto last week’s gains when Saudi Arabia’s energy minister signalled that Opec production cuts could be extended into 2019.

In UK stocks, engineering giant GKN remained in positive territory despite an embarrassing U-turn over comments made at the weekend.

Chief executive Anne Stevens said she was convinced investors would back GKN as it fights off the Melrose bid, while group finance director Jos Sclater said “long-only shareholders are mostly supportive of existing management, and understand that the Dana deal and becoming a pure play aerospace company has, longer term, significantly more value than the Melrose bid.”

The company was challenged by the Takeover Panel – which supervises and regulates takeovers and mergers – over comments made to the Sunday Telegraph and Sunday Times.

GKN issued a market announcement on Monday, saying it “confirms that these statements of shareholder support in respect of GKN were not verified and are hereby retracted”.

It came as US firm Dana upped its cash offer for GKN’s automotive business by 8.6% or 140 million US dollars (£100 million). GKN investors have until 1pm on March 29 to cast their ballots on the controversial £8.1 billion Melrose bid.

Shares in GKN rose 2.5p to 431,5p, while Melrose Industries climbed 1.8p to 221p.

On London’s junior market, online estate agency Purplebricks was in the doldrums despite Axel Springer buying a significant stake in the firm.

The German media publisher has seized an 11.5% stake in the group through a £125 million investment, which includes a £100 million subscription of new shares to help turbo-charge its US expansion.

It means the Die Welt and Business Insider owner would become the fourth largest shareholder.

However, Purplebricks closed down 10%, or 31.4p to 280p, after it said annual revenues would fall short of company forecasts following a financial hit from the Beast from the East.

It said the torrid weather conditions in late February and early March would shave around 5% off its group revenue predictions of £98 million.

The biggest risers on the FTSE 100 Index were Fresnillo up 55p to 1,263p, BP up 7.1p to 469.6p, Royal Bank of Scotland up 3.9p to 258.5p, Evraz up 5.4p to 443.5p.

The biggest fallers were Smurfit Kappa down 126p to 2,932p, Micro Focus International down 31p to 925p, Paddy Power Betfair down 220p to 7,155p, Kingfisher down 8.5p to 288.2p.

Press Association

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