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Takeover interest boosts London oil and food shares

Slovenia oil & gas group Ascent Resources soared on an approach from Cadogan Petroleum
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A takeover battle could break out for Premier Foods

Oil industry takeover activity provided excitement in London's small-cap scene on Tuesday, while Premier Foods PLC (LON:PFD) tickled taste buds.

Slovenia oil & gas group Ascent Resources PLC (LON:AST), in keeping with the name, soared 155pc to 4.98p on news of a preliminary takeover approach from Ukraine-focused Cadogan Petroleum PLC (LON:CAD).

Cadogan's shares rose 1p, or 10.3pc, to 10.75p.

Broker Cantor Fitzgerald said: "We believe Cadogan’s shares offer investors a compelling opportunity to gain exposure to considerably discounted exploration & production upside potential.

"We therefore reiterate our 'buy' recommendation and set a new target price of 36p."

The FTSE AIM 100 closed 3.52 points lower at 3,321 and the FTSE AIM All-share also declined 0.61 points to 708.19.

Among the small-cap winners was also Cloudbuy PLC (LON:CBUY), which advanced 16.67pc to 7.88p.

Last week, existing shareholder Roberto Sella agreed to lend the e-marketplace developer up to £5.75mln.

Metal Tiger plc (LON:MTR) gained more than 21pc, or 0.52p, to 2.98p as another warrant exercise took the cash raised by the resource investor through this route to more than £539,000 in just under two weeks.

Shares in the explorer and resource company investor have more than doubled recently following upbeat drill reports from its 30% joint venture in Botswana.

Kurdistan-focused Gulf Keystone Petroleum Limited (LON:GKP) saw a further 50% wiped off the share price last week, but today the stock rebounded 0.5p, or 8.1pc, to 6.65p.

Elsewhere in oil, New Zealand and Australia specialist Mosman Oil & Gas Ltd (LON:MSMN) lost 0.1p, or 12.9pc, to 0.68p after it reported a tough 2015 and said it was reviewing additional development opportunities.

Investors tucked into shares in Premier Foods on hopes of a takeover battle for the Mr Kipling cake maker.

The stock was 4.5p, or 8.6pc, tastier at 56.5p after Premier’s chief executive Gavin Darby predicted that another potential bidder could challenge US spice maker McCormick & Co's (NYSE:MKC) £496million approach.

Premier has already rejected two tentative offers from McCormick and instead agreed a “co-operation” deal with Japanese noodle maker Nissin, which has taken a 17.27pc stake at 63p per share.

Analysts have speculated that McCormick, which initially offered 52p a share, could raise its subsequent 60p a share bid by 5p.

Premier rejected the approaches as undervaluing it, but some shareholders have urged it to talk to McCormick.

The Bisto gravy and Sharwood’s curry sauce maker later indicated its readiness to look at a higher bid from McCormick.

The US group said it was willing to consider one, provided Premier gave it access to pension documentation and other information.

McCormick is now facing a “put-up-or-shut-up” deadline of April 20 to announce a firm intent to bid or walk away.

Broker Liberum Capital said Premier’s net debt, which stood at £585.3million in November, and its “large” pension liability of £4.2billion were weighing on its share price and limiting opportunities.

“In our view, Premier is better off as part of a larger group,” the broker said in a note.

The FTSE 100 Index subsided 0.58 points to 6105.9 as oil prices extended losses on concerns about rising US crude stockpiles.

The price of a barrel of Brent crude dropped 3.1pc to about $39 while West Texas Intermediate fell about 3.2pc to just above $38 a barrel.

Barclays fuelled the downbeat sentiment by predicting that a two-month rally in commodity prices could end, saying they did not reflect market fundamentals.

It said net flows into commodities totalled more than $20billion in January and February – the strongest start to a year since 2011 – and prices could tumble by up to a quarter.

Big commodity stocks were in the red, with Glencore PLC (LON:GLEN) off 7.4p at 143.8p, Anglo American PLC (LON:AAL) down 21.7p at 479.1p, Rio Tinto PLC (LON:RIO) easing 74.5p to 1863p and BHP Billiton Limited (LON:BLT) ceding 28.4p to 750p.

Marks & Spencer was among the main risers, gaining 3.1% to 404.5p.

Shares in Irn-Bru, Rubicon and Tizer maker A.G. Barr PLC (LON:BAG) fizzed up 1.5p to 520.5p as it increased pre-tax profits in the 53 weeks to January 30 by 7% to £41.3million.

Barr said it believed the strength of its brands and “product reformulation” would help it to ride any impact from Chancellor George Osborne’s sugar tax.

But natural sweetener maker PureCircle Limited (LON:PURE), which has been tipped to benefit from the tax as drink makers replace sugar with its products, soured 8p to 380p.

MID-SESSION MARKET UPDATE

Small cap shares were beating Footsie at lunch with Ascent Resources Plc (LON:AST), in keeping with the name, topping the London leader board.

Shares were up almost 63% at 3.18p on news of a possible merger with Ukraine focused Cadogan Petroleum.

A stock market statement confirmed that Cadogan had made a ‘highly preliminary’ merger approach, following an earlier sharp rise in Ascent’s price ahead of the Easter break.

Ascent is now up more than 250% in the two trading days since March 23.

On the wider markets, FTSE100 is down 0.11% with blue chip miners taking a big clout, while FTSE AIM 100 is 0.23% higher at 3,332 and FTSE AIM All-share is 0.195 higher at 710.170.

On Footsie, Anglo American (LON:AAL) lost 3.13% to 485.10p, while Rio Tinto (LON:RIO) shed 2.89% and BHP Billiton (LON:BLT) lost 3.15% to 753p.

Marks & Spencer (LON:MKS) was the big riser, gaining 2.24% to 401.30p.

Among the small cap winners, was also Cloudbuy (LON: CBUY), which added 16.67% to 7.88p

Last week Roberto Sella, an existing shareholder, conditionally agreed to lend the e-marketplace builder between £.27mln and £5.75mln.

Metal Tiger  (LON:MTR) gained over 18% to 2.90p as another warrant exercise took the cash raised by the resource investor through this route to more than £539,000 in just under two weeks.

Some £60,000-worth of warrants were exercised at a price of 1.6p in this latest batch.

Shares in the explorer and resource company investor have more than doubled recently following upbeat drill reports from its 30% joint venture in Botswana.

Gulf Keystone Petroleum Ltd’s (LON:GKP) saw a further 50% wiped off the share price last week but today the stock rebounded almost 18% to 7.25p.

Elsewhere in oil, Mosman Oil & Gas (LON:MSMN) lost almost 13% to 0.675p after it posted half year results, which ran through measure sit is taking to streamline costs.

The group is now considering new acquisitions which could see it add new diversity to a portfolio that has thus far focused down under.

The group, named after an affluent suburb of Sydney, could soon invest in projects located either in the United Kingdom or Brazil, chairman John Barr said in a Proactive Investors interview.

A total of three potential acquisitions are currently being reviewed by Mosman’s skeleton management team as they consider a new 'plan B' following the collapse of a proposed acquisition that had previously promised to ‘transform’ the group.

Months of due diligence was scrapped in February, when the lowest oil prices for a generation spiked the deal to buy the South Taranaki Energy Project (STEP).

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