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FTSE 100 weekly: G4S among top risers on break-up talk

Published: 08:02 26 Oct 2013 BST

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Rumours swirled around the City this week about a possible breakup of security giant G4S (LON:GFS), which marched to the top of the FTSE 100.

HSBC, which lifted its recommendation from ‘sell’ to 'neutral', reignited the speculation this week, saying: “Hopes that value can be unlocked through break-ups and a rejuvenated strategy are likely to buoy G4S’s stock through what is perceived as a rump of difficult trading.”

Private equity firm Charterhouse Capital is reportedly checking out the company’s cash solutions business, while activist hedge fund Cevian Capital has been buying into the firm to encourage it to sell off parts of the business.

Its shares rose 7% to £2.59.

Lloyds Banking Group (LON:LLOY), up 5%, and Aberdeen Asset Management (LON:ADN), up 9.3%, were among the top risers as the latter confirmed speculation it is in talks with the former about a possible takeover of Scottish Widows Investment Partnership.

Reports suggest Aberdeen is proposing an all-share deal to buy out the Lloyds’s fund management division, which oversees around £140 billion of clients’ money.

“The potential acquisition would add further scale and diversity to the company's product range, thus complementing organic growth, consistent with the board's strategy,” Aberdeen said in a statement.

Lloyds is yet to comment on the deal.

Shire (LON:SHP) topped the index after an impressive third quarter update prompted an earnings guidance uplift.

Product sales were up 13% year-on-year to US$1.19bn, with eight of the firm’s products racking up double-digit growth in the quarter, including Vyvance, its attention deficit hyperactivity disorder treatment, which saw sales race 21% ahead from last year’s third quarter levels.

Operating income on a generally accepted accounting principles (GAAP) basis surged 25% to US$340.8mln from US$273.4mln a year earlier, while underlying pre-tax profit improved 24% to US$332.8mln from US$268.6mln.

“We're confident in our prospects for the longer term as we continue to execute on commercial delivery, progress our prioritized pipeline and focus on targeted M&A,” said chief executive Flemming Ornskov.

It was the pick of the bunch and fared better than rival drugmaker GlaxoSmithKline (LON:GSK), which suffered from the fall-out from the Chinese bribery scandal.

In its third quarter update Glaxo revealed that sales in China were down 61% year-on-year, as operations have been disrupted by the ongoing investigation into its business. That decline is twice as large as Citigroup had estimated in a recent broker note.

“At this stage, it is still too early for us to quantify the longer-term impact of the investigation on our performance in China,” Glaxo said.

The collapse of sales in China, where the company’s reputation has been hit by allegations of bribery perpetrated by senior Glaxo staff, led to turnover, up 1% year-on-year at £6.5bn, coming in below market expectations of £6.6bn.

Unilever (LON:ULVR) saw a sales slowdown in emerging markets as expected, with the spreads division faring worse than expected, while Costa Coffee was still generating profits for Whitbread (LON:WTB), which played down talk of a split for its high street café chain.

Sports Direct (LON:SPD) founder Mike Ashley’s £106mln share sale saw the sportwear retail fall to the foot of the table, along with fellow retailers Marks & Spencer (LON:MKS) and B&Q owner Kingfisher (LON:KGF).

ARM Holdings (LON:ARM), which designs the chips that power Apple’s iPads and iPhones, dropped 2.8% after its third quarter numbers.

Oil giant Shell (LON:RDSB) was up 3% after it was awarded a 20% stake in Brazil’s largest ever oil discovery off the South American country’s coast. 

France’s Total also has a 20% stake in the Libra oil field, while Brazil’s state-owned Petrobras has 40%.


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