Market Report: The return of tax inversion
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Your support makes all the difference.Tax inversion is back on the table. The controversial takeover deals, which involve companies taking the lower tax rate of foreign businesses they acquire, were in vogue with American corporates this summer – AbbVie’s $52bn (£33bn) bid for Shire, down 75p at 5,140p, was a high-profile example.
City deal-makers feared the good times were coming to an end when the Obama administration declared a crackdown on such takeovers last month. But yesterday US medical technology company Steris announced a $1.9bn swoop on Swindon-headquartered Synergy Health, sending shares rocketing 440p to 1,840p. A new UK incorporated company will be created to pull off the cash and stock deal, helping to shave 6.3 per cent off Steris’ tax bill. If the deal comes off it could encourage many one-time suitors to return to the table, with Jefferies pushing the possibility of Pfizer making a fresh bid for AstraZeneca, which climbed 55.5p to 4,355.5p.
Despite opening lower, the FTSE 100 blue-chip index managed to break its losing streak yesterday and close 26.27 points higher at 6,366.24. Miners were largely responsible for the rise, buoyed by a better than expected rise in Chinese trade and broker endorsements. Anglo American posted the day’s biggest gains, up 62.5p at 1,388p, as Credit Suisse upgraded the company and Canaccord Genuity rated it a buy. Randgold Resources also jumped 184p to 4,381p thanks to a bump from UBS.
De La Rue bounced 17.4p to 492p on the mid-cap index after announcing a fresh 10-year deal to print banknotes for the Bank of England.
Spirit Pub Company fell at the end of last week, mirroring a decline in suitor Greene King’s price; but yesterday Spirit crept up 5.25p to 90.75p. The deadline for Greene King, which slipped 1p to 740p, to make another offer is next Tuesday.
City financier Richard Griffiths has almost doubled his stake in troubled online dating specialist Cupid from 4.53 per cent to 8.94 per cent, helping shares rise 0.5p to 20.75p. Griffiths has recently been building a stake in online video advertising specialist Blinkx, up 0.25p at 29.75p.
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