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FTSE steadies around 2-month low, Diageo shares surge
June 8, 2015 / 2:17 PM / 2 years ago

FTSE steadies around 2-month low, Diageo shares surge

* Blue-chip FTSE 100 index steady in late trading

* Diageo surges on reported possible bid interest

* Shire dips on report of potential takeover of Actelion

By Atul Prakash

LONDON, June 8 (Reuters) - Britain’s top share index steadied on Monday, with gains in Diageo on a reported takeover interest offset by weaker firms like Shire, which fell on another report saying it was considering an $18 billion takeover of Actelion.

Diageo, the world’s largest producer of spirits, jumped 5.5 percent on reports Brazilian billionaire Jorge Paulo Lemann and his partners in private equity firm 3G Capital are considering a bid for the company.

“The industry has been a hot spot of M&A activity, with smaller brands being picked up by major names looking to boost their appeal in niche products, but this is a deal of a different order of magnitude,” said Chris Beauchamp, senior market analyst at IG.

“Given the amount needed to actually succeed, this bid could either be a crowning glory for Mr Lemann or a moment of extreme hubris. At any rate, it has certainly allowed Diageo to move ahead of its rival SABMiller in performance terms for the year so far.”

Keith Bowman, equity analyst at Hargreaves Lansdown, said there was a feeling that for companies, growth was not easy to find as the economy was still growing at sub-par levels. He said the market could see some potentially bigger takeovers or mergers to kick-start things again.

The blue-chip FTSE 100 index was down 0.04 percent at 6,801.47 points by 1345 GMT, after falling to a two-month low in the previous session. The index fell 2.6 percent last week, its biggest weekly drop so far this year, but is still up more than 3 percent so far this year.

Among the top fallers, Shire dropped 1.8 percent after a Sunday Times report suggesting the pharmaceutical company was considering a 12 billion pound ($18 billion) takeover of Actelion Ltd, Europe’s biggest biotech firm. Actelion shares jumped 8.9 percent.

British grocers also slipped, with Morrisons down 0.4 percent after announcing price cuts on Monday. It had announced in March 2014 that it would allocate 1 billion pounds ($1.5 billion) towards lowering prices over three years.

Like rivals Tesco, Wal-Mart’s Asda and Sainsbury‘s, Morrisons is lowering prices in a bid to stem the flow of shoppers turning to discounters Aldi and Lidl.

Tesco shares fell 1 percent.

Additional reporting by Liisa Tuhkanen; Editing by Catherine Evans

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