Reckitt Benckiser is talk of town

Published on Thursday 19 November 2009 21:18

LONDON FTSE 100 CLOSE 5,267.7 -74.4

RECKITT Benckiser, the company behind hundreds of everyday consumer items, was the main talking point among analysts yesterday, on reports that it might merge with US giant Colgate-Palmolive.

The talk has been that, after Kraft put Dairy Milk maker Cadbury into play, other major groups might be lured into dealmaking.

Analysts were split over the prospects of a tie-up with Colgate, which is more focused on luxury cleaning products. Julian Hardwick at Royal Bank of Scotland said that while the potential synergies from a tie-up might be attractive, structuring such a massive cross-border deal would be difficult, making bolt-on acquisitions more likely.

Chas Manso, at Evolution Securities, said such a marriage "makes sense to us", with the major stumbling block likely to be who would take charge at the top of the company. Manso added the reaction of the market to the story should encourage Reckitt, which is virtually debt-free, to consider doing deals.

Shares in Reckitt closed up 35p at 3,140p, having been up almost 3 per cent earlier.

The wider FTSE 100 was dragged down by weak economic sentiment and falls among heavyweight mining companies. The index of Britain's leading public companies closed down 74.4 points, or 1.4 per cent, at 5,267.7. Only eight of the Footsie's members saw shares rise yesterday.

Mining companies were responsible for most of the retreat, as commodities fell on demand concerns. Antofagasta, was the heaviest casualty, dropping 50.5p to 890.5p, while Fresnillo fell 48.5p to 871.5p and Xstrata closed 57p lower at 1,070p.

Precious metals refiner Johnson Matthey was dragged down by the sentiment towards miners, dropping 71p at 1,549p.

Better retail sales could not lift Marks & Spencer, which surrendered much of the gains from Wednesday's surprise announcement that it had poached Morrisons' chief executive Marc Bolland. Shares in M&S fell 9.3p to 380.7p. Morrisons, which plunged on the mid-week announcement, was flat despite solid third-quarter trading. Its shares dropped just 0.1p to 280.9p, outperforming the wider market.

Brewer SABMiller reported a sharp drop in interim profits, hit by the strong dollar, but shares surged because the results were better than the market had forecast. SAB topped the FTSE 100 yesterday, rising 57p, more than 3 per cent, to 1,714p.

National Grid, up 5.5p at 645.5p and Resolution, 0.65p higher at 90.3p, were among the few other risers.

Among the mid-caps, Halfords said "staycationers" had boosted sales of camping equipment, helping to boost pre-tax profits by 24 per cent to 61 million. But shares in the group dropped 13.8p to 418.2p.

Fashion retailer Ted Baker closed 1p higher at 450p at the end of a see-saw session. The group said stronger-than- expected UK demand continued to bolster its performance.

Dana Petroleum, the North Sea-focused oil and gas firm, climbed 1p to 1,300p as it posted a trading statement with few surprises. The Aberdeen-based group has been the centre of takeover talk, although most analysts believe a deal is unlikely.

On Aim, Edinburgh-based Angel Biotechnology rose 12 per cent to 0.32p after announcing it had been awarded business with three new companies in the regenerative medicine field.

Craneware, which sells billing software for healthcare providers in the United States, was unchanged at 334p, despite revealing that four more hospitals had signed up for its products.