Markets: Takeover talk returns to boost FTSE

Takeover talk helped the market higher yesterday as rumours swirled around supermarket chain Sainsbury’s and Imperial Tobacco.

Britain’s third-biggest supermarket group gained nearly 2 per cent on renewed speculation that the Qatar sovereign wealth fund – already a major shareholder – will seek to up its stake in the company or even seek a takeover. Shares were 5.5p higher at 301.5p.

Imperial Tobacco rose 1 per cent to 2,519p, with traders citing a report that the Lambert & Butler and Golden Virginia cigarette group was the subject of revived bid talk from Japan Tobacco.

Those gains were dwarfed by the rise at Edinburgh-based oil explorer Bowleven after Dubai’s Dragon Oil confirmed it was interested in the company. The Scottish stock added 62 per cent to 120p.

The FTSE 100 closed up 19.7 points or 0.3 per cent at 5,905.1, as analysts said that with Britain’s top companies trading at relatively low valuation and many sitting on huge cash piles, M&A could be a theme for the year.

Meanwhile Weir Group saw shares jump 4 per cent on reports that it may have been gazumped on its latest acquisition target. The Glasgow-based engineering company had been set to buy Australian mining equipment firm Ludowici for £200 million. Now it has emerged that a Danish group, FLSmidth, has come in with a higher offer that Ludowici had accepted, despite earlier assurances that the Weir offer was final.

Weir said it has made an application to the Australian Takeovers Panel to strike the rival offer. Shares in the Scottish group were 82p higher at 2,051p, buoyed by news this week that it had raised a $1 billion (£630m) war chest on the bond markets.