Tuesday market close: Takeover cheer lifts stocks

Paddy Power agreed the terms of its tie-up with Betfair

A raft of merger and acquisition activity helped propel stocks higher despite more poor economic data from China.

Conviviality Retail soared 21 per cent or 32.5p to 187.5p as the Aim-quoted owner of Bargain Booze and Wine Rack struck a deal for the £200 million reverse takeover of drinks distributor Matthew Clark.

Bid hopes for water group United Utilities added to the positive mood, rising 16.5p or 2 per cent to 868.5p after analysts at SocGen upped their rating on the stock to “buy” from “hold”, saying it could make an attractive takeover target for an infrastructure fund.

But Betfair closed down 23p at 3,113p, having earlier jumped as high as 3,173p, after it agreed terms of a £5 billion merger with Ireland’s Paddy Power to create one of the world’s largest online gambling firms, with £1.2 billion of sales.

The FTSE 100 Index ended the session up 71.58 points at 6,146.1, and Chris Beauchamp, senior market analyst at IG, said: “China’s dire straits imply problems for the US economy too, and the theory goes that this knocks back the chance of a September move on interest rates. With a week still to go, there is still the chance that this new thesis will be demolished, but for now equities seem the place to be.”

However, Premier Inn and Costa Coffee owner Whitbread fell 75p or 1.6 per cent to 4,636p after revealing a slowdown in sales growth and warning prices may have rise because of the new national living wage.

Oil and gas technology group Plexus Holdings saw its shares surge 5.9 per cent or 10p to 180p after launching its Python subsea wellhead in a move business minister Fergus Ewing said would “increase the safety and reliability” of clients’ operations. The Aberdeen-based firm also signed a deal with engineer Aquaterra to develop products based on its Pos-Grip system.