Takeover speculation sends FDM shares soaring

The week ended with trading floors in the City gripped by takeover speculation.

FDM Group – a FTSE 250 IT recruitment consultant – shot up 12.4 per cent, or 64p, to 582p amid chatter that it might be a target for a rival or private equity sharks.

London has been plundered by private equity firms over the past eighteen months as company valuations remain depressed.

With so many companies being taken private the Government is looking for ways to revive the London Stock Market and make it an attractive place to do business.

Analysts at Shore Capital speculated that FDM could be next given the ‘depressed share price’, although no official statement was published by the company.

At the end of July, FDM posted revenues of £180m in the first six months of 2023, 18 per cent higher than the same period last year while profit surged 34 per cent to £29.8m.

But the broking house also pointed to better-than-expected UK economic data as an explanation. Official figures showed that GDP – which was forecast to flatline in the second quarter of 2023 – expanded by 0.2 per cent between April and June.

‘Economic growth came in better than expected which is good news for FDM,’ said Shore analysts.

Another riser was National Health Service contractor EMIS which had its merger with UnitedHealth cleared by the competition regulator. There had been worries about competition concerns. EMIS manages electronic patient records for NHS doctors, while UnitedHealth’s software is used by GPs when prescribing medicines. Shares in EMIS soared 25 per cent, or 382p, to 1908p.

The London stock market ended the week in negative territory, with the FTSE 100 down 1.2 per cent, or 94.44 points, to 7524.16 and the FTSE 250 fell 1pc, or 194.11 points, to 18799.7.

Property landlords sank as the latest economic data also fuelled expectations that further interest rate hikes could be on the cards.

Land Securities slid 2.4 per cent, or 15.6p, to 625.4p, Great Portland Estates dropped 3 per cent, or 13p, to 415.4p, Segro fell 1.9 per cent, or 14p, to 737p, British Land retreated 5.3 per cent, or 17.8p, to 316.7p and Tritax EuroBox reversed 2.3 per cent, or 1.3p, to 54.7p.

GSK traded lower after brokers at Citi downgraded the target price on its stock to 1535p from 1700p. Shares in the pharma giant fell 1.2 per cent, or 16.6p, to 1371p.

Ladbrokes and Coral owner Entain lost further ground a day after it said it had set aside £585m to pay a potential fine for alleged bribery at its former Turkish business. The FTSE 100 gambling giant expects the penalty to be paid over four years once it officially enters into an agreement with the Crown Prosecution Service (CPS), which is likely to happen next year. Shares slumped 4.9 per cent, or 67.5p, to 1312.5p.

Asia-focused stocks came under further pressure after a difficult week for China marked by deflation, falling producer prices and weaker trade figures.

Shares in the insurer Prudential fell 2.9 per cent, or 30p, to 1008.5 and luxury bag maker Burberry, which makes of its sales in China, slid 0.2 per cent, or 5p, to 2252p.

Mining stocks also took a hit on the back of lower metal prices.

Glencore slumped 2.2 per cent, or 10.15p, to 444.7p, Anglo American dropped 1.9 per cent, or 42.5p, to 2151p and Rio Tinto slipped 1.4 per cent, or 67p, to 4726p. Antofagasta fell 4.2 per cent, or 66.5p, to 1516p after Barclays and JP Morgan cut the target price on the stock.

The company on Thursday lowered its copper production forecasts amid issues at its Los Pelambres mine in Chile. It expects to produce 640,000-to-670,000 tons this year, down from a previous range of 670,000 and 710,000.