WSP rose 6.4 per cent to 241½p on Tuesday after it was tipped as a takeover target in the wake of a bid for a privately owned rival. Analysts said the acquisition of Halcrow by CH2M Hill for £230m underlined the ongoing consolidation activity in the sector.
“In our view, WSP is an obvious possible takeover target for an international engineering consultant seeking to gain strong market positions in various European economies such as Sweden and the UK, with strong niche positions in Australia, USA, South Africa and the Middle East,” said RBS, noting the company trades on a price to earnings ratio of just 7, with a 6.6 per cent dividend yield.
Game Group rose 14.8 per cent to 25¼p after the computer games retailer surprised the market by holding its interim dividend.
“The market is bound to remain a bit sceptical, but if the full year dividend of 5.88p (3.9p final) is held as well, then the forward yield at 22p is as much as 26 per cent …and that can’t be right, notwithstanding the doubts about Game’s business model in a digital age,” commented Nick Bubb at Arden Partners. In addition, Game Group’s management said they would spend 20 per cent of their salaries on buying stock over the next 12 months.
In the same sector, Topps Tiles climbed 25.5 per cent to 32p on news that full-year results would be in line with City expectations. “Going forward, if cash can be controlled and if a recovery of some sort can be engineered, then the shares are undervalued. However, we would expect it to take a while for this optimistic scenario to be reflected in the shares,” said Panmure Gordon retail analyst Philip Dorgan.
Bowleven, the explorer focused on Cameroon, moved up 12.5 per cent to 101p on rumours of a positive drilling report, while Phorm Group, the online advertising software group, gained 18.8 per cent to 95p on talk of a short squeeze.
Luminar slumped 53 per cent to 0.95p after the nightclub operator revealed takeover approaches but warned the offers would not realise any value for shareholders. Central Rand Gold, down 56 per cent to 0.22p, was another big faller after its losing its mining licence.
Recent takeover target Lookers dipped 1.4 per cent to 51¾p after non executive director Tony Bramall was revealed as the buyer of a large chunk of stock that changed hands last week. Mr Bramall now controls 24.6 per cent of the car dealer. Analysts said Lookers shares, which trade at a discount to net asset value, looked cheap.
There was also stake building at 2 Ergo, the mobile marketing and advertising group, which firmed 1.5 per cent to 69½p after entrepreneur Nigel Wray declared a raised holding of almost 14 per cent.
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