Takeover talk pushes Weir Group higher

Pumpmaker Weir Group was among the gainers in response to a bid for one of its sector peers.

Weir rose 4.2 per cent to £22.76 on news that General Electric would buy Lufkin Industries, a maker of pump equipment used to stimulate oil wells.

GE agreed to pay $3.3bn for the engineer, equivalent to 13.5 times Lufkin’s 2013 operating earnings.

The knockout price revived talk that Weir, which was being valued at about nine times forward earnings, could be a takeover target for US engineers looking to expand in shale oil extraction.

Weir would fit well within GE’s oil and mining divisions, according to analysts, though a £4.8bn market value would put it outside the US group’s stated aim of making deals worth between $1bn and $4bn.

Flowserve and Caterpillar have also been cited as potential Weir suitors. A “buy” note from Merrill Lynch helped Weir shares, with the broker raising its target to £25 after a factory visit.

Smiths Group, whose John Crane unit competes directly with Lufkin, was up 0.6 per cent to £12.15.

The wider market bounced off a three-day decline, lifting the FTSE 100 by 0.4 per cent, or 27.16 points, to 6,276.94. A quiet day for financial news meant blue-chip volume was down a fifth on the recent average.

Leading the FTSE risers, Polymetal rallied 5.3 per cent to 882p after its full-year results beat expectations.

The Russian gold miner also dismissed long-running speculation that it could merge with compatriot Polyus Gold with chief executive Vitaly Nesis saying the “likelihood is zero per cent”. Polyus was 0.5 per cent higher at 213p.

ENRC added 1.7 per cent to 247.3p with Citigroup taking the stock off its “sell” list on valuation grounds.

Premier Oil was up 6.1 per cent to 385p on news of an oil find at its 30 per cent-owned Luno II well off the coast of Norway.

Ahead of testing results expected within the next few weeks, analysts valued the oil find at between 25p and 35p per Premier share.

The nearby Edvard Grieg development, which is scheduled to come on stream by 2015, should help simplify the potential commercialisation of the prospect, they said.

Cairn Energy added 3.3 per cent to 282p following Friday’s news that US activist investor David Einhorn had a 3 per cent stake.

Cairn has been lifted by hopes of a deal with Vedanta Resources, which has a production report due this week.

CLSA analysts last month speculated that Cairn could be bought by Cairn India, its own Indian spin-off that is now majority-owned by Vedanta.

Talvivaara slumped 19.7 per cent to 13.3p after the nickel miner reported another leak at a waste water pond.

The news came on the day new shares started trading from Talvivaara’s rescue rights issue priced at 14p a share.

The company said that the leak might be connected to a fault found in November when the waste water contained elevated uranium levels.

Plugging that leak took 10 days and led to a 21-day shutdown of operations, analysts said, suggesting 2013 production targets were at risk.

A profit warning sent Mecom down 34.3 per cent to 55p with the newspaper group blaming a deterioration in advertising sales in its core Dutch business.

Emerald miner Gemfields fell 16 per cent to 26p after Zambia said it intended to ban all gemstone auctions outside the country.

Since 2009, Gemfields has raised $160m in international auctions of stones from its Kagem mine, which is 25 per cent owned by the Zambian government.

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