London shares were higher at midday on Monday, as the FTSE 100 index benefited from a weaker pound, while the FTSE 250 was lifted by acquisition activity.
The gains came despite fading hopes for a pause in US interest rate hikes.
The FTSE 100 was up 32.23 points, or 0.4%, at 7,904.14. The FTSE 250 was up 95.86 points, or 0.5%, at 19,338.55, and the AIM All-Share was up 2.78 points, or 0.3%, at 833.13.
The Cboe UK 100 was up 0.4% at 790.94, the Cboe UK 250 was up 0.6% at 16,934.53, and the Cboe Small Companies was up 0.4% at 13813.47.
The pound was quoted at $1.2408 at midday on Monday in London, lower compared to $1.2427 at the close on Friday.
In the FTSE 250, shares in Network International jumped 19% to 361.60 pence.
The Middle East and Africa-focused payments provider said it has received a non-binding takeover proposal from private equity firm CVC Capital Partners and tech-focused investor Francisco Partners Funds for a possible cash offer of 387p per share.
The new potential offer follows a series of previous proposals that were rejected, Network International noted. The offer is a 58% premium to the company’s closing price of 244.40p per share on Wednesday last week, the last business day before the first announcement was made.
The board would be minded to recommend the offer to shareholders, should a firm offer be made, it said. The consortium now has until May 11 to announce the firm intention to make an offer, or withdraw from the takeover process.
Fellow FTSE 250 firm John Wood Group also rose on takeover news, climbing 7.6% to 227.80p.
John Wood said it has decided to engage with Apollo Management Holdings to see if a firm takeover offer can be made by the private equity firm on the same financial terms as Apollo’s last proposal.
Apollo announced a fifth proposal for John Wood in early April at a price of 240 pence per share in cash. The offer represented a 59% premium to John Wood’s closing price of 151p at the time of the offer, and a 20% premium to the initial proposal submitted to John Wood of 200p per share in cash.
‘Having now weighed all relevant factors, particularly feedback received from Wood shareholders, the board has decided to engage with Apollo to see if a firm offer can be made on the same financial terms as the final proposal,’ John Wood explained.
John Wood will now give Apollo, part of Apollo Global Management, access to due diligence materials and has agreed to extend the put-up-or-shut-up deadline for Apollo to make a firm offer or walk away to May 17.
Russ Mould, investment director at AJ Bell, said: ‘Everything is up for sale at the right price, and given the uncertain economic outlook it seems that boards are minded to support takeovers as long as shareholders are not being messed about by unrealistically low offers.’
Shares in Royal Mail-parent International Distributions Services rallied 5.3% on news that the postal service and union leaders have come to an agreement after a long and bitter dispute over pay, jobs and conditions.
According to a joint statement, released on Saturday, Royal Mail said it had reached a negotiators’ agreement in principle with the Communication Workers’ Union.
Elsewhere in London, De La Rue rose 6.0%. Late on Friday, the security printed products maker said that Chair Kevin Loosemore had resigned to ‘draw a line under recent speculation surrounding the leadership of the company’.
Loosemore has faced several calls to be removed from the board in recent months from Crystal Amber Fund, which has publicly criticised the firm for various alleged failures in governance and management.
Loosemore will leave on May 1. A representative of Crystal Amber Fund is a candidate to replace him.
On AIM, DeepVerge plunged 45% after the environmental and life science firm said that, following a review of major contracts, revenue for a ‘number’ of contracts has been incorrectly recognised ‘in excess of work completed’.
Accordingly, in 2022, it now expects to recognise just 45% to 55% of its January guidance of £17.2 million.
‘Whilst it is extremely disappointing that 2022 revenues are likely to be so far below the figures provided by the previous executive management team, I’m confident that the new management has robust plans in place to deliver the order book during 2023 and 2024,’ said Chair Ross Andrews.
In European equities on Monday, the CAC 40 index in Paris and the DAX 40 in Frankfurt both were marginally higher.
The euro stood at $1.0984, slightly lower against $1.0987. Against the yen, the dollar was trading at JP¥134.04, higher compared to JP¥133.68.
‘After Friday’s weekly close in the red, which happened for the fifth consecutive time, the greenback appears to be starting this new week on a more positive note. The better-than-expected [US] banking sector earnings, released on Friday, have been seen by many as an omen that the [US Federal Reserve] will go ahead with another rate hike in May,’ said Ricardo Evangelista, senior analyst at ActivTrades.
There will be more earnings from US banks this week, with Goldman Sachs and Bank of America reporting on Tuesday.
Stocks in New York were heading for a directionless open. The Dow Jones Industrial Average was called up 0.1%, the S&P 500 index was seen flat, and the Nasdaq Composite was called down 0.1%.
On Friday, stocks on Wall Street had closed lower despite the strong start to the US bank earnings season. The Dow and Nasdaq both closed down 0.4% and the S&P 500 down 0.2%.
Market sentiment was knocked after a Federal Reserve official said that the US central bank should continue tightening monetary policy to bring down inflation.
Brent oil was quoted at $85.81 a barrel at midday in London on Monday, down from $86.42 late Friday. Gold was quoted at $2,007.79 an ounce, up ten bucks from $1,997.18.
Still to come on Monday’s economic calendar, Fed Richmond President Thomas Barkin speaks at 1700 BST.
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