M&A activity in pharmaceuticals pushes UK's FTSE higher

Tue Apr 22, 2014 10:55am EDT

* FTSE 100 up 1.1 pct
    * AstraZeneca surges on reported Pfizer bid interest
    * GlaxoSmithKline jumps on asset swap with Novartis

 (Adds detail, quote, updates prices)
    By Alistair Smout
    LONDON, April 22 (Reuters) - Merger and acquisition activity
among drug companies drove Britain's top share index to a
two-week high on Tuesday, putting it within sight of its peak
for 2014.
    Drugmaker AstraZeneca surged 6.7 percent, with
trading volumes in the stock over twice its 90-day average,
after the Sunday Times newspaper reported a 60 billion-pound
($101 billion) approach from U.S. peer Pfizer.
 
    Both companies declined to comment. Analysts at Citigroup
said in a research note they expected Pfizer "to push
aggressively ahead with a second approach."
    Rival drugmaker GlaxoSmithKline rose 5.6 percent
after exchanging assets with Swiss peer Novartis,
which announced a multi-billion dollar revamp. The general mood
saw peer Shire overtake both in afternoon trade to rise
7.1 percent. 
    "M&A activity shows a certain confidence on the part of the
executives of the companies. The AstraZeneca would be one of the
biggest deals ever done for a London-listed company," Jasper
Lawler, market analyst at CMC Markets, said.
    "It's true to say that when deals like this come off, more
follow suit. People have put a quick bet in there (on Shire)
hoping that they could be the recipient of some other kind of
deal."
    The blue-chip FTSE 100 index was up 1.1 percent, or
72.35 points, at 6,697.60 points at 1429 GMT. The UK stock
market had been closed since Thursday for the Easter holiday.
    The FTSE 100 hit a peak of 6,867 points in late January, its
highest level since early 2000. The index is now less than 3
percent off that level, having recovered from a slide driven by
concern over a slump in emerging markets economies and tension
between Russia and Western powers over Ukraine.
    However, it has been stuck in a 200-point range for the last
six weeks. Tuesday's move, led by the pharmaceutical sector,
took the index to the top end of that range, but analysts were
cautious.
    "We're still in quite a wide range, and there hasn't been
too much outside of the pharma sector to make us think that
we'll break out of it soon," Jeremy Batstone-Carr, analyst at
Charles Stanley, said.
    "(However), there's nothing like a bit of M&A to excite
investors and coalesce interest in relation to the market
generally. It shouldn't be taken as a sign of the top of the
market."     
 ($1 = 0.5951 British pounds)

 (Additional reporting by Sudip Kar-Gupta; Editing by Larry
King)
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