July 14, 2014 / 11:02 AM / in 3 years

Shire helps FTSE extend rebound on takeover offer

* FTSE 100 up 0.6 pct; dropped 2.6 pct last week

* Shire up 2.3 pct on new AbbVie offer

* Sports Direct boosted by partnership with MySale

By Francesco Canepa

LONDON, July 14 (Reuters) - Britain’s top equity index rose for a second straight day on Monday, helped by a rally in Shire after the drugmaker got an increased takeover offer from the U.S. drug company AbbVie.

Shares in Shire reached a record high after its board said it was ready to recommend a new offer from AbbVie. The new bid - the fifth by AbbView - values Shire at 31.3 billion pounds ($53.3 billion).

Some traders saw the announcement as opening the door to further bids, with AbbVie’s 53.20-pounds-per-share offer becoming a floor.

“We believe that Shire’s board was keen to have the proverbial bird in hand,” a London-based event-driven trader said.

“The board could have been minded to accept AbbVie’s offer as a floor and as it has now established that it is willing to sell the company (unlike AstraZeneca ), is effectively putting a for-sale sign in the window.”

AbbVie, which wants to buy Shire to cut its tax bill and diversify its product line-up, made the offer after Dublin-based Shire asked for an improvement on the previous 51.15-pound-per-share offer.

Other traders were more cautious on Shire’s stock, which has surged more than 40 percent in the past month.

“What we’re doing this morning is basically closing down, per client, half of the exposure, so we’re banking something good on the bounce and leaving the other half on just in case (it climbs to 53),” said Galvan’s head of trading, Ed Woolfitt.

Shire shares rose 2.3 percent to 4,984 pence. Volume rose to 60 percent higher than its full-day average for the past three months by 1028 GMT. FTSE 100 volume was less than a quarter of the index’s own average.

The FTSE 100, which dropped 2.6 percent last week to post its biggest weekly drop since March, had climbed 41.45 points, or 0.6 percent, to 6,731.62 points.

Investors had put aside concern about euro zone banks and looked ahead to corporate earnings, traders said.

“Corporate earnings have started to trend to the upside and momentum indicators suggest we are going to continue to see forward-looking estimates improve alongside EPS estimates,” Guardian Stockbrokers’ director of trading, Atif Latif, said.

Solid gains were also seen by sports retailer Sports Direct , up 3.8 percent, after it announced plans to open in Australia and New Zealand by forming a partnership with MySale Group. MySale rose 4.8 percent.

Rolls-Royce also rise, tacking on 1.2 percent as European planemaker Airbus began the Farnborough Airshow by confirming it would sell revamped versions of its A330 wide-body jet powered by Rolls-Royce Trent 7000 engines. ($1 = 0.5877 British pounds) (Additional reporting by Tricia Wright; Editing by Larry King)

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