FTSE 100 Friday close: AstraZeneca/Pfizer stand-off drives shares higher

2nd May 2014

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The FTSE 100 gained further ground over the week chiefly on the back of AstraZeneca’s soaring share price and some positive updates from the banking sector writes Philip Scott.

The UK’s blue-chip index closed on Friday at 6,822.42, flat on the day but 2% higher over the week.

Pharmaceutical research group AstraZeneca was by far the week’s strongest riser among the top 100, soaring 18% to 4,808p.

US drugs behemoth Pfizer determined to make a merger with the UK group happen, made another play for the firm this week. The maker of Viagra, confirmed on Friday that it had submitted a new proposal, upping its offer to £50 per share, valuing the revamped deal at a massive £63bn.

The latest offer represents a 39% premium to the closing price of £35.86 on 3 January 2014; the trading day immediately prior to the date of Pfizer’s January proposal.

However after reviewing the latest proposal AstraZeneca threw it out saying the offer was inadequate and substantially undervalued the business.

Chairman AstraZeneca, Leif Johansson said: “Pfizer’s proposal would dramatically dilute AstraZeneca shareholders’ exposure to our unique pipeline and would create risks around its delivery. As such, the board has no hesitation in rejecting the Proposal.”

Notably amidst the M&A noise around the healthcare sector, reports emerged this week that Shire, another of the week’s top risers, up 8% at 3,467p, may have become another potential target.

As reported in The Guardian, analysts at Societe Generale have even hinted the AstraZeneca could prepare a £30bn bid for Shire to escape from Pfizer clutches.

Within the banking sector shares in Royal Bank of Scotland are up 10% to 331.7p over the week, helped by its announcement on Friday that pre-tax profits surged to £1.6bn for the first three months of 2014, nearly double the £826m it achieved in the same period last year.

Chief executive Ross McEwan however admitted there was still much work to do and “plenty of issues from the past to reckon with”.

Lloyds, which plans to float TSB at the end of June announced a 22% rise in underlying first quarter pre-tax profit to £1.8bn, sending the its stock 6% higher over the week to 79.62p while Barclays, hit by a bomb scare at its Canary Wharf office, which turned out to be a false alarm rose 4% to 258.5p. Elsewhere HSBC was up 1% at 605.7p, as its Asian focused competitor Standard Chartered finished flat at 1,287.5p.

InterContinental Hotels Group enjoyed a 10% rise to close at 2,190p. The business announced that first quarter global revenue per available room rose 6% and  to further cheer investors, after completing two major asset sales in March, the firm is now gearing up to a $750m special dividend.

The week’s steepest fall was endured by Cambridge based semiconductor group Arm, which lost 6% to 886p, after the market bemoaned the news that Tim Score, its chief financial officer since 2002, would retire in May 2015.

Tesco dropped 5% to 285.5p after rating’s agency Standard & Poor’s lowered its forecast on the supermarket group’s credit rating while Harpic and Finish owner Reckitt Benckiser shed 2% to 4,840p after it confirmed it was no longer in active discussion regarding an offer for Merck’s consumer health business.

Other fallers over the week, included Fresnillo, down 2% at 832p and insurer Admiral which also loosened 2% to 1,391p.

Following the long weekend, week commencing 5 May sees updates and reports arrive from Sainburys, Imperial Tobacco, Legal & General and Barratt Developments.

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