MARKET REPORT: Flybe soars on Sir Stelios Haji-Ioannou rumour
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It was blue skies all the way for Flybe as rumours from a City hangar suggested that Sir Stelios Haji-Ioannou has the Exeter International Airport-based low cost regional airline on his radar.
Amid the turbulence elsewhere, the shares took off and touched 117p before closing 7p higher at 113p amid vague speculation the easyJet founder, who this week announced plans to set up a new discount airline called Fastjet, could possibly also buy Flybe currently valued at around £85m.
Broker Liberum Capital does not believe that Fastjet will pose a competitive threat to easyJet (9.5p cheaper at 344.25p) but if the aggressive Sir Stelios was to acquire Flybe and ‘bolt on’ a new business, Fastjet, that would certainly put the cat amongst the pigeons.
Sir Stelios’s move to set up Fastjet
came a week after easyJet announced its first ever dividend to
shareholders – worth £190m – with a mouthwatering £72m going to Sir
Stelios who still owns 38 per cent of the equity.
He could easily part-finance a bid for Flybe which is trading 62 per cent
below its December 2010 flotation price of 295p. But he would have a
huge job persuading Flybe’s major shareholders to sell. A trust of the
late Jack Walker, Blackburn Rovers’ former owner, holds a 48 per cent
stake via Rosedale Aviation Holdings, while International Consolidated
Airlines, the Anglo-Spanish holding company formed following the merger
of BA and Iberia, owns 14.6 per cent.
The competition authorities would also
have something to say as Flybe is Europe’s largest regional airline
carrying over 6.7m passengers last year.
Elsewhere, dealers were delighted to
see the back of the stockmarket’s worst quarterly trading performance
for almost a decade. Growing concerns over global economic growth after
figures showed China’s manufacturing sector contracted for a third
consecutive month in September combined with the seemingly never-ending
eurozone debt crisis sent investors scurrying to the hills on the final
day of the third-quarter.
The friendless Footsie fell a further 68.36 points to 5,128.48 taking its decline over the three month period to 14 per cent. The FTSE 250, considered by many to be a much better reading of the UK economy, dropped a further 187.98 points to 9,797.47 for a painful 18 per cent decline in the third-quarter. Wall Street opened 100 points off.
Rumours doing the rounds towards the
close suggested that a mega Footsie bid would hit traders’ screens early
next week. Supported strongly earlier this week on talk that China
Investment Corporation is looking to take a stake prior to launching a
full-scale offer, Imperial Tobacco was puffed up further to 2231p before closing only 3p better at 2176p.
British testing equipment group Intertek became the Footsie’s biggest casualty, plummeting 195p or 9.5 per cent
to 1856p. UBS did the damage with a downgrade to sell from neutral. The
broker is cautious on the testing and inspection sub-sector and sees
flat margins for the next 12 months.
Just for a change, banks were bashed. Reflecting its exposure to Asia, Standard Chartered lost 71p to 1286.75p, while Bob Diamond’s Barclays shed 7.8p to 161.3p. British tax-payer owned Lloyds Banking Group eased 1.62p to 34.87p.
Acquisition news lifted Vitec to
553p before profit-taking left the close 14.25p lower at 529p. The
industrial engineer has bought Haigh-Farr, a world leader in the design
and manufacture of flight-body antennae for aircraft, missiles and
spacecraft, for £23.1m.
The purchase will complement the
group’s IMT division, which supplies microwave technology to the
military, aerospace and government markets. Fears that betting shop
group Ladbrokes (3.6p lower at 119.25p will walk away if Sportingbet
is unable to sell its Turkey operations before the Takeover Panel’s
‘put up or shut up’ deadline of October 17, dragged shares of the online
gaming group down 1.75p to 46.25p.
Enough is enough. Shares of Just Car Clinics were slammed into reverse and the close was 13p or 45 per cent down at 15.5p.
Britain’s second biggest car accident
repair chain crashed after its board revealed it plans to cancel its AIM
listing after deciding that the benefits do nut justify the costs and
management time.
Marketing software provider Alterian
slumped 11.75p to 62.5p after the company said that a planned strategic
review would not be looking at ways to sell the business.
Engineer Renold improved 1.25p to 27.25p despite chairman Matthew Peacock selling 120,000 shares at 27p a pop.
West Midlands-based Mar City,
the residential housebuilder servicing the Affordable Housing sector,
firmed 0.025p to 1.75p. It has announced its first new build contract
for in excess of 100 new homes for a Housing Association in the
Midlands.
The breakthrough deal should lead to other contracts coming through in the short-term.
Chief executive Tony Ryan has over 30 years experience as a successful property developer.
Other news:
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