MARKET REPORT: Another wave of takeover fever grips the Square Mile

A wave of takeover fever gripped the City as bids emerged for several major firms.

The main event was a £5billion offer for Boots by a consortium comprised of US private equity outfit Apollo and Reliance Industries, the conglomerate headed by Indian tycoon Mukesh Ambani.

However, there were bids afoot elsewhere with transport firm First Group announcing it has rebuffed an approach from Miami-based I Squared Capital.

The FTSE 250 bus and train operator, whose work includes running the Avanti West Coast mainline and South Western Railways, concluded the £1.2billion cash offer ‘significantly undervalues’ the company.

The bid comprised 118p per share plus an extra 45.6p which would be paid under certain conditions. 

However, First said the approach ‘does not provide shareholders with sufficient certainty’ and as a result, its board ‘unanimously rejected’ the proposal.

First shares were down 1.2 per cent, or 1.7p, to 135p on the news as investors appeared unconvinced by the prospect of a fresh approach.

Meanwhile, private hospital firm Mediclinic revealed it too had turned down a takeover swoop.

The group was approached with a £3.4billion offer by a consortium including its largest shareholder Remgro, the investment vehicle of the billionaire Rupert family in South Africa.

But Mediclinic’s board concluded the 460p per share proposal ‘significantly undervalued’ the company.

Despite the rejection, Mediclinic’s shares surged 2.6 per cent, or 11.2p, to 436.2p, suggesting the market believed the takeover tussle was not yet over. Elsewhere, an ongoing battle over ad agency M&C Saatchi continued to rumble on.

Next Fifteen (down 2.2 per cent, or 24p, to 1062p), the media firm that struck a £310million deal to buy M&C last month, said its bid would not increase its bid.

The statement came after rival bidder AdvancedAdvT, the vehicle controlled by tech entrepreneur Vin Murria who was recently ousted a deputy chairman of M&C, questioned whether Next Fifteen’s offer undervalued the company. M&C Saatchi shares fell 3.5 per cent, or 7p, to 195p.

The FTSE 100 was down 1.5 per cent, or 116.79, to 7476.21 and the FTSE 250 slipped 1.2 per cent, or 237.59 points, to 20073.4. Fears of a global economic slowdown continued to weigh on the market following bleak forecasts from the World Bank and the OECD.

Plans by the European Central Bank to start raising interest rates from next month in a bid to tackle inflation were also expected to pump the brakes on growth.

Matters were not helped by reports parts of Shanghai had reintroduced lockdown measures, sparking concerns China could reverse its recent easing of restrictions.

The FTSE 100 was also held back by several of its constituents going ex-dividend, with Sainsbury’s down 5.9 per cent, or 13p, at 209.4p, Primark-owner AB Foods falling 3.3 per cent, or 56p, to 1652p and WPP shedding 4.5 per cent, or 41p, to 871.8p.

Retail stocks were on the slide as the British Chambers of Commerce warned economic growth would grind to a halt this year while Pepco, the owner of unlisted chain Poundland, warned customers were cutting back on essentials amid the cost of living crisis.

B&Q-owner Kingfisher dropped 3.6 per cent, or 9.2p, to 246.7p, B&M slumped 1.6 per cent, or 5.9p, to 368.5p, Ocado fell 3.9 per cent, or 37.2p, to 915.4p, Howdens lost 1.6 per cent, or 10.6p, to 662.2p and Dunelm declined by 3.8 per cent, or 33p, to 835.5p.

Adding to the misery was sofa seller DFS, which fell 11.9 per cent, or 22p, to 163p after warning demand for its furniture dropped as household spending was squeezed.