MARKET REPORT: FDM Group Share Price Soars on Takeover Speculation
Trading floors in the City were abuzz with takeover speculation as the week came to a close. FDM Group, a popular IT recruitment consultant listed on the FTSE 250, saw its shares surge by 12.4%, or 64p, reaching 582p. Rumors circulated that the company might become a target for a rival or private equity firms.
Considering the recent trend of private equity firms taking companies private due to depressed valuations, the government is now exploring ways to revitalize the London Stock Market and make it more appealing for business transactions. Analysts at Shore Capital noted that FDM could potentially be the next target due to its “depressed share price,” although no official statement has been released by the company.
FDM Group posted impressive financial results at the end of July, with revenues of £180m in the first half of 2023, marking an 18% increase from the same period last year. Profit also saw a significant surge, rising 34% to £29.8 million. Shore analysts pointed to better-than-expected UK economic data as a possible explanation for this performance. GDP, which was projected to remain flat in Q2 2023, actually expanded by 0.2% between April and June.
Another notable gainer in the market was EMIS, a contractor for the National Health Service (NHS). Its merger with UnitedHealth received approval from the competition regulator, alleviating previous concerns about potential competition issues. EMIS, which manages electronic patient records for NHS doctors, experienced a 25% increase in its shares, reaching 1908p.
However, the general sentiment in the London stock market was negative, with the FTSE 100 falling by 1.2%, or 94.44 points, to 7524.16, and the FTSE 250 dropping by 1%, or 194.11 points, to 18799.7. Property landlords were particularly affected, as economic data raised expectations of further interest rate hikes. Land Securities, Great Portland Estates, Segro, British Land, and Tritax EuroBox all experienced declines in their share prices.
GSK also traded lower after Citi brokers downgraded the target price on its stock. Shares in the pharmaceutical giant fell by 1.2%, or 16.6p, to 1371p.
Entain, the owner of Ladbrokes and Coral, continued to lose ground following its announcement that it had set aside £585m to potentially pay a fine for alleged bribery at its former Turkish business. The FTSE 100 gambling company expects the penalty to be paid over a four-year period once it reaches an agreement with the Crown Prosecution Service (CPS), likely to occur next year. Shares dropped by 4.9%, or 67.5p, to 1312.5p.
Asia-focused stocks faced further pressure due to a challenging week for China, characterized by deflation, falling producer prices, and weaker trade figures. Prudential and Burberry also saw their shares decline.
Mining stocks were impacted by lower metal prices, with Glencore, Anglo American, Rio Tinto, and Antofagasta all experiencing declines in their share prices. Antofagasta faced additional pressure as Barclays and JP Morgan reduced the target price on the stock, following the company’s revision of its copper production forecasts due to issues at its Los Pelambres mine in Chile.
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