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BEAM me up Scotty!
Diageo cheers over Beam talk
By Geoff Foster
PUBLISHED: 17:34 EST, 12 March 2012 | UPDATED: 02:42 EST, 13 March 2012
Intoxicating rumours of an imminent mega bid in the spirits world had dealers licking their lips in anticipation.
Dealers heard that thirsty bidders are all over Beam Inc, the liquor company formed in the break-up of Fortune Brands last year, like a rash and its days of independence are numbered.
Shares of the Illinois-based owner of Courvoisier cognac and Cruzan rum traded around the $55.95 a share level in New York but word is the take-out price could be much nearer $90 a share.
Cheers: Diageo and Pernod are said to be interested in Courvoisier owner Beam
Johnnie Walker scotch whisky-to-Smirnoff vodka and Guinness beer group Diageo (11p better at 1553p) has been forever rumoured to be interested in Beam along with Pernod, Europe’s second-biggest distiller.
Analysts have been of the opinion that Beam, whose Jim Beam is the third-largest whisky brand in the US and which generates more than 30 per cent of its sales from bourbon, is a particularly attractive takeover target because it is one of the only spirits companies not controlled by a family.
Diageo would love to get its hands on Beam in order to gain share in the US bourbon market. Acquiring Beam would boost its share of the US bourbon market to 44 per cent from 13 per cent. It would also be able to expand Beam’s bourbon sales in Europe and Asia.
Broker Liberum Capital reckons Beam would be a good fit as Diageo is under exposed to brown spirits in the US. A multi-billion pound break-up bid for Beam could possibly be boss Paul Walsh’s swansong.
Diageo recently announced that Ivan Menezes, already the most senior executive after chief executive Walsh, had been promoted to chief operating officer.
Succession plans are therefore in place should Walsh say cheerio in the not-too-distant future. Peroni brewer SAB Miller, which swallowed Fosters for £6bn last year, frothed 26.5p higher to 2637p.
The Footsie edged 5.26 points forward to 5,892.75 in thin trading with many fund managers having their minds more on today’s start of the horse-racing festival at Cheltenham.
Others just sat on their hands ahead of today’s Federal Open Market Commission decision on US interest rates and the Federal Reserve’s appetite for a third round of quantitative easing.
Wall Street rose 30 points in the early exchanges. Defence group Cobham jumped 10.1p to 220.6p after withdrawing its £273million offer for rival Thrane & Thrane after the Danish company rejected its offer.
Cobham had been talking with Thrane for months and submitted an offer of 420 Danish crowns on February 8. A bullish feedback from analysts attending the group’s Investor Day in St Albans, Hertfordshire, helped William Morrison Supermarkets rise 6.8p to 301.6p.
A revival of private equity takeover speculation lifted investor 3i to £2 before it closed 2.7p up at 196.4p. Insurance giant Prudential rose 7.5p to 728p in anticipation of pleasing results today. Recent reports have suggested that boss Tidjane Thiam is looking to expand in Brazil but legislation there stops insurers controlling their own sales force.
Rolls-Royce fell 11.5p to 823.5p after chief executive John Rishton sold 103,828 shares at 827.5p a pop. Buying ahead of today’s full-year results lifted Computacenter 41.6p to 410p. Egypt-focused gold miner Centamin rallied 3.55p to 85p after announcing the resumption of normal operations at its flagship Sukari mine following last week’s illegal work stoppages.
Miners had downed tools as a result of a breakdown in ongoing discussions involving general salary increases and other benefits. All outstanding issues have now been resolved.
After announcing maiden annual results since it was spun out of African Aura, Aureus Mining rose 4.25p to 77.75p. Shore Capital rates Aureus as one of the top picks in the West African junior gold company sector. Aureus is to build Liberia’s first commercial gold mine next year and a fund-raising may be required.
Reflecting a strong return to profitability for the full-year, Israeli-based technology company Emblaze added 3p at 48p.
Hovis-to-Mr Kipling group Premier Foods improved 0.5p to 12p after agreeing terms of a refinancing package that gives it access to banking facilities of £1.2bn until June 2016.
Tristel, the manufacturer of infection control, contamination control and hygiene products, added a penny to 37p following interim results. Revenues rose 10.9 per cent to £5.061million and overseas sales were up 100.8 per cent to £0.775million. FinnCap’s target price is 50p. Despite reporting in-line half-year results, Coal of Africa eased 1.5p to 66p.