Marcus Evans Group | Worldwide Headquarters | American Offices | Latin America | European Offices | African / Asian Offices

Vodafone rises as it calls off Greek merger, while Shire climbs on bid talk

Vodafone terminates plans to link up with Greece’s Wind Hellas; Shire subject of renewed speculation

Much of the recent interest in Vodafone‘s overseas businesses has revolved around India, but on Monday the focus switched to Greece.

In a short statement the mobile phone group announced it was abandoning plans – unveiled in August – to merge its Greek business with rival Wind Hellas. It said:

Vodafone and Largo, the sold shareholder of Wind Hellas, confirm they have agreed to terminate discussions relating to a potential business combination between Vodafone and Wind Hellas.

Analysts said competition concerns were probably behind the move, although Greece’s current financial problems could have played a part. Espirito Santo said:

The proposal to consolidate the Greek mobile market down to two players each with around 50% market share was never likely to succeed in any case, but it was probably worth a try; it was possible that an exception could have been made given the trauma that Greece in general and Wind in particular are going through.

We haven’t seen any official announcements regarding the reasons for the collapse of the merger from either the companies or the regulators, so we assume the regulators (Greek or EU) have told Vodafone in private discussions that this deal would not get approval. This allows Vodafone to withdraw without suffering the ignominy of public rejection.

We would now expect Vodafone to re-commit to growing its Greek business organically, which may involve some investment in subscriber growth/retention to grow its market share – a price worth paying in the short term to take advantage of Wind’s troubles.

Ahead of a trading update on Thursday Vodafone climbed 2.75p to 177.85p.

More generally, Greece was also the main subject on investors’ minds once more. With little clarity about the progress – or otherwise – of talks to allow the next €130bn tranche of bailout money to the paid to the country, the FTSE 100 suffered a little profit taking after hitting new six month highs last week. But there was no real sense of panic, and the index closed down just 8.87 points at 5892.20.

Shire rose 19p to £21.29 on renewed talk of a possible bid for the pharmaceuticals group. The company has been linked in the past with a number of predators, from Bayer to Pfizer to AstraZeneca. Traders heard suggestions this time of an offer worth perhaps £35 a share.

Still with takeover speculation, Misys climbed 5.5p to 335p hopes a bid would emerge following last week’s proposal for the IT group to merge with Swiss rival Temenos. The news disappointed those hoping for a bid premium for the UK business.

Randgold Resources was among the leading risers, up 165p at £75.65 after it reported a 259% jump in full year profits.

But Glencore lost 21.8p to 460.75p on suggestions it would have to pay more to succeed in its plans for a £50bn merger with Xstrata, down 21.5p at 1261.5p There were also reports the deal could face regulatory scrutiny.

A boardroom row at coal miner Bumi sent its shares 55p lower to 795p. Indonesia’s Bakrie family are attempting to oust financier Nathanial Rothschild and other directors from the board.

Anglo American fell 23p to £28.87 and BHP Billiton was down 6.5p at £22 on growing talk they could be about to pounce on US coal producer Walter Energy at around 5 a share. In the market Walter shares stand at around .

Insure Admiral gave up some of the gains it made on Friday, falling 39.5p to 998.5p. Andy Hughes at Exane BNP Paribas said:

Admiral’s share price reacted strongly on Friday (up 7.9%) to the announcement that the reinsurance arrangements had been extended to 2014 on current terms.

This prompted some commentators to say that Admiral’s reserving issues were in the past and that the reinsurers had audited the level of reserves. We see a key difference between the reinsurance and the shareholder risk. We do not believe the reinsurance structures will be effective in capital terms under Solvency II and therefore the extension is rather irrelevant.

We expect that Admiral’s market share is in decline. This could lead to a decline in vehicle count in the fourth quarter.

Elsewhere SuperGroup soared 41p to 703p after Oriel Securities moved from hold to buy, but Ocado dropped 4.8p to 103.5p on profit taking after last week’s share price rise.

Premier Foods has just started a £50m advertising push, with television spots starring Loyd Grossman plugging his sauces from today. The market seems unimpressed – Premier’s shares lost 1.5p to 10.5p.

But Character Group climbed 4.25p to 132.5 after the company signed a deal to produce a range of toys based on children’s social media and virtual world website Bin Weevils. The site won the best children’s website BAFTA in November ahead of the likes of Moshi Monsters and Club Penguin.

Amisha Chohan at Merchant Securities said:

[This] confirms the group’s ability to secure top licences, ensuring its product portfolio is broadening and up-to-date.

Avanti Communications dipped 1.5p to 284p as it announced a placing with new and existing investors to raise £75m. The cash will be used to fund the design, construction and launch Hyas 3, its third satellite which will sell capacity to telecoms companies and internet service providers. © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds