Invensys drops 16% as it confirms Emerson talks but says they have ended
Engineer says it received preliminary approach from US group as well as expressions of interest from other companies
Invensys has finally issued a statement after Wednesday afternoon’s share surge, admitting it had received an approach from US group Emerson Electric, but saying the discussions had ended.
The engineering group’s shares jumped by 40% at one point on talk Emerson was interested, but it is only this morning that Invensys has clarified the position. It said the US group had previously made a “highly preliminary approach” for the group but the talks were “no longer ongoing.” Nor are any other discussions underway about an offer for the company.
It also said it had been in “highly preliminary discussions” with third parties who had expressed interest in parts of its business. But there is little clarity on when this all happened.
In recent time there has been persistent talk that Siemens, US group GE or China’s CSR was interested in all or part of Invensys, which makes control systems and rail signalling equipment.
The news that there are no talks sent Invensys shares down 42p to 215p, a 16% decline. But this is still above Wednesday morning’s opening price of 201.9p.
Overall the market has reacted with a little disappointment to the US Federal Reserve’s extension of its Operation Twist bond buying programme to stimulate the country’s flagging economy. After shares jumped sharply in anticipation of what the Fed would do, this reaction was fairly predictable.
With further signs of weakness in the global economy, including news that Chinese factory output had contracted for the eighth month in a row, the FTSE 100 is down 32.71 points at 5589.58.
Miners are among the main fallers after the disappointing Chinese figures, since that country is a major consumer of commodities. Kazakhmys is down 25p at 730.5p, while Vedanta Resources has fallen 28p to 950p.
But Unilever recovered from recent falls following downbeat comments from peers Danone, the French food group, and Procter & Gamble. In a note entitled Why Unilever is not P&G or Danone, Investec analyst Martin Deboo said:
While P&G and Danone’s profit warnings serve to remind that this is not a time for complacency, we counsel against too much read-across. For us, Unilever is a company that is gaining momentum rather than losing it, whose input pressures are getting better rather than worse, who is relatively less exposed to slowing geographies and who is less of a hostage to guidance fortune. We stay holders, but warming ones.
Unilever is currently 15p higher at £20.77 while Reckitt Benckiser, also hit by the P&G and Danone comments, is 33p better at £34