MARKET REPORT: North Sea-focused oil and gas group Serica sees shares soar by 5% after it spurns takeover bid
Serica Energy shares climbed after it rejected yet another takeover bid. The stock rose 5pc, or 18p, to 375p after the North Sea-focused oil and gas group turned down a £1.2bn offer from energy investment firm Kistos.
The bid is higher than a previous £1bn offer Kistos made which was slapped down by Serica’s board earlier this month.
Under the terms of the latest offer, Serica investors would receive 0.4 Kistos shares and 213p in cash for each Serica share they held. They would also control 58pc of the combined group compared to 50pc based on the previous bid.
Serica Energy shares climbed after it rejected yet another takeover bid
But Serica’s management had concluded that the new offer ‘significantly’ undervalued the company and was ‘opportunistic’. As a result, it advised shareholders to take no action in regards to the new offer.
Kistos shares dropped 0.9pc, or 5p, to 525p after the bid was rejected. Kistos originally approached the Serica board in May to discuss the possibility of a merger but several offers were refused.
A counter bid for Kistos by Serica was also turned down. The takeover interest came after Serica shares suffered a decline earlier this year following the Government’s plans for a windfall tax on profits made by oil and gas firms to help ease the cost of living crisis battering households.
Analysts at broker Stifel backed the decision of Serica’s board to reject the approach, saying that investors should instead wait for the results from the company’s North Eigg well in the North Sea. The FTSE100 ticked up 0.4pc, or 29.93 points, to 7306.3 and the FTSE 250 edged down 0.1pc, or 21.78 points, to 19802.99.
STOCK WATCH: Hurricane Energy
Hurricane Energy shares hit a two-month high after the firm repaid all its debts. The oil and gas explorer, which owns assets off the west coast of Shetland, announced it had repaid £65.2m worth of bonds and £1.2m in interest. The repayment means the company is debt free, with boss Antony Maris saying the repayment was a ‘key milestone’ for the group. Hurricane flagged that it had ‘significant cash on hand’. The shares surged 16.6pc, or 1.2p, to 8.45p.xt
Markets remained hopeful as they awaited a major interest rate decision from the Federal Reserve as well as a large helping of US earnings due this week. Blue-chip banking stocks also gained ahead of results from the sector, with Standard Chartered up 3.2pc, or 18.2p, to 591p, NatWest added 2.3pc, or 5.1p, to 230.2p, HSBC gained 2.2pc, or 11.3p, to 526.5p, Barclays climbed 1.8pc, or 2.88p, to 160.72p and Lloyds rose 1.3pc, or 0.58p, to 43.81p.
Richard Hunter, head of markets at Interactive Investor, said the banks were expected to remain ‘awash’ with cash, raising hopes of more shareholder returns either through buybacks or dividend payments.
But the prospect of higher rates spooked gambling stocks amid fears it could dampen consumer spending on bets. L a d b r o k e s – o w n e r E n t a i n dropped 2.2pc, or 25.5p, to 1154.5p and PaddyPower-owner Flutter eased 2.6pc, or 216p, to 8060p. Online supermarket group Ocado sank 4pc, or 32p, to 759.6p after analysts at broker Berenberg cut their target price on the stock to 1290p from 1415p.
JD Sports was also on the back foot, slipping 2.1pc, or 3p, to 138.9p, after JPMorgan trimmed its target on the retailer to 180p from 210p. Pharma giant AstraZeneca inched up 0.4pc, or 44p, to 10810p after a triple dose of good news from its drug pipeline.
The company’s Tezspire treatment for severe asthma and Ultomiris, its treatment for generalised myasthenia gravis, a rare condition that causes muscle weakness, have been recommended for approval by EU regulators. Meanwhile, the firm added that its Enhertu breast cancer drug had been granted priority review by the US FDA and is expected to receive a decision by the fourth quarter of this year.
Telecoms group Airtel Africa rose 2.4pc, or 3.9p, to 168.6p after expanding its presence in Kenya. The firm has purchased additional mobile spectrum for £33m to support the expansion of its 4G network in the country