MARKET REPORT: Pendragon sees shares surge after £400m takeover bid

Car dealer Pendragon rose to its highest point in five months after a takeover attempt by its largest shareholder.

The company, which owns brands such as Evans Halshaw and Stratstone, rose 19.8 percent, or 4.5 pence, to 27.2 pence after it said it received an offer of 29 pence per share from Hedin Mobility last Wednesday. Group and considered the proposal.

The offer represents a 26 per cent premium to the closing price on September 20, the day before Hedin entered the market, and values ​​the company at just over £405 million.

Hedin, which operates car showrooms in countries including Belgium, Sweden and Switzerland and owns 27 percent of Pendragon, is a major critic of the board of directors, particularly in the area of ​​driver compensation.

At the AGM in June, the company suffered a third straight uprising over compensation from its bosses, with more than 65 percent of the vote against the pay package.

In August, Pendragon noted that a previous offer of 29 pence per share had been approved by all but one of its five largest shareholders.

Liberum brokers thought a bidding war was “unlikely” and that other shareholders would “probably accept.”

The FTSE 100 rose 0.03 percent or 2.35 points to 7020.95, while the FTSE 250 fell 1.39 percent or 249.86 points to 17,722.83.

Homebuilders collapsed amid growing fears that rising interest rates will hit real estate demand as skyrocketing mortgage costs deter would-be buyers.

Taylor Wimpey fell 7.1 percent or 7.31p to 95.84p while Persimmon fell 6.6 percent or 89.5p to 1260.5p, Barratt Developments fell 5.1 percent or 20.8p to 385.2p and Berkeley 4.9 percent fell, or 169p, to 3315p.

Stock Watch – Music Magpie

Electronics reseller Music Magpie crashed to record low after profit warning.

The company, which allows consumers to buy and sell used electronics, books and CDs, said the performance of its consumer technology business was “weaker than expected” amid continued pressure on profit margins.

Due to ‘increasing pressure on the cost of living’, it forecasts earnings for the year to the end of November to be lower than earlier expectations. It fell 67.6 percent or 18.6 pence to 8.9 pence.

While a planned cut in stamp duties announced last Friday in Chancellor Kwasi Kwarteng’s mini-budget should boost housing demand, many are concerned about rising inflation and the prospect of a sharp rise in mortgage interest payments will exacerbate the affordability crisis. .

“Many will be forced to put their dreams of owning their own home on hold until the cost of living is over,” said Myron Jobson, an analyst at Interactive Investor.

As the pound crashes, fears grow that the sharp fall in sterling’s value will fuel inflation, forcing the Bank of England to raise interest rates even further.

The problem for the new government is that the growth it hopes to achieve through tax cuts is unlikely to materialize as quickly, while the reduction in the pound’s purchasing power will effectively import more inflation at a time of already acute inflationary pressures. , he said. AJ Bell investment director Russ Mold.

While bank stocks usually rise on forecasts of rate hikes, NatWest fell 3.6 percent or 8.7p to 233.7p, while Lloyds fell 3.3 percent or 1.51p to 44.71p, Barclays fell 0.6 percent or 1.04p , to 160.82p and HSBC fell 1.7 percent, or 8.4p, to 501.6p.

When Brent crude traded below $84 a barrel, Shell shares fell 0.1 percent or 3p to 2211.5p, while BP fell 0.7 percent or 3.15p to 429.95p.

FTSE 250 real estate group LXi REIT has pulled out of a £500m deal to buy several Sainsbury’s supermarkets.

The abolition of the planned acquisition, announced last week, came amid speculation that investors were unwilling to raise enough cash given market volatility.

LXi fell 0.8 percent or 1p to 126.6p, while Sainsbury’s fell 0.8 percent or 1.5p to 191.45p.

One winner was defense giant BAE Systems, which rose 2.2 percent or 17.4 pence to 813.2 pence after broker Jefferies raised its price target from 960 pence to 1,000 pence.

And consultancy RPS rose 15 per cent, or 31p, to 238p after agreeing a £636m acquisition deal with US group Tetra Tech.