MARKET REPORT: Sausage maker’s shares sizzle amid merger mania

Investors got a boost at the end of the week amid a slew of takeovers on the London Stock Exchange.

The trading session was chock-full of M&A chaos as sausage casing maker Devro shot 62 percent, or 119 pence, to 311 pence after a bid from one of Germany’s largest agricultural conglomerates.

Saria – part of the Rethmann family empire – offered 316.1 pa share (or £667 million) for Devro, which was a 65 per cent premium over Thursday’s closing price.

Peel Hunt described the offer as a ‘knockout’, while AJ Bell called it ‘very generous’.

Saria said Devro would complement Van Hessen’s sausage casings and give customers access to a broader market. The German group has approximately 10,500 employees in 26 countries.

Devro Chairman Steve Good said: ‘We believe that Saria’s understanding of our markets, strong financial position and cultural fit will benefit the group’s business and employees. Devro’s management has unanimously agreed to recommend that Devro’s shareholders accept Saria’s offer.’

But that wasn’t the only deal of the day.

Curtis Banks joined the party, confirming it was in “advanced talks” about falling into the hands of a digital investment platform provider. Nucleus said it is considering a possible cash offer for the self-invested personal pension providers. Curtis Banks, which was floating at 190p in May 2015, rose 25.7 percent, or 68p, to 333p.

The FTSE 100 rose 0.2 percent, or 20.07 points, to 7486.67, while the FTSE 250 rose 0.03 percent, or 5.36 points, to 19,545.70. Homebuilders sank into the red after a gloomy forecast.

Berenberg said it cut earnings forecasts for the industry by about 40 percent because of rising mortgage costs. The broker also lowered the target price for most shares, with homebuilder Taylor Wimpey taking the biggest hit after shares fell 1 percent, or 1.05 pence, to 104 pence.

Imperial Brands added 1.2 percent, or 26 pence, to 2,126 pence after Deutsche Bank raised the tobacco firm’s price target from 2,250 pence to 2,325 pence and reiterated a “buy” rating.

Cigarette retailers did well during the pandemic as people working from home found more time to indulge their addiction.

Meanwhile, JD Sports will review its remuneration policy after repeated shareholder revolts under controversial former boss Peter Cowgill.

The retailer will put more emphasis on stock-based payouts for bosses, rather than the hefty cash incentives paid out under Cowgill. It fell 0.9 percent, or 1.15 pence, to 124.55 pence.

Bank seller ScS hailed a recent turnaround after orders, which fell 14.4 percent between July 31 and October 6, rose 1.3 percent in the six weeks to mid-November. It also launched a new share buyback program worth up to £3.1 million, and its share rose 10.7 per cent, or 15 pence, to 155 pence.

But LSL Property Services spooked investors after warning that the most profitable part of its business could be dragged down next year by a weaker mortgage market. It fell 9.9 percent, or 26 pence, to 236 pence.

Breedon rose 5.9 percent, or 3.4 pence, to 60.6 pence after the construction supplier said it was on track for a record profit this year. Sales in the ten months to October were up 14 percent to £1.19 billion.

And in a rare win for the London stock market, Conviction Life Sciences Company plans to float 100 pence per share in a £100 million listing later this year.

The newly formed investment firm said many life sciences and medical technology companies in the UK, Europe and Australia are “structurally undervalued”.