There was a heatwave not only in London, but on the London stock market as far as Glencore was concerned, with a near 8% price hike.  Apparently, Glencore is in advanced talks with Bungee, attempting to agree the right price – around $95 a share. As the competition is very fierce in this arena, there are at least two other potential bidders involved, Archie Daniels, and Mitsui, Glencore is keen to seal a deal.

 

A charting look at some of the most followed stocks on the London market.

Bunge has been very much in the M&A spotlight, with the chances now being that the group is in the home stretch as far as its takeover story. Of course the market has been fully aware of would be suitors Glencore and Archie Daniels. However, it is possible that there is another player ready to join the M&A party in the form of Mitsui. This means that advisors to Bunge are now preparing for a three way fight.

At the same time Glencore is said to be revving up for a knockout blow in this particular melee. The implication here is that in order to secure victory Glencore has to bid as much as $96. The risk is anything below such a number could mean that Archie Daniels or now Mitsui trump a deal in which one which Glencore has been the implied frontrunner.

At the very least we are looking at a situation which should be a win-win for shareholders.

You can tell that Hammerson is getting the full M&A price volatility treatment. Indeed, it has been since before the announcement of takeover interest, just ahead of which there  was the typical  final flush out and selling climax below 440p in March, just to make sure that no one was in the stock on the long side “by accident.”

Of course, since then the slings and arrows of offer / no offer / rejection et al have been in operation, and caused Hammerson shares to fly around like a penny stock.

But there is a strategic angle here. It is that if a 600p plus offer has been rejected as too cheap, then the stock should be trading near or above this value according to historic M&A precedent, not nearly 200p below.

Already for Friday there has been a reasonable rebound from the 447p intraday low. But one would consider that there will be further offers, and that just as the move in March was a suckers’ flush out, so is the latest gap down.

Indeed, it is suspected that hedgies and other steely traders are dipping into what at these levels is a value situation, as opposed to necessarily a speculative one. The situation could therefore be resolved as quickly as Monday / Tuesday given the price imbalance.

What one may also say strategically is that it is likely that Klepierre would have another bite at the cherry later in the year, especially if Hammerson does not get the Intu purchase over the line in what is said to be a close situation.

But even if it does, our hedge fund friends are likely to be buying on any sub 450p dips, as the floor in the stock has been copper bottomed by recent events. If the Intu deal goes ahead the French can buy on the cheap. If it does not hedge funds through their weight of money may be instrumental in a sale of Hammerson in 6 months anyway.

Disclaimer

It would appear that the cable area is something of a live wire at the moment in terms of both newsflow and M&A. This is said particulary in the wake of the Prysmian – General Cable deal, and the way that the EU anti-trust (anti-business / anticapitalism) brigade have set a date of May 8 by which time we shall know whether the $3bn affair will go through. In the meantime it could be that some opportunistic buying in the sector takes place, with Nexans of France allegedly being in the sights of one of the private equity giants. KKR is particularly in the frame.

Like the best M&A situations, this looks to be one where the sector is in play fundamentally anyway, so even if there is no deal traders should be underpinned. In the case of Nexans, the shakeout after the CEO walked last month provides a decent underpinning of the downside.

Disclaimer

Given that Zurich is possibly one of the most boring companies in the world, it takes some effort for an “amateur” writing such as myself to even put finger to keyboard. The latest here surrounds hedge fund interest in the group, and price action which according to someone of 30 years of day in / day out observation of such matters would suggest something is afoot.

As far as suggestions in the market are concerned, we have perhaps rather unhelpfully, who may not be running the rule over Zurich. Quite logically, the first non contender is said to be Warren Buffett – perhaps on the basis that the company is too exciting from his perspective (ultra boring).

The other non contender – which may be too obvious is allegedly Allianz.  The other half heard snippet is that Morgan Stanley is advising somewhere in the mix. That is all for now.

Disclaimer

Shire seems to be one of those companies where everyone other than the management of the company are aware that below £30 it is fundamentally “too cheap” and that anyway, on a big picture basis, its future should be entwined with a larger international player.

Of course, for many large companies these days, the combined business prevention entities of politicians, regulators and the anti-rich squad mean that many a decent deal like GKN gets blown out of the water. However, in the case of Shire it could very well be that it is days, rather than weeks or months, before some M&A developments are forthcoming. On this occasion the company would be mad to protest.

At the very least, current share price levels should offer a near term boost despite a falling market.  It has been interesting that despite the plunge in stocks, smaller group Vectura (VEC) was up 8%, suggesting that drugs may be regarded a more defensive in a rising interest rate environment.

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