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Marks & Spencer jumps 2% on renewed bid talk while FTSE slips on profit taking

Category : Business

Reports of bankers lining up Marks as a target lift retailer’s shares

Summer seems to be here so it’s time for a bit of bid speculation, this time surrounding Marks & Spencer.

As markets take a breather after Friday’s rises on the back of better than expected US jobs data, the retailer is heading higher. Its shares have climbed 7.6p to 348.7p following weekend reports that bankers where lining it up as a £6bn bid target after its recent falls. Analyst Clive Black at Shore Capital said:

That M&S has made no comment on these stories as yet implies that the company’s board has nothing to consider as yet to our minds; we would imagine that the regulatory authorities will be keeping a watch on matters. Whether there are M&S files being dusted off by inactive and bored bankers on the one hand and financial buyers on the other; well who knows? That said, we doubt that the stories are total flights of fancy or fiction.

He added that Marks was on his buying list anyway, based on its medium-term cash generation prospects once it has completed its investment programme and it can reap the benefits:

Time will tell as to whether M&S is subject to a bid approach. The stock may be temporarily marked up on the back of the growing band of press stories. However, we deem that M&S’ brand, market positions and stores to be worth a lot more than the present stock multiples. Accordingly, should bid talk become a lot more serious the upside should, to Shore Capital, be material.

Overall the FTSE 100 has dipped 11.14 points to 5776.14 as investors bank some profits.

Burberry is up 22p at £13.27, with weekend hits at more action by the Chinese central bank to boost its economy helping luxury goods groups, which see the area as important for their future growth.

Centrica has fallen 4.3p to 319.2p and SSE has slipped 10p to £13.18 after Deutsche Bank cut its ratings on both from buy to hold. Analyst Martin Brough said:

The expected UK energy market transformation is well underway, but political consensus on energy policy is breaking down. Weakness in global commodity prices makes upstream investments look less valuable, and we cut [our recommendation on] Centrica and SSE.

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