Full steam ahead for P&O demerger plan

This week’s stock market review

Peninsular & Orient (P&O), the British maritime group has announced
proposals to de-merge its cruises business and create a separate group to
enable it to concentrate on its logistics activities. The company plans to list
the new group in both the UK and the US stock markets.

The news went down well with the City and the company’s stock price
accordingly steamed upward. Many commentators have long regarded P&O as
undervalued at about £6bn gross market capitalisation and the proposed
separation of its cruises division is seen by many as the most logical way to
improve the market value of the company. Already, analysts have already put a
value of between £5bn and £7bn on the company’s cruises business.

On that basis, the market expects the combined share price to cruise to
about £14 soon. P&O chairman Lord Sterling has said he thinks things should
be plain sailing from now on.

Feds shut off BP Amoco’s pipelined acquisition

BP Amoco’s ambition to acquire US oil company Arco has been dealt a severe
blow with the news that the Federal Trade Commission (FTC) in the US will seek
to block the takeover transaction through the courts.

The latest development promptly sent the share price of both companies
tumbling. BP Amoco, the second largest stock in the UK by market
capitalisation, fell sharply but City analysts expect both stocks to recover
quickly from last week’s setback.

The companies also said in a joint statement that they are prepared to go to
court to fight to rescue the $27bn merger being derailed by the FTC. The
prospect of litigation means BP Amoco can expect to foot legal bills in excess
of $100m but the company says it is prepared to mount a vigorous defence
against the FTC’s proposed action.

Telecoms sector braced for flurry of takeovers

Shares in the telecoms sector rocketed last week, hard on the heels of a
crash in the stock price of BT’s stock price. It’s good to talk but last week
it must have been painful for BT to think about what hit its share price. let
alone to talk about it.

Speculation is rife about big takeovers and mergers engulfing the sector
soon. Companies in the frame are City of London Telecommunications, Energis and
Telewest. All three stocks have surged in value.

Potential raiders include Deutsche Telekom of Germany and Level 3
Communications of the US. Although many bargain-hunters have been piling into
BT, some have fled and gone to the smaller players in the sector in
anticipation of bigger gains should the companies be taken over.
VodafoneAirtouch and Mannesmann have at last buried the hatchet and agreed to
merge.

Comments are closed.