Syria strike fails to move market, second activist targets Whitbread and Shire’s oncology sale may complicate a potential takeover

UK Stock Market

“The UK stock market barely moves on Monday despite the Syria missile strikes at the weekend serving to heighten geopolitical tensions, something that has historically had a negative impact on stock markets around the world.

“Also perplexing is the failure for the gold price to move upwards; the precious metal has historically appreciated in value in times of tension.

“The FTSE 100 was flat at 7,261 in early trading on 16 April,” says AJ Bell investment director Russ Mould.

Whitbread

“Elliott Capital Advisors has popped up on Whitbread’s share register, making it the second activist investor to snap up shares in the coffee shop-to-hotels business in the past five months.

“Perhaps best known for shaking up investment trust Alliance Trust and its current drive to reshape BHP Billiton, Elliott has taken a 5.3% stake in Whitbread, making it the largest shareholder in the business.

“Fellow activist Sachem Head owns 3.38%, having picked up its stake late last year. Sachem has previously pushed for a break-up of pharmaceutical Shire, according to media reports, leading the market to suggest it will put similar pressures on Whitbread.

“Elliott hasn’t commented on its intentions for Whitbread, although the chatter is likely to remain the same as it has for many years.

“In a nutshell, there is a widely-held belief that Whitbread should separate its Costa Coffee business from the Premier Hotels operation. They are very different businesses and could be worth more as separate entities rather than as part of the current leisure conglomerate.”

Shire

“Rare diseases pharmaceutical play Shire may have complicated a prospective takeover attempt from Japan’s Takeda by agreeing to sell its oncology business to French firm Servier for $2.4bn.

“Oncology was an area which Takeda had specifically highlighted in its rationale for a deal, so whether by accident or design Shire’s latest move could undermine the logic behind the transaction.

“There are already concerns about how Takeda will fund any approach given Shire has a materially larger market value than the Japanese group and it would likely have to pay a healthy premium for a bid to be successful.  

“Takeda has until 25 April to put up or shut up and the market will be watching its next move closely.”

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