London midday: Whitbread blows froth off Costa speculation

3rd Apr 2012 11:47

The Footsie moved sideways in the morning session, prompting the suspicion that many traders have made an early start to the Easter break.Food - and drink - for thoughtWhitbread's Chief Executive Officer, Andy Harrison, moved to damp down speculation about the possibility of the Premier Inn and Beefeater restaurants owner hiving off its fast-growing Costa Coffee chain after it announced that Finance Director Chris Rogers will take over at the helm of the chain, replacing John Derkach, who will join UK restaurant company, Tragus Group, as Chief Executive in August."Costa has an exciting future within Whitbread and Chris will spearhead our ambitious growth plans, which will create substantial shareholder value." Following up on the comment about Costa's future within Whitbread, Harrison told reporters that he would not discount the chain being demerged from the company - "we have always said 'never say never'," Harrison said - but stressed that the board is completely focused on "delivering Costa's growth story" for the benefit of Whitbread's shareholders. Geoff Collyer, an analyst at Whitbread's house broker Deutsche Bank, said: "We see Costa remaining within the group for some time." "If demerger was a near-term option, why is the managing director leaving? We see an early demerger of Costa as potentially limiting the realisable value from the Costa growth plans for investors," Collyer added.Contract caterer Compass is proving about as popular as a stale pork pie after Morgan Stanley cut its rating from 'overweight' to 'equal weight', though the price target has been raised from 630p to 670p. Blackrock, a major holder of the stock, lobbed out 8.3m shares of the stock following the downgrade.Drugs firms edge upDrugs giant GlaxoSmithKline has received top-line results from seven of the eight 'Harmony' drug development Phase III studies investigating the use of albiglutide in type 2 diabetes. Glaxo said that based on the studies it has performed so far, there is enough information to support progression to regulatory submissions, as a possible once-weekly treatment for type 2 diabetes.Sticking with the pharmaceuticals sector, Anglo-Swedish drugs giant AstraZeneca is teaming up with US biotechnology company Amgen to jointly develop and bring to market a portfolio of clinical-stage inflammation treatments.Chip designer ARM is also getting into the collaboration game. It has teamed up with two digital security firms to create a joint venture aimed at creating a secure environment for services running on high-tech gadgets such as smartphones and tablets.Collaboration is not exactly the watch-word at investment trust Alliance, where the board has given a feisty response to activist investor Laxey Partners' renewed attempt at telling the board how to run the company. Hedge fund Laxey, which owns 1.7% of Alliance Trust, has called for a number of changes, including the outsourcing of investment management, higher dividends and the opportunity for shareholders to sell their shares to the company at price closer to net asset value per share than the stock is currently trading in the market.Alliance has responded by accusing Laxey of wasting the board's time and being motivated by short-term self-interest rather than the medium and long-term interests of the wider shareholder base.Aberdeen Asset Management, which is hoping to get the investment manager gig at Alliance should it outsource its portfolio management, is wanted after Morgan Stanley recommended acquiring the shares.In other broker action, recruitment firm Hays has been upgraded from "neutral" to "buy" by Bank of America.Resource stocksOil and gas group Heritage Oil has drilled and flowed gas at a reservoir interval at its Miran West-3 well in the Kurdistan Region of Iraq.African Barrick Gold has revised upwards by 0.5m ounces of gold the resource estimate for its Nyanzaga project in Tanzania after working out how to treat the two mineralised zones of the project, Tusker and Kilimani, as a single pit resource.Cairn Energy is splashing out $450m dollars on Agora Oil & Gas, a firm with North Sea interests and owned by Lord Rothschild's investment trust, RIT Capital Partners. Meanwhile, mining titan Xstrata has sold a majority interest in its Chilean hydroelectric development company to Origin Energy.In other mergers and acquisitions news, equipment rental group Ashtead has acquired Philadelphia-based peer Topp Construction Services and its related company Precision Steel Works. The two companies have been bought for a total consideration of $33.5m in cash, which included the among paid to settle Topp's net debt at closing.FTSE 100 - RisersAberdeen Asset Management (ADN) 265.10p +2.32%Burberry Group (BRBY) 1,556.00p +1.83%IMI (IMI) 1,007.00p +1.21%Polymetal International (POLY) 945.50p +0.80%ICAP (IAP) 395.90p +0.79%AstraZeneca (AZN) 2,846.00p +0.74%Glencore International (GLEN) 401.70p +0.64%BG Group (BG.) 1,487.50p +0.61%Land Securities Group (LAND) 734.50p +0.55%Serco Group (SRP) 559.00p +0.54%FTSE 100 - FallersRoyal Bank of Scotland Group (RBS) 27.13p -2.23%Pearson (PSON) 1,199.00p -1.80%Compass Group (CPG) 659.00p -1.79%Man Group (EMG) 131.30p -1.50%Lloyds Banking Group (LLOY) 33.16p -1.27%Bunzl (BNZL) 1,015.00p -1.26%Old Mutual (OML) 160.90p -1.17%Tullow Oil (TLW) 1,534.00p -1.16%CRH (CRH) 1,285.00p -1.08%Barclays (BARC) 234.00p -1.04%FTSE 250 - RisersHeritage Oil (HOIL) 152.60p +10.58%Salamander Energy (SMDR) 233.60p +4.05%Cairn Energy (CNE) 331.50p +3.46%Ruspetro (RPO) 233.30p +3.09%Home Retail Group (HOME) 115.90p +2.75%Premier Oil (PMO) 402.30p +2.55%Hays (HAS) 87.35p +2.46%Interserve (IRV) 297.40p +2.38%Essar Energy (ESSR) 161.50p +2.34%Homeserve (HSV) 239.70p +2.13%FTSE 250 - FallersRedrow (RDW) 123.80p -4.03%Grainger (GRI) 100.60p -3.73%Dunelm Group (DNLM) 514.50p -3.47%Exillon Energy (EXI) 162.40p -3.33%Ophir Energy (OPHR) 510.50p -2.76%Diploma (DPLM) 440.60p -2.74%Brewin Dolphin Holdings (BRW) 170.00p -2.58%Spirit Pub Company (SPRT) 61.50p -1.99%Ferrexpo (FXPO) 299.50p -1.90%Anglo Pacific Group (APF) 300.00p -1.90%FTSE TechMARK - RisersAntisoma (ASM) 1.90p +8.57%E2V Technologies (E2V) 125.00p +3.31%RM (RM.) 79.50p +2.58%FTSE TechMARK - FallersPromethean World (PRW) 72.00p -3.68%Vernalis (VER) 24.00p -2.54%Oxford Biomedica (OXB) 3.00p -2.28%JH