Sector movers: Chemical stocks gain on Merck-AZ Electronic deal

5th Dec 2013 15:49

Chemical stocks were the best performers on Thursday on the back of M&A activity in the sector with AZ Electronic Materials (AZEM) rocketing after an offer from German drugs and chemicals giant Merck.Merck today launched a 403.5p-a-share offer for the specialty chemicals firm, a 53% premium to the previous day's closing price. The all-cash recommended deal values the company at £1,565m.AZEM, which debuted on the stock market in 2010, is a big player in the global electronics industry and a known supplier to tech giant Apple, manufacturing coatings and flat-panel display materials for use in 3D screens, tablets and smartphones.AZEM Chairman John Whybrow said the strategic opportunity to be bought by Merck is "compelling".The stock was up 51% at 397p before the close of trade."We expect the offer to be accepted by shareholders and see a counter-bid as unlikely," said analyst Paul Satchell from Canaccord Genuity."AZEM is simply so specialist that extracting material synergies would be very difficult for anyone except a close competitor. Anti-trust considerations would prevent such a bidder."The broker downgraded its rating on the shares from 'buy' to 'hold', with upside now lacking after it raised its target price to 404p from 354p."We expect the shares to trade close to the offer price from early this morning, absent a counter-bid, or failure of the offer, neither of which we see as likely," Satchell said.Others in the UK-listed chemicals sector were also making gains today, including Victrex, Croda International, Alent and Synthomer.Top performing sectors so far todayChemicals 10,195.32 +4.08%Industrial Metals & Mining 1,273.23 +1.13%Personal Goods 24,229.12 +0.99%General Industrials 4,220.72 +0.82%Food Producers & Processors 7,033.55 +0.70%Bottom performing sectors so far todayFood & Drug Retailers 4,407.79 -1.32%Construction & Materials 4,063.66 -0.79%Life Insurance 6,470.68 -0.74%Oil Equipment, Services & Distribution 22,335.13 -0.63%Banks 4,742.45 -0.38%BC