MARKET REPORT: Serica Energy rises 14% as it rejects £1bn takeover offer

Serica Energy rose after rejecting a takeover bid from a smaller rival.

Shares in the North Sea gas producer rose 14.1 percent, or 43p, to 348p after it emerged that Kistos, led by oil and gas entrepreneur Andrew Austin, had approached Serica’s board with an offer cash and stock, which valued the group at just over £1 billion.

The offer, which equated to 382 pence per Serica share, was a 25 percent premium to the company’s closing price the day before the bid was announced.

Kistos approached Serica’s board in May to discuss the possibility of a merger, but several proposals were rejected. A counter bid for Kistos from Serica was also rejected.

Serica revealed that the terms of the latest bid were the same as Kistos’ approach in May and that it was now “reviewing its position” and advised shareholders not to take any action.

Shares in Kistos also jumped 5.2 percent, or 24p, to 487p after news of the talks became public.

Under the terms of the deal, Serica investors will receive 0.2932 Kistos shares and 246 pence in cash for each share they own. They will also own 50 percent of the combined company.

Serica shares recently fell after the government announced plans to introduce a surprise tax on the profits of oil and gas companies to help ease crisis-hit livelihoods. Falling stock prices may have sparked the initial interest from Kistos.

Despite the rejection of the Kistos bid, the rise in Serica’s shares suggests that investors were hopeful that a higher offer might be forthcoming.

The FTSE 100 edged up 0.2%, or 13.27 points, to 7,209.86, while the FTSE 250 also added 0.1%, or 17.98 points, to 18,854.96.

Stock Watch – Foresight Group

Foresight Group has grown after attracting an Australian infrastructure fund in a deal worth up to £79.6m.

The acquisition of Infrastructure Capital comes as Foresight reported profits of £27.9m for the year to the end of March, compared with £15.7m a year earlier.

Boss Bernard Fairman said the results beat the company’s expectations when it went public in February last year.

Shares jumped 10.8 percent, or 40p, to 410p.

Markets continued to suffer from a cocktail of worries related to the war in Ukraine, persistent inflation and new quarantines in China due to Covid-19.

UK retailers also suffered again after data showed June sales fell 1 percent year-on-year as shoppers tightened their belts amid the cost-of-living crisis.

AJ Bell analyst Danny Hewson said the “dire” figures “raise the specter of a UK recession as cost-of-living pressures continue to put pressure on household finances”.

Concerns about the global economy also weighed on oil prices, with Brent crude falling to just under $103 a barrel.

Shell shares fell 1.6 percent, or 32.5 pence, to 1,998 pence, while BP fell 2 percent, or 7.55 pence, to 377.05 pence.

One of the biggest decliners was Land Securities, which fell 1.9 per cent, or 12.6p, to 662.4p after analysts at RBC downgraded the stock from “sector outperform” to “sector perform”. and cut their price target to 675p from 950p. .

The assessment was similarly gloomy for rival British Land, which was downgraded by RBC to “underperform” from “sector perform” to 375p from 475p after its analysts took a “cautious look” at the UK’s London office and retail markets. Shares in the group fell 1.8 per cent, or 8.3p, to 454.5p.

United Utilities added 0.8 percent, or 8p, to 1,041.5p after closing a deal to sell its renewable energy business for 100 million pounds.

United Utilities’ Renewable Energy division, which consists of solar, wind and hydropower assets across 70 sites, is being sold to SDCL Energy Efficiency Income Trust. But the assets will continue to power the company’s water treatment plant.

Meanwhile, construction group Balfour Beatty rose 1.7 percent, or 4.4p, to 268.2p after selling its 67 percent stake in the US student housing complex at Purdue University in Indiana.

Balfour is expected to make a better-than-expected profit of £38.4m on the sale, which is due to close in August.