UK midcap index at 3-month highs as Virgin Money soars
Reuters
Published Mar 07, 2024 08:46
Updated Mar 07, 2024 17:31
By Shristi Achar A and Sruthi Shankar
(Reuters) -British midcap stocks rose to fresh three-month highs on Thursday as lender Virgin Money (LON:VMUK) soared on a possible buyout, while pest control firm Rentokil lifted blue-chip shares following a profit jump.
Shares of Virgin Money UK rallied 35%, their biggest percentage gain on record, after Nationwide Building Society (LON:NBS) agreed to buy the bank in a potential 2.9 billion pound ($3.7 billion) deal to create the country's second-largest savings and mortgage provider.
The offer represented a premium of 38% to Virgin Money's Wednesday close.
"Nationwide is effectively pouncing on Virgin Money at a time when prospects are improving for its industry, albeit we're still in a volatile period until the base rate starts to come down," said Russ Mould, investment director at AJ Bell.
Data from mortgage lender Halifax showed British house prices rose for a fifth month in a row in February, echoing other signs of a recovery in the housing market.
"A 38% bid premium is not overly generous and sits well below the 51% average seen last year with UK-listed takeovers," Mould added, noting that there could be competing offers from other firms.
The UK's domestically oriented FTSE 250 index climbed 0.6% its highest level since Jan. 2.
The blue-chip FTSE 100 rose 0.2% but lagged continental European markets and Wall Street, where surging technology stocks led the main indexes to all-time highs.
Investors mostly took comfort as the European Central Bank acknowledged the progress it had made in bringing down inflation.
Rentokil Initial (LON:RTO) surged 17.7% to become the top gainer among FTSE 100 components after it reported a 50% jump in annual profit.
Entain (LON:ENT) dropped 4.9% after the gambling group said that regulatory measures in the UK and the Netherlands would hurt its profit forecast for the current financial year, while aerospace supplier Melrose fell 2.3% on flagging revenue headwinds.
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Written By: Reuters
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