MARKET REPORT: Diageo’s pulse quickens as takeover rumours mount

Drinks giant Diageo has become the latest household name to be labelled a takeover target.

The company behind the Guinness, Johnnie Walker and Smirnoff brands has endured a tough year due to slowing sales.

Diageo, whose brands also include Captain Morgan and Baileys, issued a profit warning in November following problems at its Latin America and Caribbean unit.

And with stocks at their lowest level since October 2020, analysts believe it’s an easy target.

Citi upgraded Diageo and said investors should buy the stock as it is undervalued. The shares rose 1.8 percent, or 45 pence, to 2,508.5 pence.

JD Sports fell 4 percent, or 4.7 pence, to 112.9 pence after Barclays downgraded the stock, prompted by concerns over weak results from rival Nike.

British Airways owner IAG led the blue-chip index as investors remained optimistic that a bid to buy Air Europa will be approved by the European Commission, which is investigating the deal, amid growing consolidation in the industry, with Lufthansa winning approval to buy a 41 per cent stake in Italy’s ITA Airways for £275m.

IAG gained 5.5 per cent, or 9.05 pence, to 173.35 pence, helping to lift major markets as the FTSE 100 rose 0.6 per cent, or 51.98 points, to 8,173.18 and the FTSE 250 rose 1.1 per cent, or 222.69 points, to 20,417.16.

Consumer goods group Reckitt Benckiser completed its £1 billion share buyback but its shares fell 0.6 percent, or 27 pence, to 4,231 pence.

And clean energy firm Johnson Matthey launched the first half of its £250m share buyback programme, lifting its value by 3 per cent, or 47p, to 1,625p.

Online advertising firm Baltic Classifieds added 4.4 per cent, or 10.5 pence, to 251.5 pence after revenue rose 19 per cent to £61m in the year to April 30, with profits up 32 per cent to £30m.

The company expects revenue to increase 15 percent by 2025.

Topps Tiles reported a drop in sales as owners postponed repairs and maintenance.

Revenue fell 6.9% in the third quarter to June 29 and was down 2.7%, or 1.1p, at 39.6p.

Drax hit its highest level since late May after analysts said the power company should receive more biomass subsidies from a future U.K. government, sending it up 4.5 percent, or 22.5 pence, to 522.5 pence. Eneraqua Technologies, which advises clients on how to become more energy efficient, warned it would be paid later than expected as some clients have delayed spending decisions because of the election.

Shares fell 10 percent, or 5 pence, to 45 pence.

Investors in Wood Group – which fell 2 per cent, or 4.1 pence, to 199.9 pence – will have to wait until the end of the month to find out whether the suitor for the oil services engineer has decided to make a formal offer or walk away.

In May, Dubai-based Sidara submitted its “fourth and final” bid of 230 pence or £1.59 billion, and has been given an additional four weeks to finalise its offer.

AIM-listed Fintel, which provides services to the UK financial sector, has bought its eighth business in a year after acquiring Threesixty from fund manager Abrdn for £14.6m.

Its shares rose 1.3 percent, or 4 pence, to 310 pence.