CFD Traders Diary
Another day of volatility on HBOS takeover news
18/9/2008
There were big moves in both directions today as Lloyds TSB and HBOS went in different directions after the former struck a deal to buy HBOS for £12.2bn. At last night\'s prices the bid was worth around 230p, but Lloyds is currently down 7% and HBOS is up almost 30%, though well shy of the perceived value. Lloyds estimated that the deal would lead to an additional contribution to earnings before tax from cost synergies significantly in excess of £1bn a year by 2011, but there are concerns over opposition to the deal from shareholders, so it remains a risky situation. Overall the market saw value buying and was up 48 points mid-morning.
Elsewhere, Kingfisher shares were strong after it saw retail sales rise 2.5% in the 26 weeks ended 2nd August, but fall 2.6% on a like-for-like basis. UK sales were broadly flat, while retail profit was up 9.1%, supported by gross margin and cost improvements. It said that France did well, but B&Q China felt the impact of a weaker than anticipated housing market, so overall these are fairly good figures, though this also remains a somewhat shaky investment for now.
Tate & Lyle said it continued to trade satisfactorily and expected profits from the group\'s continuing operations in H1 to be broadly in line with the corresponding period. It added that the general deterioration in global economic conditions coupled with the increased volatility in commodity prices, energy costs, and exchange rates made any statement about the outlook more than usually difficult, but the board was confident that the group remained on track to make progress for the year as a whole. The shares rate a dull if worthy hold right now
