Surging Unilever shares send FTSE 100 higher

February 17 2017, 5.55pmUpdated: February 19 2017, 6.27pm
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London’s top flight index has pushed higher, buoyed by surging Unilever shares after the consumer goods giant rejected a major merger offer from US peer Kraft Heinz.

The FTSE 100 closed higher by 0.3% or 22.04 points at 7,299.96 points, topped by Unilever which shot up nearly 14% or 449.5p to 3,797p.

It comes after Kraft Heinz offered 143 billion US dollars (£115 billion) for the Anglo-Dutch company, representing an 18% premium on Unilever’s closing share price on February 16.

If accepted, it would have sealed one of the biggest deals in corporate history.

Unilever, which owns leading brands like Marmite, PG Tips, Pot Noodle and St Ives, said the offer “fundamentally undervalues” the firm and demanded shareholders take no action.

Michael Hewson, chief market analyst at CMC Markets UK, said: “There is speculation that Kraft Heinz will return with a higher offer, which in turn will prompt competition concerns as well as worries about job losses, given Kraft Heinz’s narrow focus on costs.

“Unilever shareholders will also have to weigh up the costs of throwing away a consistent path of dividend growth, which has seen good regular returns over the last 10 years.”

Kraft Heinz has until March 17 to announce a firm intention to make an offer for Unilever, or confirm it will not make a formal bid.

Disappointing retail data weighed on the pound, which dropped 0.5% against the dollar to 1.241 and fell flat against the euro to trade near 1.169.

The Office for National Statistics said month-on-month retail sales fell by 0.3% in January, as a jump in food and fuel prices squeezed consumer spending power at the start of the new year.

Economists had been pencilling in a figure of 1% growth.

Across Europe, the French Cac 40 fell 0.65% while the German Dax ended the day flat.

In oil markets, Brent crude fell 0.6% to 55.45 US dollars per barrel (£44.64) as concerns about oversupply outweighed excitement over rumours of new Opec production cuts.

In UK stocks, Rolls-Royce shares took a tumble, falling 27.5p to 666p after Fitch downgraded the company’s credit rating from A to A-, just days after the engineering giant reported a pre-tax loss of £4.64 billion for 2016 – one of the biggest losses in UK corporate history.

The company suffered amid a £4.4 billion writedown caused by the collapse of the pound since the Brexit vote, as well as a £671 million penalty to settle bribery allegations.

The biggest risers on the FTSE 100 were Unilever up 449.5p to 3,797p, Coca-Cola HBC up 77p to 1,989p, Imperial Brands up 116p to 3,781p, and Reckitt Benckiser Group up 199p at 7,100p.

The biggest fallers on the FTSE 100 were Standard Chartered down 35.2p at 773p, Rolls-Royce Holdings down 27.5p at 666p, Royal Dutch Shell’s ‘B’ shares down 40p at 2,185.5p, and Anglo American down 24.5p at 1,345p.

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