FTSE 100 steady, gold at record highs, third bid for Rightmove may not be high enough, Apollo eyes Intel investment and Alphawave IP revenue halves

“The FTSE 100 was steady in early trading on Monday after seeing losses on Friday as US stocks slipped,” says AJ Bell investment director Russ Mould.

“Investors are still weighing the Federal Reserve’s blockbuster 50 basis point interest rate cut last week, which was seen in some quarters as worrying about the state of the world’s largest economy, despite the Fed’s best efforts to offer reassurance.

“Retail stocks ticked higher while Endeavour Mining was among the gainers as gold hit yet another record high. The precious metal tends to benefit from a fall in inflation-adjusted interest rates and has also been in demand as tensions in the Middle East escalate.

“These tensions have also helped oil to bounce from its recent lows, suggesting the respite motorists are enjoying on petrol prices, according to the latest figures from the RAC, may prove short-lived.

“Asset manager Apollo is eyeing up a big investment in Intel, according to reports. This comes after the troubled chip giant agreed plans to spin off its manufacturing arm and an injection of capital may help the company with its aimed-for fresh start.

“UK semiconductor IP group Alphawave IP was on the floor on a shocking set of half-year results which saw revenue halve and the company swing to a loss. Alphawave IP expects a big rebound in the second half of the year, but that’s a tale investors often hear in these situations and the promised recovery doesn’t always materialise.”

Rightmove

“If you want to own the market leader, you must pay a premium price and that’s exactly the situation with Rightmove.

“Rupert Murdoch’s REA Group is back for the third time with a higher bid for the UK property portal but it still doesn’t look like the price is generous enough. Shareholders are more likely to sit up and show interest if the bid starts with an eight, not a seven – and so the latest bid of 770p is a step in the right direction but unlikely to be enough.

“The fact REA has now made three different offers shows it is serious about wanting to own Rightmove. Pouncing on the business after a lacklustre period for the share price, there was always the chance REA was simply trying its luck while the target was going through a tough period. That no longer appears to be the case. This looks like a serious pursuit, albeit one where the bidder’s idea of fair value still doesn’t align with shareholders’ expectations.

“The market reaction tells you everything you need to know. There is a slim chance the deal will happen at the current price given the shares are trading at 690p, 10% below REA’s bid. The fact Rightmove says it will ‘carefully consider’ the latest proposal implies it isn’t completely cold to the prospect of a takeover, knowing that it has to act in shareholders’ best interests. However, it feels like the company will still push for more.

“There is only so much of a song and dance you can do with takeovers. REA really needs to show its best and final offer. If it’s still not enough to win over Rightmove’s board and shareholders, the bidder needs to walk away and think about different ways to expand its empire.

“Rightmove digging in its heels and refusing to be bought on the cheap would also show that UK plc isn’t for sale at any price. The FTSE 100 might be full of stocks on lower valuations relative to the US, but that doesn’t mean they are all for the taking. If anything, Rightmove fighting off REA might show to investors that not only is there good value on offer, but that certain companies might still be around to generate returns over the long term and not simply be a ‘blink and you’ll miss it’ opportunity.”

These articles are for information purposes only and are not a personal recommendation or advice.