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Market: TalkTalk shares rise on second bidder chatter

TalkTalk shares rose today
Carl Court/Getty Images
Graeme Evans, Markets reporter
9 October 2020

The remarkable turnaround in fortunes for Rolls-Royce shares continued today as investors fired up the beleaguered engines giant for a second successive session.

Rolls rebounded 25% yesterday and was up another 22% — 42.75p to 238.1p — today as bargain hunters circled the FTSE 100 index stock in the wake of recent heavy falls.

Shares had been trading at a 17-year low of just above 100p last week after chief executive Warren East disclosed a £5 billion plan to shore up the company’s balance sheet, including a £2 billion cash call priced at a 41% discount to the theoretical ex-rights price of 55p.

Airline stocks were alongside Rolls on the recovery path for most of this week, with sentiment helped by progress towards a Covid-19 testing regime at Heathrow. But the improvement ran out of steam today for British Airways owner International Airlines Group, which dropped back by 1.9p to 105.6p for a market value of just over £5 billion.

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A poor week for Ocado also continued after the grocery delivery technology stock fell another 65p to 2,391p. It had been trading at about 2,676p on Monday.

The FTSE 100 index was 31.7 points higher at 6,009.7 after being propped up by oil stocks as the price of Brent crude lifted to 43 US dollars a barrel on the back of supply concerns caused by a hurricane in the Gulf of Mexico. BP was up 4.7p at 225.55p and Royal Dutch Shell lifted 26.2p to 1,021.8p.

On currency markets, the pound recovered from initial disappointment at the weaker-than-expected GDP figure for August to later stand little changed against the US dollar.

The UK-focused FTSE 250 index also took the 2.1% growth figure in its stride, rising 75.82 points to 18,021.98 after a rally for recently sold stocks including pubs chain Mitchells & Butlers and retailer Marks & Spencer.

TalkTalk Telecom was being closely watched after its shares moved more than 2p above the 97p a share price it revealed yesterday for a potential takeover by Toscafund.

The fund, which is led by Martin Hughes, already has a 29% stake in the broadband firm but today’s price suggests the City thinks another bidder might be in the frame or that the board should be pressing to increase the £1.1 billion proposal.

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