Renewed takeover speculation helped Croda International follow the London market higher on Monday.
Talk that Croda has been attracting takeover interest helped the cosmetics ingredient maker advance 1.8 per cent to £20.93.
A $2.7bn bid this week for Holland’s Nutreco, the animal feed maker, from investment fund SHV suggests “the M&A wave in the chemical industry has started”, said Baader Bank analyst Markus Mayer.
Private equity’s interest in the sector has been increasing, which is what triggered the last M&A wave nearly a decade ago, he said.
Solid numbers from Dutch peer Akzo Nobel provided the more fundamental reason for buying Croda, which has dropped 20 per cent from its 2014 peak since a July profit warning.
Akzo said pricing for its speciality chemicals division had improved on flat volumes.
Wider market volatility continued, with the FTSE 100 reversing an opening loss to close up 1.7 per cent, or 105.26 points, to 6,372.33.
Travel stocks led the bounce. Carnival gained 4.5 per cent to £23.47 and Tui Travel rallied 4.7 per cent to 365.7p – both having lost about 9 per cent over the previous month.
Morgan Stanley was recommending Tui Travel after hosting a meeting with management from the holiday group and its parent company, Tui.
Management remained confident in completing a merger, despite Institutional Shareholder Services advising Tui Travel shareholders to vote against it, the broker said.
“We were pleasantly surprised by the potential scale and timetable of the non-core business disposals, the internal upside from margins within Tui Travel, the minimal impact seen by Ebola on their businesses, and how well the co-CEOs seemed to work together,” Morgan Stanley added.
Ahead of its results and a strategy update on Thursday, Tesco was up 3.7 per cent to 185.9p. The shares were helped by monthly industry figures to mid-October from Kantar Worldpanel that showed the pace of Tesco’s sales decline and loss of market share moderating.
WPP rose 4 per cent to £11.71 after Omnicom began results season for the advertising agencies with better than forecast numbers.
Disappointing results caused most of the fallers. Reckitt Benckiser lost 2.1 per cent to £50.10 after its sales missed expectations while Arm Holdings dropped 5.3 per cent to 806p after its earnings showed more benefit from dollar strength than royalties.
APR Energy, the generator hire specialist, lost 7.5 per cent to 471.5p on a downgrade to “equal weight” from Morgan Stanley.
APR has said it may have to abandon a deal with Libya’s state power company, which provides an estimated 50 per cent of group operating earnings.
Exiting the agreement may be complex as Libya will not want to lose grid capacity and APR’s bargaining position when selling equipment will be weak, Morgan Stanley said.
The earnings loss may also raise investor concerns about APR breaching its debt covenant, the broker added.