FTSE 100 movers: Smith & Nephew surges on Cevian stake; Next goes ex-div
London’s FTSE 100 was up 0.7% at 8,231.30 in afternoon trade on Thursday.
Smith & Nephew shot higher after activist investor Cevian Capital bought a 5% stake in the medical equipment manufacturer. Cevian now holds 43.9m shares in the company, making it the third largest shareholder.
Russ Mould, investment director at AJ Bell, said: "Cevian has previously taken positions in UBS, Vodafone and Aviva in an attempt to force change and the case for doing so at Smith & Nephew is presented by a near-40% decline in the share price over the last five years.
"The positive share price reaction to Cevian taking a position in Smith & Nephew demonstrates the market thinks an outside catalyst for a shake-up of the business would be no bad thing.
"The company was severely affected by the pandemic as elective procedures like hip and knee replacements were cancelled, reducing demand for its orthopaedic products. Lockdown also hit the company’s supply chain, as it did for many businesses.
"However, its post-Covid recovery has been faltering and an improvement plan announced in 2022 has not yet resulted in a material improvement in earnings and profitability. This hasn’t been helped by a weak showing in the US market.
"Cevian is likely to hold management’s feet to the fire and may look for more ambitious targets than set out under the existing improvement plan. It could also push for a rationalisation of the company’s portfolio, which encompasses sports medicine and wound care alongside orthopaedics."
Distribution and outsourcing firm Bunzl was boosted by an upgrade to ‘buy’ at HSBC.
Barclays rose after saying it had agreed to sell its German consumer finance business to Austrian bank Bawag Group for "a small premium" to net assets.
Next was in the red as it traded without entitlement to the dividend.
FTSE 100 - Risers
Smith & Nephew (SN.) 1,059.50p 7.43%
Melrose Industries (MRO) 575.40p 2.97%
Bunzl (BNZL) 3,120.00p 2.90%
Barclays (BARC) 224.20p 2.77%
Vistry Group (VTY) 1,259.00p 2.44%
Standard Chartered (STAN) 738.20p 2.16%
Lloyds Banking Group (LLOY) 56.92p 1.86%
WPP (WPP) 742.80p 1.73%
Rolls-Royce Holdings (RR.) 463.50p 1.69%
IMI (IMI) 1,810.00p 1.69%
FTSE 100 - Fallers
Next (NXT) 8,976.00p -1.49%
Spirax Group (SPX) 8,520.00p -0.76%
Darktrace (DARK) 579.60p -0.69%
easyJet (EZJ) 460.50p -0.52%
Halma (HLMA) 2,708.00p -0.33%
Haleon (HLN) 325.40p -0.21%
Land Securities Group (LAND) 636.00p -0.16%
Rightmove (RMV) 537.80p -0.15%
Croda International (CRDA) 4,084.00p -0.15%
Auto Trader Group (AUTO) 802.40p 0.00%