


Invensys has finally issued a statement after Wednesday afternoon's share surge, admitting it had received an approach from US group Emerson Electric, but saying the discussions had ended.

The engineering group's shares jumped by 40% at one point on talk Emerson was interested, but it is only this morning that Invensys has clarified the position. It said the US group had previously made a "highly preliminary approach" for the group but the talks were "no longer ongoing." Nor are any other discussions underway about an offer for the company.

It also said it had been in "highly preliminary discussions" with third parties who had expressed interest in parts of its business. But there is little clarity on when this all happened.

In recent time there has been persistent talk that Siemens, US group GE or China's CSR was interested in all or part of Invensys, which makes control systems and rail signalling equipment.

The news that there are no talks sent Invensys shares down 42p to 215p, a 16% decline. But this is still above Wednesday morning's opening price of 201.9p. Tintin Stormont at Singer Capital Markets said:

The group's execution has been disappointing in the last year (leading to the January profit warning) but there is no doubt that its products, market position, and opportunity, particularly in the emerging markets could be very attractive to a trade buyer for the right price.

We see strategic buyers for each of group's divisions but also think a single buyer for the whole of the group is possible. A break-up is likely to generate the highest value for each division though the group's large pension may prove a stumbling block than if the group were to be acquired in its entirety by a large conglomerate.

Overall the market has reacted with a little disappointment to the US Federal Reserve's extension of its Operation Twist bond buying programme to stimulate the country's flagging economy. After shares jumped sharply in anticipation of what the Fed would do, this reaction was fairly predictable.






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