Rolls-Royce share price reverses 10% as hype around rumoured takeover at the jet engine maker subsides
- Rolls-Royce shares have reversed some of Friday’s gains, falling 10%
- The stock had risen 20% after news about a possible takeover emerged
- Shares have been battered by Ukraine war and announced departure of boss
Rolls-Royce shares tumbled 10 per cent today as investors’ enthusiasm about a rumoured takeover approach subsided.
The FTSE 100 jet engine maker could be about to be involved in a ‘significant corporate transaction’ with an as yet unidentified suitor, according to a blog post on financial news site Betaville on Friday.
It sent shares climbing nearly 20 per cent at the end of last week.
In focus: Rolls-Royce could be the target of a takeover from an unidentified suitor
But today, the stock reversed its gains, falling 9.9 per cent to 99.22p towards London market close.
However, it remains above Thursday close of 92.30p.
That suggests investors are still hoping for a deal, according to Victoria Scholar, head of investment at interactive investor.
‘With nothing confirmed so far, the shares are losing steam this morning,’ she notes.
‘However they are still trading significantly above Thursday’s close, suggesting there is still some M&A premium in the price with investors pinning their hopes on an approach.’
Analysts at broker Jefferies said UK defence giant BAE Systems would be the ‘obvious candidate’ for a potential buyer, although that would mark a huge change in strategy.
The British government’s ‘golden share’ in Rolls-Royce, which allows it to veto any deals, would prevent any ‘purely opportunistic’ bids and deter most bidders.
Rolls-Royce shares are down by around 22 per cent since the start of the year.
The decline accelerated last month, when Russia invaded Ukraine and its chief executive, Warren East, announced he would depart at the end of the year.
The engineer gets around a fifth of the titanium it uses for its jet engine rotor blades from Russia.
Rolls-Royce shares have lost almost a quarter of their value since the start of the year