Shares in Cookson, one of the oldest industrial companies in Britain, jumped 4% to 718.5p after rumours that it is working on a break-up of its business resurfaced.
The report in the Sunday Times (behind the paywall) said Cookson is plotting to float its electronics business – which makes parts for gadgets such as the iPad – as a standalone company on the London Stock Exchange.
Cookson, one of the largest companies on the mid-cap index with a £1.9bn market cap, has recently replaced its broker Lazards with Rothschild. It has two very distinct strands of work, with the electronics part and the ceramics business, which produces specialised parts for steelmakers and accounts for about two thirds of sales.
Harry Philips, analyst at Oriel, said:
It's not a new debate. The Cookson break-up has been long-talked about, as with all conglomerates. The irony is, if Cookson gets rated on the basis it ought to be, it doesn't need to break itself up. If this acts as a prompt to take a look at Cookson and where it can go, then there's little need for it to be done.
He upped his target price from 850p to 900p, and rates the shares a 'buy', writing in a note:
The potential break up or otherwise is the catalyst to recognise the considerable value in the portfolio. The stock offers both momentum and rerating and remains one of our core buys.
