Furniture groups weigh up private option

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The Independent Online

The UK was facing the dramatic prospect yesterday of all three of its major furniture retail chains falling into private hands, as rumours swirled that MFI Furniture is mulling a management buyout. The speculation comes as DFS Furniture considers a low-ball offer from its chairman, and as the managing director of the UK operations of Courts is said to be looking for private equity backing for a bid for that company's British operations.

The UK was facing the dramatic prospect yesterday of all three of its major furniture retail chains falling into private hands, as rumours swirled that MFI Furniture is mulling a management buyout. The speculation comes as DFS Furniture considers a low-ball offer from its chairman, and as the managing director of the UK operations of Courts is said to be looking for private equity backing for a bid for that company's British operations.

Shares in MFI, led by its chief executive John Hancock, have slid this year following a disastrous winter sale, blamed on an outdated bedroom furniture range. But yesterday's vague rumours of a private equity bid sent them back up 1.75p to 145.5p.

MFI recently appointed Shaun O'Callaghan, a corporate restructuring specialist, to the board, sparking hopes that it could demerge its fast-growing builders' merchant Howden Joinery.

DFS, meanwhile, continues to trade above the level of Lord Kirkham's indicative offer for the company, which has cultivated a much trendier image than its rivals in recent years. The share price, down 0.75p at 432.5p yesterday, reflects optimism that the chairman settle on a bid higher than his original 415p per share. Courts Furniture was up 1.5p at 315p amid continuing speculation that Steven Cohen will bid for the UK operations he currently runs.

Little Homestyle, meanwhile, was the subject of rumours, too. According to retail sector gossips, the struggling beds group may have attracted a bid for its Rosebys textiles business. Homestyle shares were off a ha'penny at 103.5p.

The FTSE 100 ended up 6.1 points at 4,412.8 on what was a second very quiet day, with investors awaiting news later this week on European interest rates and US employment. The blue chip index's gain was entirely down to BP, the oil giant which had impressed everyone with its strategy presentation on Monday and its promise to return billions to shareholders in share buy-backs and higher dividends. The stock was up 12p at 457p, the best performer in the FTSE 100, and even its arch-rival Shell was up 3.5p at 367.25p on all the talk of permanently high oil prices.

A spike in the gold price was behind strong buying of Anglo American, the miner, whose shares rose 11p to 1,308p and, further down the market, of Jubilee Investment Trust. The company, chaired by Francis Maude MP, was up 0.5p to 70p. One of its biggest holdings is the US gold miner GoldSpring.

Lonmin, the Southern Africa platinum miner which forms the rump of the old Lonrho empire, is considering merger and acquisition activity that could double its size to £3.3m, the new chief executive was heard telling analysts. Bard Mills took the helm on Friday and his first City briefings this week have focused on the strategic review with which he has been charged. Purchases of gold, nickel and copper mines are top of the wish list, he said, since the company is considering the wisdom of diversifying away from platinum. The question, Mr Mills stressed, is whether any new mines could be bought on the cheap and whether it is worth the considerable risk. Lonmin shares were off 7p to 1,148p on the acquisition talk: investors really hope that the company will be bought by a bigger rival at a tidy premium to the current share price.

The telecoms and retail group Carphone Warehouse nudged 2.25p higher to 147.5p on talk that final results will outstrip published forecasts. There was also gossip about a string of strong race results for the bookies Paddy Power, whose shares were up 10p to 601p.

Newsplayer, the media content group, was up 3.25p to 30.75p on talk of one or even two acquisitions next week. And Actif, which sells women's clothes under the Elle brand, was the subject of some well-informed buying ahead of interims which are expected to be strong. The shares were 7.5p.

Whatman rose 5p to 189p , its highest since July 2001, after results showed that the laboratory equipment group's recovery plan is paying dividends. A 10 per cent increase in the final dividend, to be precise. Word from the industry is that Whatman's sales force is being much more aggressive, and the company's chairman, Bob Thian, was bullish yesterday on the prospects for 2004. Gyrus, which makes instruments used in keyhole surgery, was up 6.5p to 210p after it shrugged off the effects of the weak dollar to boost 2003 operating profit, thanks to the launch of new products.

And Croma, the ambitious little security group chaired by John French, was said to be nearing a big acquisition that has been several weeks in the planning. The group - which already makes "light grenades" for illuminating snipers' lairs, and suits that stop spies being detected by burglar alarm sensors - has been on the road trying to raise around £2.3m for the purchase of a private company, its most significant deal since coming to AIM last December. The shares were steady at 6p.

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