The private-equity industry may have spent a staggering $700bn(£357bn) on deals across the globe in 2006, but investors do not expect the spending spree to end just yet. InterContinental Hotels rose 56p to 1,217p yesterday, easily the best blue-chip performer, as talk of a 1,500p-per-share bid persisted.
The favourite to bid for InterContinental is the US group Starwood Capital, run by Barry Sternlicht, a former chairman and chief executive of Starwood Hotels, which includes the Sheraton and Westin brands. Starwood bought Taittinger, the French hotel and champagne group, last year. The Blackstone Group is another possible bidder, as is Permira, the buyout house linked with just about every deal done in London this year. At 1,500p, a bid would value InterContinental at £5.7bn.
The cruise operator Carnival is making a last-ditch attempt to prevent the shares from ending the year as the worst performer in the blue-chip index. Thursday's record fourth-quarter earnings prompted some positive broker comment, with Citigroup, Morgan Stanley and ABN Amro all reiterating "buy" recommendations. ABN has a target of 3,000p for the shares, which closed 63p firmer at 2,599p, although the stock will need to rally further in the last week of the year if it is to avoid the wooden spoon.
The property sector has had a strong final quarter ahead of British Land's and Land Securities' conversion to real estate investment trust status on 1 January. The former ended the session 10p better at 1,660p, a new all-time closing high, while Land Securities closed 11p better at 2,240p. Brokers remain bullish on the sector in 2007 and anticipate strong performance once the conversion is completed.
Trading followed the same pattern as the rest of the week - traders had little enthusiasm for opening new positions. The FTSE 100 closed 6.3 better in the shortened final session before the Christmas break.
HMV Group's Christmas looks like being far from merry. The music and book retailer has already warned investors that trading is worse than expected, and the broker Goldman Sachs weighed in with a downgrade yesterday. Goldman believes the UK retail market is "structurally challenged" and that HMV is losing its pricing power over suppliers. It cut its price target for the shares to 140p from 155p as the stock closed 4.5p worse at 142.25p.
Second-line money managers were in demand again, as F&C Asset Management topped the list of FTSE 250 gainers with Ashmore Group a close second. Most analysts expect the London markets to have another good year in 2007 and investors see the sector as one that is in line for a bout of consolidation. F&C closed 10p better at 208p while Ashmore continued its recovery to end the session 10p firmer at 253p.
Forth Ports, 42p better at 2,164p, pleased investors with an upbeat trading statement. The last remaining independent port operator in the UK told the market property profits will see it perform better over the course of the full year than was previously forecast. However, it is takeover speculation that has really driven the shares higher in the past three months and traders expect a bid in the new year at 2,450p per share.
Meanwhile, a rumour the consumer giant Procter & Gamble is mulling an offer for SSL International is gathering momentum. SSL firmed9p to 369.75p, just short of the high for the year. The word among traders is P&G may be willing to pay up to 500p per share for the condom-to-foot-care group.
In the small-caps, the technology recruitment group InterQuest was 4p firmer at 89p. The company, run by major shareholder Gary Ashworth, is tipped to fly next year after a run of acquisitions, of which more could be in the pipeline. Mr Ashworth is well known to City insiders; his previous company, Abacus Recruitment, was the best performing stock on AIM in 1996 and 1997 before being sold to Carlisle Holdings.
IQE, an AIM-listed supplier of wafers to the solar panel industry, climbed 0.5p to 19.25p as it confirmed the £7.5m acquisition of the Singapore-based MBE. As part of the deal, the group also raised £4.5m by placing 25 million new shares with investors at 18p per share. Chairman Godfrey Ainsworth bought 109,000 shares in the group at just over 19p per share.
The legal battle between Eurogold and Oxus Gold rumbles on, despite shares in Oxus more than trebling in the last month of the year. Oxus lost 2.25p at 37.75p as Eurogold confirmed it has agreed financial backing to continue litigation against Oxus in Australia. The firms are in dispute over the ownership of assets in Ukraine.