Market Report: InterContinental in line for Middle East buyout

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The Independent Online

Is there no end to the money Middle Eastern investors have to spend on buying UK assets? If the rumours doing the rounds of the City yesterday are anything to go by there will be a slew of deals back by petro-dollars in the first quarter of the new year.

Dealers reckon InterContinental Hotels could be among the first to go and the talk sent its shares racing to a fresh all-time high of 1,252p, up 35p on the day. A Dubai-based consortium is said to be stalking the hotel operator and could be close to tabling a 1,500p a share offer for the company.

In the same sector, Millennium and Copthorne was also being talked of as a possible bid target for a Middle Eastern raider. It's shares gained 3p to 600p on the back of the excitement. Analysts said that its impressive asset base - the company owns most of the hotels it operates - make it very attractive.

Meanwhile, Merrill Lynch was heard predicting that 2007 will see Middle Eastern money finance a wave of infrastructure acquisitions. This year has seen the takeover of a series of high-profile and asset-rich British companies including P&O, BAA and AB Ports. The American investment banks believe that over the next two years similar deals worth up to £250bn could emerge.

InterContinental Hotels, which owns the Crowne Plaza Hotels and Resorts brand and operates in nearly 100 countries, was formed by the break-up of Six Continents in April 2003. It gave birth to the hotels group and pubs owner Mitchells & Butlers. In May, rumours of a bid for InterContinental Hotels from private equity firm Permira dominated trading of its shares.

The retail sector was also alive with takeover rumours. Moss Bros gained 10.5p to 76.5p amid speculation Baugur, its biggest shareholder, will table an £80m bid for the company after next month's trading statement from the struggling menswear retailer. The Icelandic investment company, which already controls the likes of House of Fraser and Karen Millen, has a 29 per cent stake in Moss Bross.

Woolworths jumped 2.75p higher to 36p on hopes that Baugur will also swoop on the shop chain some time in the new year. With a 10 per cent shareholding, it features as Woolworths' biggest investor. However, it will need serious money to win the group - probably around £600m.

Laura Ashley added 0.5p to 23.75p after it emerged that Bonham Industries had purchased 100,000 shares at 23p, taking its total holding to 24.5 per cent. The retailer's chairman, Dr Khoo Kay Pen, controls Bonham.

The FTSE-100 rose 55 points to 6,245 leaving the blue chip index within a whisker of its high for the year. Leading the index higher was Vedanta, 55p better to 1,210p, Standard Life, 10p stronger to 300.25p, and British Land, 38p stronger at 1,698p. Meanwhile, the FTSE-250 gained 71 points to a new record high of 11,155.

Delta ticked 0.5p lower to 159.5p as Steel Partners continued to reduce its stake in the industrial conglomerate. Yesterday the US value investor revealed that it had cut its shareholding in Delta to below 3 per cent. Steel Partners built up a substantial holding in the company two years ago when the stock traded at around the 100p level.

Keller dropped 2p to 894.5p after its chairman, Michael West, sold 220,000 shares at 890p, bagging him £1.9m. He nevertheless retains a stake of 1.3 million shares or 2 per cent of the company. One can't blame Mr West for cashing in some of his chips. Shares in the international engineer have more than doubled in the past year alone. Since the start of 2003, they have risen nearly fourfold.

NETeller advanced 7p to 153.75p despite the sale of shares by Stephen Lawrence, the company's chairman, via his Corvina International investment vehicle. Mr Lawrence sold 2.4 million shares and now holds 7 million through Corvina.

Shares in NETeller have been in decline for most of this year after online gaming was outlawed in the US. The group provides an "e-wallet" money transfer system for gamblers to use when playing poker and other games via the web.

Finally, readers should keep an eye out for Timan Oil & Gas. Shares in the former Soviet Union-focused explorer are expected to start trading on the AIM today. Timan, which has three licences in the Timan-Pechora region of western Russia and an 80 per cent interest in two Caspian Sea blocks, is believed to have raised £18.3m in new money.

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