Market Report: ITV and Aegis step into the takeover spotlight

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The Independent Online

Analysts believe that if there is going to be corporate action in the industry, then it is going to be where the French investor Vincent Bolloré now has a 6 per cent stake. M. Bolloré, who disclosed the shareholding on Thursday, has not ruled out adding to his stake in Aegis and many believe his aim is to force a marriage between the media buyer and Havas, where he is also a major investor.

Meanwhile, evidence of consolidation among European broadcasters got investors talking about ITV's future. On Thursday, Axel Springer agreed to take control of ProSiebenSat.1, Germany's biggest private television company, in a deal worth £1.7bn.

One of the major beneficiaries of the tie-up is the US billionaire Haim Saban, who holds a significant stake in ProSieben. He is said to have looked at buying Carlton and Granada before their merger to become ITV and now, flush with cash after his sale to Axel Springer, he may be tempted to make a move on the UK broadcaster.

Elsewhere, Vodafone ticked 0.5p higher to 145.25p after the mobile phone giant reported more signs that things are improving at its struggling Japanese operations. Vodafone boasted that the business won 18,000 new customers in July, meaning that the company has now reported two consecutive months of subscriber growth. Japan is certainly important to the group. It accounts for 20 per cent of Vodafone's total sales and has been a fly in the ointment for its management for some time.

BPB retreated 1p to 734p as several hedge funds took bear positions in the stock. According to their logic, should Saint-Gobain return with a fresh offer for the company, it is unlikely to bid more than 770p a share for the plasterboard maker. In such a case, those hedge funds short will lose 36p for every share they short (the difference between BPB's current price and 770p). But there is also a good chance Saint-Gobain's offer for BPB might altogether fail, say the hedge funds. This would cause BPB shares to slump back down to 550p (where they traded before the French group's initial offer). Such a scenario will see hedge funds with bear positions bag 184p for every BPB share they are shorting. Hence, by betting against the stock now, they are risking 36p to potentially win up to 184p a share.

Deutsche Bank and Citigroup both scaled back their recommendations on ICI shares after their 10 per cent leap on Thursday. ICI dropped 7p to 289.5p as Deutsche and Citigroup both cut their stances on the stock to "hold" from "buy". The German broker said: "While we expect the group's earnings resilience to continue, we believe the shares now reflect fair value."

Meanwhile, the FTSE 100 index finished 0.8 points lower at 5,314.7 as strong gains by blue chips early during the day were lost after a weak start to trading on Wall Street. Logistics group Exel rose 9p to a new high of 962.5p.

Premier Oil rallied 21.5p to 738p, Dana Petroleum put on 17p to 733p and BG Group rose 6p to 494.25p as investors took the view that the recent coup in Mauritania is unlikely to negatively impact the trio's operations in the West African country. The removal of President Taya by a group of army officers has been a bloodless affair so far and analysts do not expect the new regime to conduct a major change in the country's policy towards foreign oil companies.

Among smaller companies Floors 2 Go, up 3p to 36p, was a major talking point. Bid rumours surrounded the floor-coverings retailer from the start of the day. Dealing rooms were alight with talk of a 45p-a-share offer for the group, possibly from a private equity player such as Apax.

The speculation came hot on the heels of last week's gossip which suggested that Floors 2 Go might be considering a merger with its rival United Carpets. In an attempt to stop the frenzy of speculation, Floors 2 Go yesterday rushed out a statement saying it knew of no reason for the recent jump in its share price.

Hopes that Laura Ashley would soon be taken private pushed its shares 1p higher to 13.75p. Malaysian United Industries controls the bulk of the company and has long been talked of as keen to buyout minority shareholders.

However, a deal is not imminent. Lillian Tan, the retailer's chief executive, played down the buyout rumours yesterday. As far as she is concerned, corporate action is not on the cards at present.

Finally, Fonebak, which mends old mobile phones for resale, rose 14p to 159.5p as brokers suggested that the company is trading ahead of budget.