Market Report: Rank soars on talk of private equity interest

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The Independent Online

Rank was the major talking point of yesterday's session. Shares in the leisure conglomerate raced 6 per cent better to their highest level since February as rumours of a break-up bid for the company circled dealing rooms.

Gossips reckon a private equity firm is stalking Rank, 16.5p higher at 272.5p, and could soon emerge with an offer of more than 300p a share. Investec Securities also did its bit to get the stock moving higher. It urged investors to buy into the company before next week's trading statement from the leisure group. The broker expects Thursday's update to the City to bring good news from both Rank's bingo arm and its Blue Square online bookmaking division, although only average news from the casino business.

Adding to the intrigue surrounding the stock was news of a technical glitch in trading of Rank stock. It emerged that late on Tuesday a dealer had mistakenly entered a trade of 115 million shares which, had it been settled, would have seen around 20 per cent of the company change hands. In reality, the dealer meant to trade only 5 million shares. The mistake was reversed by the Stock Exchange yesterday.

Elsewhere in the FTSE 250, Rightmove jumped 20.25p to 343.75p after Numis Securities initiated coverage of the property website with a "buy" rating and a 413p price target. The broker described Rightmove as a "clear market leader" in the field and argued that this is fundamental to the success of the company as it creates a virtuous circle whereby more users attract more estate agents, who in turn attract users.

Although Numis admits that the group is by no means immune to a major slump in the UK property market, it points out that Rightmove's growth is fuelled by a structural change in the way house hunters search for properties.

Meanwhile, the FTSE 100 ended a six-session losing streak by rallying 58 points to close at 6,084. Pharmaceutical companies did particularly well after news that US giant Pfizer plans to cut its sales force by 20 per cent. Analysts believe the likes of GlaxoSmithKline and AstraZeneca may soon follow suit. If they do, it will substantially increase their profitability. For the sector's big players, sales and marketing account for the largest slice of their spending.

Although many have long wanted to cut this cost, without an industry-wide move in that direction they face the risk of losing market share to rivals and this has prevented significant reductions in the past. After Pfizer's decision, those days look to be over. GlaxoSmithKline rose 40p to 1,371p, Shire gained 34.5p to 1,041p and AstraZeneca put on 77p to 3,008.

Elsewhere, Legal & General rose 4p to 153.4p amid rumours of a possible bid for the insurer from Aegon, its Dutch rival. Forth Ports rose a further 15p to 2,030p as traders continue to bet on a takeover of the port operator. Persistent rumours of a dawn raid on the stock by the predator, which would aim to secure a sizeable stake in the group, have so far come to nothing.

Caffe Nero ticked 0.75p higher to 251.5p on talk that Gerry Ford, the company's founder and chief executive, is close to wrapping up negotiations to take the group private. GLG Partners recently disclosed a near 2 per cent stake in Caffe Nero, making it one of several hedge funds with substantial share holdings. They are certainly keen to see a deal done. As is Mr Ford. He wants to roll-out the coffee shop chain abroad and believes that taking Caffe Nero into private hands will give him the flexibility to do so.

Dealers expect Mr Ford to end up paying between 280p and 300p for control of the company, which at the last count boasted 285 stores. He already controls 43 per cent of Caffe Nero.

Oasis Healthcare improved 3p to 40.5p after a series of director share purchases. Stephen Lambert, the chief executive, picked up 50,000 shares at between 36.5p and 37.75p, while Andrew Holdcroft, the company's finance director, bought 87,500 at 38p. Only a few months ago Oasis, which operates a chain of dentists, rejected an offer for the company believed to have been pitched at around the 36p level.

Southern Bear, a former cash shell, returned to AIM having acquired a pipework business that provides specialist systems for the pharmaceutical and refrigeration industries. The shares rose 0.5p to 3.5p. Finally, readers should keep an eye out for the South-east Asia-focused oil and gas explorer Salamander Energy, which floats today.