Market Report: Rank's numbers come up after UBS support

Click to follow
The Independent Online

Rank's long-suffering shareholders enjoyed some welcome relief yesterday thanks to a bullish piece of research on the leisure conglomerate from UBS. Shares in the owner of Mecca Bingo, Hard Rock restaurants and a series of casinos rose 4 per cent, or 8.5p, to 200.5p, after the Swiss broker urged investors to pile into the company before its results next month.

UBS said: "We believe that Rank has been undergoing a significant restructuring since the appointment of Ian Burke as the new chief executive in March. This process is being implemented quietly, with Mr Burke's first major presentation to the City due to take place at the interim results on 1 September 2006."

The broker believes the event will see Rank confirm the sale of its Hard Rock chain, boast of a material reduction in overheads and possibly return a substantial amount of cash to investors. UBS also highlighted just how exposed the group is to a bid at present. According to its calculations, Ranks is worth at least 240p a share and at current levels would make a great takeover target for a private equity house.

Rank shares certainly needed a boost. They have lost more than a third of their value since the start of the year, mainly because of a downturn in trading at the group's bingo halls in Scotland after the introduction of a smoking ban in public places.

Cable & Wireless gained 2.75p to 120p on the back of an upgrade from Citigroup. The US broker raised its stance on the telecoms group to "buy" from "hold". Although it set an ambitious price target to 160p on the shares, the US broker did warn that C&W is not a company for fainthearted investors. Citigroup said the business has been a destroyer of reputations and value for almost two decades, but took the view that all this could be about to change.

Spirent ticked 2p higher to 42p as Sherborne Investors emerged with a 9.6 per cent stake in the telecom equipment group. Sherborne is controlled by Edward Bramson, who is also a director at Hanover Investments, a specialist in making money from turnaround situations. Probably the biggest success Hanover has had on these shores is the renaissance it engineered at the chemicals company Elementis.

Spirent is without doubt in need of help from the likes of Mr Bramson. But the appearance of Sherborne on the group's shareholder register with such a chunky stake is likely to have unsettled Spirent's management. Mr Bramson has a history of removing directors who do not deliver.

In the meantime, his unmasking as the man behind the heavy buying of Spirent shares over the past few sessions will put an end to talk about a bid for the company for the time being.

Blue chips once again lost ground. The FTSE 100 fell 10.7 points to 5,818.1. ITV, off 3.25p to 98.24p, Lonmin, down 38p to 2,663p, and BP, 8.5p weaker at 614p, were among the worst performers.

Punters continued to pile into Morgan Crucible, 3p better at 285p, after Monday's news that the maker of carbon and ceramics had received a bid approach. Comments from the likes of Bridgewell Securities fuelled the buying. It said that the group's strong balance sheet and potential to improve its profit margins could see it being bought for a price as high as 400p.

Meanwhile, Panmure Gordon dismissed any suggestion that the UK engineer Cookson, 5.5p better at 526.5, might be behind the bid. The broker said: "Having just sold its small fibres business to Morgan Crucible, and given its desire to move away from the commoditised bricks and linings business, Cookson is unlikely to be the bidder or to become involved."

Among smaller companies, Chaco Resources ticked 0.75p higher to 12.5p after its chairman, Jon Pither, bought 175,000 shares at 11.9p, while Nicola Brookes, the oil explorer's finance director, acquired a more modest 50,000 at the same price.

Monstermob soared 14p to 70p after the mobile ringtones group confirmed it had received a takeover approach.

Finally, Renesola made a strong debut on London's junior market. The company, which manufactures silicon wafers for the global solar power industry, placed its shares on AIM at 79p. The stock closed yesterday at 89p. Renesola raised £26m of new money from the float and will use it to fund the expansion of its plant in China.

Comments