Market Report: Rumours of Swiss suitor revive AstraZeneca

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The Independent Online

More bid rumours dominated what little good news there was on another poor day for equity markets, as only 10 members of the FTSE 100 ended the day in positive territory.

Rumours surfaced once again that AstraZeneca, the index's biggest gainer yesterday, up 69p at 2,714p, is a target. The pharmaceuticals giant's Swiss rival Novartis has been talked of as a potential suitor for the business, andABN Amro reiterated it's "buy" recommendation on AZ.

In a note to clients, the Dutch broker noted that AZ trades on an undemanding multiple, and results from recent tests on the effects of Crestor, its cholesterol-lowering drug, are scheduled to be announced next week at a conference in the US.

Positive news concerning the drug's ability to reduce the build-up of plaque in the heart's blood vessels could give sales of Crestor a boost. The drug is crucial to AZ: it is the first "blockbuster" the company has introduced since 2003,it generates sales of more than $1bn (£576m) a year, and is taken by 4.5 million people. AZ's rival GlaxoSmithKline also had a good day, rising 29p to 1,536p.

Greg Dyke, the former director general of the BBC and the man who brought the world Roland Rat, may be about to return to the television industry through an audacious bid for ITV, some traders believe. Rumours are doing the rounds that Apax Partners, the private-equity firm at which Mr Dyke has been an adviser since October 2004, is poised to make an offer for the UK's largest independent broadcaster.

A possible bid has been whispered about by traders for some time, but has gained credibility in recent weeks because of Anthony Bolton's pending retirement.

Mr Bolton is the long-serving manager of the Fidelity Special Situations fund, and one of the City's most powerful fund managers. He was largely responsible for the creation of ITV through the tie-up of Carlton Communications and Granada, but the combination of the broadcasters has lost almost 25 per cent of its value since the merger. The talk in the City is that Mr Bolton wants out of ITV before he retires and a sale is the only way he will get his fund's money back.

A bid would set Apax back at least £5.4bn once ITV's debt is taken into account, and goodwill would take it up to about £6bn. Full-year results from ITV were as expected yesterday, including a widely anticipated £300m share buy-back, but the broadcaster warned of continued slowing ad revenues. Still, its shares were up strongly, gaining 3.25p to close at 114p.

Miners were weak once again, as Goldman Sachs warned that China may be trying to impose price caps on steel-making commodity imports, threatening iron ore prices. China imports more than 80 per cent of its iron ore, taking more than 45 per cent of global output, but officials denied it was trying to impose price caps as negotiations continued.

Mining stocks subsequently extended Monday's losses, with Anglo American dropping 60p to 1,990p, Antofagasta falling 64p to 1,957p and Kazakhmys closing 30.5p lower at 825p. The world's largest iron ore miners, Rio Tinto and BHP Billiton, escaped the worst of the selling but fell 42p to 2,588p and 18p to 916.5p respectively. Anglo American was also among a number of FTSE 100 stocks that began trading ex-dividend yesterday.

Further selling in property firms meant that even a better day for the oil groupsBP, half a penny better at 634p, and Shell, up 14p to 1,833p, could not prevent a slide in the wider market, as the FTSE 100closed 44.5 lower at 5812.9.

Meanwhile, a roller-coaster day for the London Stock Exchange saw its shares soar to 872p, up 30.5p, and tumble to 810.5p, down 31p. The LSE eventually closed the session in positive territory, albeit only 4p higher at 845.5p, after the chairman of the New York Stock Exchange, John Thain, said he would look for non-US acquisitions. The NYSE had its first day as a publicly traded company after itsreverse takeover by the trading platform Archipelago.

Among smaller firms, Betex Group, which floated on AIM on Friday, continued its strong run by gaining 2.5p to 46p, as the serial small-cap entrepreneur Nigel Wray increased his stake in the Chinese lottery company to 4.8 per cent.

Cohort, a Henley-based defence contractor, enjoyed a strong debut on AIM afterits shares were placed with institutional investors at 123p through Investec. Cohort stock was well bid all day, and closed at 139.5p, a 13.4 per cent premium.

Finally, Golden Prospect, a natural resources-focused investment-banking boutique, reported superb results, with full-year pre-tax profits up 113 per cent to £9.6m and a final dividend of 0.75p. The total dividend is 1.25p, up from zero last year. However, traders proved they are a tough bunch to please, and GP shares fell 0.25p to 58p.

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