Market Report: Sainsbury buoyed by bid hopes amid carnage

Click to follow
The Independent Online

J Sainsbury was one of the few winners as chaos once more broke out in the markets, after a broker said its prospective takeover was 90 per cent certain to complete. The stock closed up 0.9 per cent at 547p as Société Gé*érale said the Qatar-backed fund Delta Two was set to close the deal "sooner rather than later".

The French broker said neither party could now afford to walk away as the share price would plummet. The move would hit Delta Two as well as the supermarket group, because its holding could devalue by up to £570m.

Sainsbury has been resistant to previous takeover attempts, but SocGen said it must realise this offer comes at the top of the market, although it could extract more value from the bid. The news helped boost Morrison Supermarkets which added 1.25p to 276p.

Elsewhere, takeover speculation was quiet, although one old chestnut was back. The Danish press reheated perennial rumours of Carlsberg preparing a bid for Scottish & Newcastle. So it must be true. The brewer fell 18.5p to 612p.

Top of the six FTSE 100 risers was Sage Group, which was up after UBS upgraded the stock to "buy", as it expects positive growth in the US. The note helped the software provider gain 1.8 per cent to 243p.

After a quiet morning, the FTSE 100 spiralled out of control, losing a whopping 1.9 per cent to close at 6,191.2. The market was smashed by US non-farm payroll figures, which came in way below expectations. Ryan Kneale, analyst for BestForTraders.com, the financial bookmakers, said: "This is the most definitive proof yet that the US economy could be spluttering its way to the end of the year."

UK financial stocks continued to feel the burn, especially with the expectation that peers around Europe were going to issue profit warnings. Market chat predicted warnings from Dresdner Kleinwort, Deutsche Bank and Société Gé*érale. One trader said there were still opportunities for "massive shorts in UK banking stocks". He added that a shorter's favourite at the moment was Barclays, which closed down 4.2 per cent at 582.5p. Yesterday it fell after saying it was prepared to underwrite the latest struggling structured investment vehicle it helped launch.

The second string was topped by Domestic & General, up 10 per cent to 1,395, after accepting a takeover bid by Advent International. The private equity group is to pay 1,425p per share for the warranties specialist, valuing the bid at £523.9m.

Another riser was Cairn Energy, which unveiled a few acquisitions of its own. The oil and gas group rose 1.9 per cent to close at 1,808p after announcing offers for Plectrum Petroleum and MedOil. The deals are worth a combined £38.3m.

One of the worst performers on the mid tier was JD Wetherspoon, which ended the day 6.4 per cent down at 560p. Its interims were a touch behind expectations, while Panmure Gordon complained of a lack of earnings visibility until March, and trimmed the price target from 630p to 600p.

Another company to come in below expectations was Go-Ahead Group, which fell 5.9 per cent to 2,566p and dragged the travel sector down as a result.

Takeovers drove much of the movement on AIM. A management buyout at Comland Commercial more than doubled the company's value sending it to the top of the growth leaderboard. The property developer revealed it was in talks with MCF Commercial, owned by Stuart Crossley, Comland's chief executive, over a takeover worth £43m. News of the £9.50- per-share deal drove the price up 450p to 850p. The fruit machine company Inspired Gaming Group was also up after it received a 385p-per share offer from an unnamed financial institution. Traders were yesterday expecting a rival bid from an industry buyer, potentially valued at more than £4 per share. The stock climbed 24.5p to 365p.

Ragusa Capital was back on the market, after a four-month voluntary suspension. The company is set to change its name to Andes Energia after buying utility assets, and oil and gas exploration interests in Argentina for $72.5m (£35.7m).

Imprint suffered as the management buyout backed by Alchemy Partners failed, knocking the shares 11.7 per cent to 155p. It has received a separate bid, though, and the management has reserved the right to come back. Tiddler World Television also suffered after a potential suitor pulled out of talks. The stock, which will still cancel its AIM listing on Monday, shed 30 per cent to close at 0.14p.

Traders were interested to see Central African Mining rally 15 per cent after a terrible few weeks. It had been forced to pull its all- share bid for Katanga Mining after the Democratic Republic of Congo revoked its mining licences. One trader yesterday said he wouldn't be too surprised, now there is scant chance of Camec's landing Katanga, if the licences are returned.

Comments