Market Report: Takeover talk fires up trading in Blacks Leisure

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The Independent Online

Management at Blacks Leisure, the outdoor and camping retailer, were probably dreading summer 2006 from the moment Michael Eavis decided to give his neighbours a break by not holding the Glastonbury Festival this year. And they were right; summer trading was awful, culminating in a stinging profit warning at the end of August.

The company is due to report first-half results on Thursday, and unless there has been a sudden surge in camping holidays since the summer the news is unlikely to be anything better than break even. Traders are convinced that a take over bid will trump the results, and according to one market source "all the right people have been piling into Blacks". The shares closed 32.5p better yesterday at 431p on good volume of more than 13 million shares, nearly 10 times the average daily volume.

Mike Ashley, the South African retail entrepreneur behind sports retailer behind Sportsworld and Lillywhites, is thought to be mulling a bid and traders said that the group could attract an offer up around 500p per share, despite its current woes.

Banks were stronger as reports circulated that the Dubai-based investment group Istithmar could be looking to up its stake in Standard Chartered, up 39p at 1,464p, to 20 per cent by investing another £3.5bn in the company. Traders said Temasek Holdings, the Singaporean government fund that owns 11 per cent of standard Chartered, might attempt to block such a large acquisition or even launch an outright bid for the bank.HSBC was 4p firmer at 1,008p and HBOS up 11p to 1,080p.

It took analysts at Crédit Suisse a week to figure out what they thought of the boiler-cracking news from British Energy last week. The broker yesterday reiterated its "neutral" guidance but cut its price target from 615p to 500p, sending the shares 10.5p worse to 437.5p. It will now take a miracle for the company to retain its spot in the blue chip index at December's reshuffle.

Orthopaedic and wound-treatment group Smith & Nephew ought to be doing good business, given the bleak state of global geopolitics. Deutsche Bank thinks that it is and yesterday reiterated its "buy" recommendation with an increased price target of 575p. The German broker believes that the current rating of the shares is not pricing global growth in at "a time when industry momentum is accelerating". The shares added another 6.75p to close at 514p.

The FTSE 100 was a mixed bag with strength in banks and property offsetting selling in mining and oil issues. The blue-chip index closed 10.9 better at 6,166.1.

Some takeover momentum has built up at London Stock Exchange over the past couple of weeks and the shares hit an all-time high yesterday. The talk among traders is that various hedge funds holding significant stakes in the business will sell out at anything over 1,300p, and there is widespread belief that Nasdaq, the New York based technology exchange, will offer them what they want sooner rather than later. The shares closed at 1,275p, a rise of 16p, having been 44p better earlier in the session.

Likewise VT Group, the shipbuilding and defence contracting group, topped the list of FTSE250 risers as traders speculated that a take over by BAE Systems could be back on the cards. The speculation came on the back of reports that the UK government will not oppose BAE Systems seeking a US listing and the disposal of its stake in Airbus earlier this month. VT Group closed 8.75p better at 491.5p while BAE Systems firmed 2.25p to 421.75p.

According to market sources, the bid for Morgan Crucible was definitely still on yesterday morning and by mid-afternoon the stock was almost back to its high for the year. The company then shocked the markets at 10 past four by confirming that talk are indeed off, knocking 22p on the session from the shares to close at 260p. Given the late announcement, traders expect more selling this morning.

Shares in European Colour were sharply better, up 1.25p to 4.25p, even though the company is due to de-list from the public markets on 13 November. A bitter boardroom dispute has erupted between some directors and the chairman, Steven Smith, who plans to delist the company and merge it with an American rival, Magruder Color, also chaired by Mr Smith.

Land fill group Augean warned on Friday that first-half profits would be materially lower than market expectations, but the shares staged a decent rally yesterday, closing 16.75p better at 137.75p.