Market Report: Whitbread rises on hopes of restructuring

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The leisure and restaurants group Whitbread has been one of the top performers in the blue-chip index over the past 12 months, adding more than 70 per cent after corporate restructuring, restaurant refurbishment and takeover speculation.

The company is due to give investors a trading update on Wednesday, but the broker Panmure Gordon got the ball rolling before the statement with a bullish research note. Panmure believes that if the company's restructuring programme is taken to another level by reducing central costs, increasing pub food revenues, selling the David Lloyd Leisure unit and returning some capital to investors, Whitbread could have a sum-of-the-parts valuation of up to 2,500p a share. The valuation becomes even more bullish if a bid premium is taken into account, and although Panmure retained a more conservative 1,800p price target before the update, it believes there is scope for upgrades. Whitbread closed up 32p at 1,708p.

The revival at Drax Group shows no sign of slowing amid more talk that a consortium of private-equity houses is mulling an offer. The stock is up more than 11 per cent on the week and closed 23.5p higher at 739.5p yesterday. The company looked nailed on to get relegated from the blue chips at the reshuffle in two week, but the talk is that it may have saved its place.

London shares were buoyed by stronger mining and oil sectors. The postponement of Lord Browne of Madingley's appearance in front of a Texas jury to testify on the 2005 refinery explosion, plus a rally in the oil price, helped BP climb 14p to 535p, with Shell adding 28p to 1,702p. The FTSE 100 ended 20.6 better at 6,401.5.

Debenhams topped the FTSE 250 climbers after a 16.5p gain to 180p on huge volume, with almost 60 million shares changing hands. Some takeover rumours are doing the rounds and the word is that a Middle Eastern investment group is building a stake, possibly the same Qatari fund that recently invested in Sainsbury's. However, Debenhams' former private equity owners still hold more than 35 per cent of the stock and most traders believe an approach is a long shot.

Bullish initial coverage comments from the broker Goldman Sachs helped Randgold attract support, sending the shares 31p better to 1,245p. Goldman believes the price of gold will remain strong thanks to demand from emerging economies and forecasts a price of $835 an ounce for 2008. It highlights Randgold as a good proxy for the underlying gold price. The broker set a price target of 1,635p for the shares.

Details on the latest bid for the struggling music publisher EMI Group, 0.5p worse at 242p, are yet to be made public by the suitor Warner Music. But the word among traders is that an offer will be made in the region of 277p per share. Market makers said in light of EMI's abysmal recent trading record, investors will be tempted despite a relatively small bid premium.

There was disappointing news for the online gambling sector as the Nevada regulator confirmed it had no plans to licence web gaming. PartyGaming fell 0.25p to 39.75p while Sportingbet shed 1p to close at 40.75p. Some traders took the news as a positive, one saying: "Opening up the floodgates to all of Las Vegas might have brought short-term benefits but in the longer term European companies would probably rather the Americans stayed out of the market." Both companies are due to report full-year results next Thursday.

In the small caps, shares in the reconstructive orthopaedic devices manufacturer Corin Group soared 126p to close at 414p after the FDA gave its Cormet hip replacement implant the green light. Analysts at Teather & Greenwood and Nomura Code reiterated positive guidance on the shares, with the latter setting a particularly bullish 600p 12-month price target.

Small-cap traders are expecting big things from Myhome International, a home services franchising group spun out of Unilever six years ago. The shares transferred from Plus Markets in December and have performed strongly, rising more than 16 per cent since the switch. The entrepreneur Nigel Wray took a 14.9 per cent stake in the group on the move to AIM and punters are expecting rapid earnings upgrades. The shares ticked 4.5p firmer to 79p.

Monstermob was in the red as the Chinese suitor Linktone withdrew its offer to buy the whole company after an emergency general meeting at which investors backed the sale of 52 per cent of the company to the Spanish group LaNetro Zed. Monstermob fell 6.25p to 48.75p on the news.