McCarthy & Stone lifted

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The Independent Online

If you believe yesterday's stock market gossip, a bid is back on the cards at the retirement home developer McCarthy & Stone. Dealers reported chunky buying of the stock, up 24p to 501.5p, amid talk that John McCarthy, the group's chairman, will return next week with a 575p- a-share bid for the company he began in 1963.

Earlier this week, the independent directors of McCarthy & Stone rejected an offer from Mr McCarthy on the grounds that it undervalued the company. Although it never emerged how much the group's chairman had bid for the shares he and his family do not already own, market professionals reckon Mr McCarthy will struggle to win the company with an offer of less that pounds 600m.

There were also suggestions from some corners of the City that a sector peer may be about to make a move on the group. Analysts who know the industry well rejected such a scenario. They argued that McCarthy & Stone operates in an entirely different part of the market to the average house builder, which leaves little scope for synergies. The group builds apartments for the elderly, equipped with 24-hour help lines and emergency pull cords, and aims to take advantage of Britain's ageing population.

However, some traders were cautious about piling into McCarthy & Stone. Many have been burnt by the plethora of failed bids over the past few months, most recently JJB Sports, AWG and Somerfield. There was also some evidence of investors exiting stocks for fear that ongoing bid talks may come to nothing.

This trend was most obvious at Chelsfield, which lost 8.5p to 300p. Back in May the property group said it had received a bid approach from its chairman, Elliott Bernerd, but since then there has been radio silence from Chelsfield, causing some investors to get cold feet.

Those who shorted Bradford & Bingley on Thursday will have done well as the former building society issued a disappointing trading statement yesterday which sent its shares 23.5p lower to 314.5p. However, late during the session, the old rumour that Barclays, down 0.75p to 451.75p, may be mulling a bid for B&B returned and helped to moderate the stock's losses on the day. The wider FTSE 100 index finished the week on a positive note, rising 26.1 points to 4,067.8, while the FTSE 250 added 30.6 to close at 4,958.7.

GlaxoSmithKline rose 23p to 1,247p despite news that Europe's drug agency had started a review of the group's anti depressant, Seroxat. Analysts reckon this could lead to the withdrawal of the drug, which is one of GSK's top sellers. There are fears that the drug might in some way be linked with mood swings and even attempted suicides. Elsewhere in the sector, SkyePharma gained 4p to 69p after announcing that it had initiated phase-III clinical trials of GSK's oral-release variant of Requip, a treatment for Parkinson's disease. The success of the drug will boost both SkyePharma and GSK earnings.

Corus ticked 0.75p lower to 14.5p after Standard & Poor's downgraded its credit rating on the Anglo-Dutch steel maker. S&P cut its rating on the group to B from BB-. The downgrade comes despite assurances from Corus earlier this month that negotiations with its bankers, aimed at an extension of the group's credit facility, were progressing well. Vague whispers of a bid for Arriva next week pushed the transport group's stock 8.5p better to 347p.

GW Pharmaceuticals lost 5.5p to 213p as the group, which develops various medicines from cannabis, unveiled plans to raise pounds 20m through a placing of new shares at 200p each. Meanwhile, directors took the opportunity to cash in some of their stock. GW said directors are looking to sell a total of 4.2 million shares at 200p each.

Evolution Beeson Gregory was heard warning clients that RM, steady at 95.5p, is likely to have a tough time of it in the months ahead. The broker said it had recently held discussions with RM's competitors, which also operate in the information communications technology (ICT) arena, whoe revealed that market conditions continue to weaken. "The current schools funding crisis means that investment in ICT infrastructure is not a priority. School governors are more concerned about balancing their budgets and retaining teaching staff," Evolution cautioned.

Faroe Petroleum made its debut on AIM as Williams de Broe placed 14.4 million new shares at 103.5p each, raising pounds 15m for the oil and gas explorer. The stock ended the day at 110.5p. Dana Petroleum, steady at 14.5p, controls 13 per cent of the group, and accompanies the venture capital group 3i on the shareholder register. Word has it that Wigmore, the AIM-listed facilities management group, will on Monday unveil an acquisition along with first-half results. Its shares fell 0.12p to 2.5p.