Bid hopes dial up demand for mobile groups
Tuesday 11 May 1999
Mobile phone operators' shares were in heavy demand as the market anticipated a series of bid auctions for the owners of Britain's cellular networks. Orange rang up a 28.5p increase to 805.5p, while the security group Securicor benefited from its 40 per cent stake in Cellnet, topping the FTSE 100 gainers after putting on 28.5p to 568.5p.
Dealers were excited by talk that Cable & Wireless, up 25p to 857.5p, and its US partner MediaOne could fetch an incredible pounds 10bn for One2One, the smallest of the four mobile companies. Several overseas bidders, including Deutsche Telekom and Mannesmann of Germany, France Telecom and the US giant MCI Worldcom, are thought to be in the race for One2One.
According to City wisdom, the losers in the battle for C&W's offshoot will turn their attention - and their cash - to its bigger rivals. The pounds 10bn price tag on One2One prompted a wave of buying. The figure, much higher than the pounds 5bn to pounds 7bn predicted by analysts, triggered a rerating of the whole sector.
Traders took out calculators and worked out that if One2One is worth pounds 10bn, Orange could go for pounds 12bn, or pounds 10 a share, including around pounds 1.5bn of debt. Such a premium could convince the Asian giant Hutchison Whampoa to sell its controlling stake, despite recent denials. Similarly, a huge wad of cash will probably persuade Securicor and majority-owner BT, down 22p to 989p, to let go of Cellnet. Vodafone is seen as a more difficult nut to crack and rose only 3p to 1,090p.
The rest of the blue-chip index had a sluggish day, leaving the FTSE 100 down 7.2 points at 6,348.8 in low volume. News of Serb troop withdrawals from Kosovo helped Footsie to trim early losses inspired by interest-rate fears. A weak survey by the British Retail Consortium, leaked ahead of today's publication, also eased fears of a rate hike and boosted the bond market.
The FTSE 250 was also depressed, finishing 18.6 points down at 5,843.3. The small cap proved the exception, rising 4.8 points to 2,583.2.
Bids, real and rumoured, were the day's defining feature. PowerGen was one of the stars of the session, soaring 28p to 769.5p ahead to today's annual meeting. Speculation the generator might spell out its acquisition plans in the US were mixed with rumours of a possible attack from Centrica; the gas group ended 3.5p lower at 125p in hefty turnover after a lukewarm annual statement and ahead of today's expiry of its special dividend deadline.
Rumours of a Centrica bid for National Power, 5.5p higher at 523.75p, are still alive. The prospect of a pounds 500m cashback at tomorrow's results propelled fellow utility British Energy 12.5p higher to 600p.
Safeway rose 1.75p to 260.25p as dealers added the French retailer Carrefour to a list of potential predators that also includes the Dutch group Royal Ahold. Rival Sainsbury shed 4p to 424.5p despite whispers of an interest from the elusive Warren Buffett and continued talk of a merger with Marks & Spencer. M&S fell 7p to 407.75p after another round of job losses.
There was a run on the banks after HSBC, down 71p to 2,120p, announced a $10.3bn (pounds 6.3bn) swoop on two US rivals. The market liked the deal but was scared by the $3bn rights issue needed to pay for it.
The bank malaise hit Standard Chartered, 47p lower to 1040.5p, Halifax, down 26p at 818.5p, and NatWest, 24p off at 1,427p. Woolwich bucked the trend, rising 13.75p to 417.25p on vague rumours of corporate action.
The financials' bad day was completed by insurer Sun Life, which plummeted 26.25p to 516.25p after saying that integrating Guardian Royal Exchange will cost 13 per cent more than expected. Still, the merger went unconditional yesterday and GRE is set to disappear from the index. Next was tipped to take its place and soared 11.5p to an all-time high of 838p.
Airtours travelled 25.5p higher to 495p as its takeover of First Choice, up 4.5p to 206.5p, looked set to be cleared by Brussels.
Rumoured bids were prominent among the undercard; software group Sage logged on a 97.5p rise to 2,037.5p, ahead of today's interims, amid speculation of an imminent US buy. Smith & Nephew, the healthcare group, surged 7.5p to 167.5p. There are whispers that rival Seton Scholl, down 23.5p to 786.5p, could launch a bid if it misses out on condom-maker London International Group. LIG rose 2.5p to 183p amid rumours of a 230p-per-share bid from US group Safeskin.
Coats Viyella, the textile company, was 1.25p up at 44.5p on bid speculation, while the plant hirer Ashtead fell 8.5p to 212.5p on fears that it is lining up a US buy. Northern Foods put on 4p to 131.5p amid continuing talk of interest from AB Food, down 10.5p to 467p.
The airport group TBI confirmed talks to sell its properties and nosedived 0.75p to 99p. The floor-coverings group Headlam bounced 4p higher to 396.5 after revealing a French acquisition.
Psion, maker of handheld computers, fell prey to profit takers and crashed 73.5p to 754p. Building materials producer Rugby crumbled 5p to 127p as the mooted bid failed to appear.
Among minnows, United Overseas, supplier to PoundStretcher and Kwik Save, picked up 6.5p to 28p on director buying. Planit Holdings rose 9p to 49.5p after launching an Internet interior design system.
Scottish housebuilder Cala rose 7.5p to 197.5 as privately-owned Miller bid 200p. Premier Oil struck a 1p advance to 22.25p on rumours that Paladin Resources, up 1p to 24.5p, is keen to merge.
Turbo Genset, a maker of high-powered electricity generators, started its life on Ofex with a 50p jump to 245p and a contract from the Williams grand prix team. Profits warnings took their tolls on Deltron Electronics, down 17p to 96.5p, and Money Controls,down 21.5p to 130p.
SEAQ VOLUME: 926.1m
SEAQ TRADES: 81,330
GILTS INDEX: 108.56 - 0.01
CAMBRIDGE Mineral Resources is close to completing an aerial survey of one of the major properties it owns in Ireland.
The mining minnow, which is listed on the Alternative Investment Market, is looking for diamonds and other precious gems in County Donegal. The shares closed 1p lower at 19p yesterday, but there is some talk that a couple of mining giants are taking a close interest in the results of the survey.
BLAGDEN, the underperforming chemicals group, might have caught the eye of a predator. The company last week said it would break itself up after selling its largest business and returning pounds 34m to shareholders.
But the plans could be thwarted by a mystery bidder thought to be attracted by Blagden's pounds 120m cash pile. Insiders claim companies could use the group as a cash shell and springboard for acquisitions.
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