Bid whispers on a dull day bring star billing to BICC

Market Report

BICC, one of the market's great underperformers, was the unlikely star of a dull day as whispers of corporate action swirled around the construction group.

The stock soared nearly 14 per cent in respectable turnover as the prospect of a bid or of a major share reshuffle whetted dealers' appetites.

At the end of flat day for the overall market, BICC was sporting a 12.5p rise to 103p. There were two tales behind the climb. One school of thought argued that the owner of the rail maintenance company Balfour Beatty could again find itself under siege from predator Wassall, up 2.5p to 221p. The acquisitive investment vehicle fought a bitter battle with the BICC board a few months ago, only to see its 125p-per-share offer rejected.

However, the bid scrap left Wassall with a chunky 9 per cent plus stake in BICC, which could be an ideal platform for another strike. Critics pointed to Wassall's protestations that BICC's recent sale of its cables businesses had made the company far less attractive.

Proponents of this theory suggested that Wassall was looking to offload its stake, possibly to one of BICC rivals which could then launch a bid for the group.

The market was convinced that whoever bids will have to offer more than the 125p put on the table by Wassall. The other construction-related rumour centred on RMC. The building materials maker jumped 53.5p to 1092p amid speculation that it is poised to sell its Great Mills do-it-yourself chain. Mooted buyers included Homebase owner Sainsbury, up 5.5p to 416.75p, and Kingfisher, down 22.5p to 716.5p, which already has B&Q. Smaller rival Norcros jumped 14p to 95p after unveiling a 103p-per-share management buyout offer.

The rest of the market was dull as hell, as Wimbledon and the forthcoming long weekend in the US combined to restrain trading. After Thursday's fireworks, the FTSE 100 ended a mere 3 points higher at 6,491.9 despite another rip-roaring rally in the Dow. At the London close, the US index had broken through its all-time intraday high after a goodish set of employment numbers, but the FTSE 100 failed to take notice. The second liners were buoyed by bid talk and outperformed, with the FTSE 250 ending 37.7 better at 5935.1 and the Small Cap moving 13.4 higher to 2676.9.

The main interest came from intriguing takeover rumours. Marks & Spencer, where talk of trading problems is still rife, lost 5.75p to 360.75p amid wild speculation of a strike for clothes chain House of Fraser, up 4.5p to 91.5p. However, a different whisper suggested that HoF could go to another retailer or opt for a lucrative sale and leaseback of its properties.

Struggling cash-and-carry group Booker remained unchanged at 95.5p despite vague talk of a 120p-per-share strike by the US retail giant Wal-Mart.

In a completely different sector, United Utilities surged 24.5p to 819p on talk that rival Scottish & Southern Energy, down 12.5p to 645p, or a US competitor were having a look. A positive outcome of the imminent water watchdog review also helped United.

Reed International rose another 17.25p to 465p on continued rumours of a bid from Dutch rival Wolters Kluwert. Rival Emap, up 57p to 1,204p, was helped by Merrill Lynch support and hope of bolt-on acquisitions.

Away from the takeover chat, Granada beamed 64p higher to 1,246p as brokers upgraded after recent presentations. Engineer Invensys kicked off its share buyback programme and firmed 14.5p to 318.75p, while Dixons, results next week, soared 42p to 1328p as investors grew more and more eager on the Freeserve flotation.

Cable & Wireless featured prominently among the falling blue-chips as a profit warning caused a 12.5p sell-off to 781.5p. SmithKline Beecham bled 24p to 840p after delaying the $1.3bn sale of its US labs due to a database blunder, while rival Glaxo Wellcome shed 32p to 1820p on fears over NHS budget cuts.

In the FTSE 250, microchip designer ARM Holdings stormed away, jumping 163.5p to a record high of 952.5p - a rise of over 20 per cent. Goldman Sachs believes that forthcoming results will be fantastic and the market is waiting for a bumper contract, possibly with Texas Instruments. Computer group Computacentre buzzed 31p better to 543.5p after the predicted deal to suppy BT with desktop products arrived. Palmtop organiser-maker Psion was 50p higher to 870p as CSFB said "buy" and slapped a 1,000p price target.

The Magnet kitchen group Berisford cooked a 11p advance to 252p after unveiling a pounds 231m offer for US rival Scotsman Industries.

BATM Advanced Communications, the hi-tech communications group, rang up a 32.5p rise to 865p after an upbeat annual meeting. It plans to leave AIM very shortly and should go straight into the FTSE 250, sparking some buying from the tracker funds.

The bears had a picnic on Group Chez Gerard. The steak-and-chips restaurant group fried 27.5p lower at 222.5p amid rumours of an imminent profit warning. The transport company First Group travelled 17.5p lower to 323p on persistent fears that it might lose its train franchises, while United Biscuits crumbled 5.75p down to 186p after a bearish trading statement. Somerfield, down 6p to 268p, was hammered by brokers' downgrades.

City of London PR soared 28p to 125.5p as dealers tipped it as the next takeover target. The sector is excited after the expected pounds 47.9m all-share offer by public relations giant Incepta, up 1.25p to 39.75p for smaller rival Lopex, up 4.5p to 82.5p.

SEAQ VOLUME: 1.05bn

SEAQ TRADES: 69,969

GILTS: N/A

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