Buy-back speculation starts utilities' summer surge


Will utilities again enjoy what is regarded as their traditional late-summer run? There are faint signs electricity and water shares are beginning to anticipate action ahead of their interim profits season.

Many utilities start disclosing their figures in October.

In the preceding close season, when reporting companies feel obliged not to talk to the stock market, it is not difficult for the more determined speculator to get some intriguing stories flowing.

Kevin Lapwood at stockbroker MeesPierson would not be surprised if, in the next few weeks, there is a rush of share buy-back and takeover rumours. "It has happened before and I can't see things being different this time round."

Many utilities are sufficiently well endowed to consider returning some value to shareholders, either through a buy-back or special dividend. Even BG, the old British Gas, which once seemed to spend much of its time pleading poverty, is regarded as a buy-back candidate with some thinking in terms of around pounds 1bn being earmarked.

With a Labour Government it is clearly in the utilities interests not to have too much surplus cash slurping around their systems. Far better then to gear up and hand any unwanted money to shareholders.

ScottishPower, up 10.5p to 438p, led the advance with the English generator National Power enjoying the additional glow of regulator Professor Stephen Littlechild's about-turn over prices with a 5.5p rise to 541.5p.

Among water shares Anglian rose 3p to 772.5p; Severn Trent 6p to 854.5p and South West Water 10.5p to 790.5p.

The rest of the market managed, just about, to go through the motions of a day's trading. Again attendance was patchy with the tail end of the holiday season and the August Bank Holiday taking their toll.

Trading was moderate with once more BT attracting a significant slice of the action as distressed arbitrageurs continued to seek sanctuary. BT fell 22.5p (after 29.5p) to 413.5p, the biggest fall of any blue chip.

Footsie started on a firm note, helped by a Dresdner Kleinwort Benson forecast it would be above 5,000 points at Christmas. Then worries about the market's and Wall Street's recent volatility eroded confidence and shares gave ground. Still, blue chips, helped by firm gilts, finished comfortably above the day's low point, reducing a 49.2 deficit to 14.8 by the close.

Worries linger about the direction of interest rates. Many fear Germany will lift rates next month, which could draw funds away from London although, of course, the argument the market is cheap in relation to continental markets would remain in place.

BAT Industries, despite the $11.3bn Florida settlement, led the blue- chip leader board with a 19.5p gain to 533.5p. Societe Generale Strauss Turnbull regard the shares as a buy. The Florida deal is seen as a local enactment of the broader $368.5bn proposed national settlement.

Vaux, strong last week on talk of corporate activity, fell 12.5p to 288.5p as DKB said sell. The investment house suggested the progress had left the price "unsustainable". The pounds 48m sale of its 38 nursing homes and five three -star hotels was not such a good deal as many had expected. And analyst Andrew Holland believes speculation that management changes could lead to a demerger of the brewing and hotel operations was unjustified.

WH Smith, figures today, fell 11p to 367.5p and Dixons suffered from profit taking, off 10p to 654p.

Eurocopy, the office equipment group, slumped 26p to 32p on a profits warning and Astec (BSR) fell 22.5p to 137p.5p following disappointing results.

Little property group Delyn held at 97.5p. The hostile bid from Newport is doomed with shareholders accounting for 55.97 per cent of the capital supporting the board's rejection.

Pan Andean Resources, raising pounds 482,000 by placing shares at 36p, rose 4.5p to 48.5p.

Biocompatibles International, the healthcare group, recovered 62.5p to 1,157.5p on talks its long-awaited deal with the US giant Johnson & Johnson is at last nearing completion.

The group is involved, it is thought, in wide ranging talks with J&J. It was originally said that the American group was negotiating to use Biocompatibles "stents" , valves which free blocked arteries.

The talks should have been completed in June, prompting the shares to weaken from around 1,400p. However it is thought the negotiations have dragged on because other Biocompatibles products have interested J&J which has a stake in the company.

Start your day with The Independent, sign up for daily news emails
Life and Style
Fans line up at the AVNs, straining to capture a photo of their favourite star
life Tim Walker asks how much longer it can flesh out an existence
Life and Style
Every minute of every day, Twitter is awash with anger as we seek to let these organisations know precisely what we think of them
techWhen it comes to vitriol, no one on attracts our ire more than big businesses offering bad service
Professor David Nutt wants to change the way gravely ill patients are treated in Britain
people Why does a former Government tsar believe that mind-altering drugs have a place on prescription?
Norway’s ‘The Nordland Line – Minute by Minute, Season by Season’ continues the trend of slow TV
Arts and Entertainment
Jonny Evans has pleaded not guilty to an FA charge for spitting at Papiss Cisse
Life and Style
Kate Moss will make a cameo appearance in David Walliams' The Boy in the Dress
The image released by the Salvation Army, using 'The Dress'
Liverpool defender Kolo Toure
football Defender could make history in the FA Cup, but African Cup of Nations win means he's already content
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Customer Relations Officer

£13000 per annum: Recruitment Genius: This is an exciting opportunity to join ...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Jemma Gent: Project Coordinator

£12 - £15 Hourly Rate: Jemma Gent: In this role you will report to the Head of...

Recruitment Genius: Evening Administrator

£8 per hour: Recruitment Genius: This Pension Specialist was established early...

Day In a Page

Homeless Veterans campaign: Donations hit record-breaking £1m target after £300,000 gift from Lloyds Bank

Homeless Veterans campaign

Donations hit record-breaking £1m target after huge gift from Lloyds Bank
Flight MH370 a year on: Lost without a trace – but the search goes on

Lost without a trace

But, a year on, the search continues for Flight MH370
Germany's spymasters left red-faced after thieves break into brand new secret service HQ and steal taps

Germany's spy HQ springs a leak

Thieves break into new €1.5bn complex... to steal taps
International Women's Day 2015: Celebrating the whirlwind wit of Simone de Beauvoir

Whirlwind wit of Simone de Beauvoir

Simone de Beauvoir's seminal feminist polemic, 'The Second Sex', has been published in short-form for International Women's Day
Mark Zuckerberg’s hiring policy might suit him – but it wouldn’t work for me

Mark Zuckerberg’s hiring policy might suit him – but it wouldn’t work for me

Why would I want to employ someone I’d be happy to have as my boss, asks Simon Kelner
Confessions of a planespotter: With three Britons under arrest in the UAE, the perils have never been more apparent

Confessions of a planespotter

With three Britons under arrest in the UAE, the perils have never been more apparent. Sam Masters explains the appeal
Russia's gulag museum 'makes no mention' of Stalin's atrocities

Russia's gulag museum

Ministry of Culture-run site 'makes no mention' of Stalin's atrocities
The big fresh food con: Alarming truth behind the chocolate muffin that won't decay

The big fresh food con

Joanna Blythman reveals the alarming truth behind the chocolate muffin that won't decay
Virginia Ironside was my landlady: What is it like to live with an agony aunt on call 24/7?

Virginia Ironside was my landlady

Tim Willis reveals what it's like to live with an agony aunt on call 24/7
Paris Fashion Week 2015: The wit and wisdom of Manish Arora's exercise in high camp

Paris Fashion Week 2015

The wit and wisdom of Manish Arora's exercise in high camp
8 best workout DVDs

8 best workout DVDs

If your 'New Year new you' regime hasn’t lasted beyond February, why not try working out from home?
Paul Scholes column: I don't believe Jonny Evans was spitting at Papiss Cissé. It was a reflex. But what the Newcastle striker did next was horrible

Paul Scholes column

I don't believe Evans was spitting at Cissé. It was a reflex. But what the Newcastle striker did next was horrible
Miguel Layun interview: From the Azteca to Vicarage Road with a million followers

From the Azteca to Vicarage Road with a million followers

Miguel Layun is a star in Mexico where he was criticised for leaving to join Watford. But he says he sees the bigger picture
Frank Warren column: Amir Khan ready to meet winner of Floyd Mayweather v Manny Pacquiao

Khan ready to meet winner of Mayweather v Pacquiao

The Bolton fighter is unlikely to take on Kell Brook with two superstar opponents on the horizon, says Frank Warren
War with Isis: Iraq's government fights to win back Tikrit from militants - but then what?

Baghdad fights to win back Tikrit from Isis – but then what?

Patrick Cockburn reports from Kirkuk on a conflict which sectarianism has made intractable