Charter bucks the depressed market trend on bid talk

Market Report

THE ENGINEERS Charter and TI yesterday injected a welcome dose of takeover speculation in a deeply depressed market.

As the FTSE 100 tumbled nearly 3 per cent and the other indices followed suit, it was ironic that a couple of old-fashioned metal bashers, rather than the much-hyped Internet bunch, posted two of the day's largest rises.

Charter was the best performer in the midcap, soaring 24p to 353p, amid talk that a predator is sniffing around.

The idea of a bid is not without logic. The maker of welding and rail track equipment has been one of the great underachievers over the past few years. Tough markets and investors' dislike for its wide spread of activities led to a chronic underperformance of both the All-Share and the engineering sector.

But if the whispers are to be believed, Charter shareholders, which include the activist fund manager Phillips & Drew, could soon be put out of their misery. Dealers said that Charter would be a perfect catch for a US group such as Ingersoll-Rand or the acquisitive Terex, the recent buyer of Powerscreen.

UK firms were seen as less likely predators but some brave traders mentioned the defence giant GKN, up 1p at 1040p.

The possibility of a management buyout was also mooted.

The sceptics' corner claimed that Charter's spike was all to do with the recent upbeat trading from rival Cookson, up 6.5p to 225.p.

As for TI, the stock jumped 23.75p to 456.5p in high turnover as buyers talked of a forthcoming acquisition.

Since the purchase of a 4.6 per cent stake by leverage buyout specialist KKR, the once-sleepy TI has been transformed into a takeover machine. It recently bought US rival Walbro and is now believed to have turned its sights on another prey.

Market watchers disagreed on the identity of the mooted buy, with some pointing to a domestic strike and others suggesting an overseas foray.

As for Charter, there was a boring reason for TI's rise: brokers Merrill Lynch and Teather & Greenwood have gone positive on the stock ahead of forthcoming results.

The rest of the market had a day to forget as fears of a US rate hike cast a dark shadow over trading. The FTSE 100 was further unsettled by a veiled profit warning from the heavyweight drug group Glaxo Wellcome and finished 179.7 lower at 6117.5.

The blue chip index was depressed from the opening bell as the stream of companies' results contained a few nasty surprises. The morning rout turned into a minor carnage when the US employment cost index, a key indicator of inflation, came in stronger than expected.

The numbers caused a three-figure fall in the Dow and London could not resist the selling pressure.

The second-liners fared a little better, with the FTSE 250 closing 24.4 lower at 5947.6 and the Small Cap losing 7.5 to 2715.6.

Glaxo's caution on its earnings outlook shocked the market. The stock plummeted 199p to 1,553p - a near 12 per cent plunge - after it warned that it would not meet its target of double-digit EPS growth. Hefty downgrades are now likely and a growing band of dealers believe that Glaxo's troubles will put the merger with SmithKline Beecham, down 37.5p to 736.5p in sympathy, back on the agenda.

The Woolwich was also badly hit, falling 23.5p to 334p as interim results failed to dispel fears about profits and margins.

The retailer GUS shed 41p to 645.5p after the expected bearish trading update. However, no analyst appeared to have downgraded and the sharp fall was probably deepened by a stock overhang.

BT was also in the doldrums, ringing up a 44p fall to 1086p after disappointing interims numbers and a worrying rise in costs.

Bullish stories were rare.

Reckitt & Colman bucked the trend and rose another 41p to 863.5p and is now nearly 100p higher than the price of its proposed offer for Dutch group Benckiser.

Reckitt's jump highlights traders' belief in a counterbid from Unilever, down 9p to 572p, or a private equity group such as Hicks Tate Muse First.

ICI was another survivor, rising 15.5p to 695.5p after a disposal by its South African division.

There are whispers that the blockbuster sale of ICI's acrylics unit to a US competitor is near.

Invensys was hoisted 7p better to 336.25p on talk of imminent sell-offs and a Merrill Lynch push. The US broker has included the old BTR Siebe in its list of top 15 stocks which also features BG, up 2.75p to 369.75p. Mobile group Orange dropped out and lost 43p to 955.5p.

In the FTSE 250, Enterprise Oil flared 17.75p higher to 451p amid returning rumours of bid interest, possibly from the Italian oil giant ENI. Good results from rival Lasmo, up 6.5p to 160.25p, also helped.

Insurer LIMIT firmed 5.5p to 146.5p amid growing whispers that the mystery bidder is Warren Buffett's Gen Re.

Continued offer talk propped up the paper group DS Smith, up 8.5p to 185.5p and printer St Ives, 27p higher at 582p, while suggestions that a sale of the Odeon cinema chain is close sent Rank 5.5p higher 280.5p.

Cinema developer Pacific Media rose 0.10p to 1.01p amid whispers of expansion in the Far East.

Building merchant Travis Perkins rose 8p to 776p after saying it is considering how to respond to the bid by BSS for plumbers merchant PTS, up 6p to 227p.

United Assurance lost 0.5p to 431p, despite vague talk of a bid from Britannic, down 10p to 960p, while TV producer Flextech was savaged by a Lehman's downgrade and shed 60p to 892.5p. Fears of another profit warning sent Jarvis 14p lower to a 12-month nadir of 257.5p.

Car parts group Shalibane broke down after a profit warning, plunging 27p to a worst-ever 51.5p, while engineer Holders Technology fell 22.5p to 87.5p after poor interims. Charter carrier AB Airlines was suspended at 13p pending clarification of its financial position while pub owner Ultimate Leisure debuted on AIM with a 31.5p rise to 176.5p.

SEAQ VOLUME: 1.06bn

SEAQ TRADES: 73,879

GILTS INDEX: 105.86 -0.03

THE MEDICAL products maker NMT has been targeted by some nosy buyers amid bid talk. The Aim-listed maker of a revolutionary syringe with a retractable needle shot up 5.5p to 166.5p despite the market's malaise.

Some investors say NMT has attracted the attentions of a US predator which could be willing to pay more than 250p a share. NMT will be a prize catch for any American company as its US sales are set to take off after a change in safety laws.

FRENCH restaurant group Chez Gerard issued a profits warning and the shares lost 6.5p to 182.5p. Difficult trading at the chain was one of the City's worst-kept secrets and rumours of a warning had been doing the rounds.

The only people who did not know about it were Chez Gerard's financial public relations agency Smithfield Financial, who steered journalists away from writing a story a few weeks ago. A dose of French egg on their faces would not be out of place.

Start your day with The Independent, sign up for daily news emails
Sport
Seth Rollins cashes in his Money in the Bank contract to win the WWE World Heavyweight Championship
WWERollins win the WWE World Heavyweight title in one of the greatest WrestleMania's ever seen
Arts and Entertainment
Louis Theroux: By Reason of Insanity takes him behind the bars again
tvBy Reason of Insanity, TV review
Arts and Entertainment
Cassetteboy's latest video is called Emperor's New Clothes rap
videoThe political parody genius duo strike again with new video
Arts and Entertainment
tvPoldark, TV review
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Retirement Coordinator - Financial Services

Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

Recruitment Genius: Annuities / Pensions Administrator

Negotiable: Recruitment Genius: You will be the first point of contact for all...

Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

Ashdown Group: Learning and Development Programme Manager

£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...

Day In a Page

No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor