City File: Fork ahead for motor group

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THERE is much more than meets the eye in BSG International's pounds 20m agreed bid for Jessups, the south-east England car dealer.

The deal is just the first move in an ambitious plan by Richard Marton, who was promoted to be BSG's chief executive only a few months ago, to split BSG into two separate companies. One of them could then be sold or floated on the stock market.

A start has been made by creating a manufacturing division that takes in Britax seat belts and motor components, and a vehicle distribution division into which Jessups will be slotted. BSG already has 14 Midlands and north of England car dealerships.

Watch for at least one more takeover by BSG, to beef up the manufacturing side. Marton will then decide which part to demerge and how. On a generous 5.8 per cent yield, BSG shares at 69p are a buy.

GIVE a roll of drums and dice to London Clubs International, the casino operator. Originally a management buyout from Grand Metropolitan, its first attempt at a float was thwarted by the fuzz. Three years later, under new management, it is returning at 200p on a prospective p/e of just over 8, well below its great rival, Crockfords. But although much of LCI's profits come from the Ritz Hotel casino, it has a better spread here and abroad than its one-outlet rival. Existing shareholders, including Legal & General, are hanging on: only new shares are being issued, to pay off loans used in the buy-out.

A FUNNY thing happened to the shares of WPP, the troubled advertising giant, when IBM announced that it was putting all its worldwide advertising with Ogilvy & Mather, the WPP subsidiary: the shares did not move. The market feels that the shares' rise over the past 18 months from around 50p to 119p is enough. It is only three years since WPP's boss, Martin Sorrell, had to coax the banks into keeping the group in business. The shares could also be hurt by failure to float WPP's market research businesses for up to pounds 250m, a Sorrell project now on the back burner. Avoid.

WITH coal privatisation under way, investors have piled into likely beneficiaries such as Coal Investments and RJB. Even cannier ones have been salting away shares in Waverley Mining Finance. Edinburgh-based Waverley used to be a dreary investment trust specialising in gold mines outside South Africa. But in the past couple of years it has expanded in Australia. At the end of last year it negotiated a deal with the miners of Scotland's Monktonhall, which merely needs more investment to live up to its original promise. Waverley's gold interests are looking increasingly valuable. Although the shares have climbed from 12.5p to 64p in the past 18 months, they remain good value.

OVER the past few weeks the market has had an attack of jitters over the magazine and local newspaper group Emap. The shares are 381p against a 1994 high of 476p. The worry chiefly concerns Carweek, the troubled motoring title. As a result, analysts are clipping profit forecasts: Derek Terrington of Kleinwort has marked them down by pounds 3m to pounds 45m, as has Colin Tennant at UBS. But Anthony de Larrinaga at Panmure Gordon believes the fall is overdone.

This makes sense: Emap's product base is wide and profitable enough to absorb the troubles of one magazine and the group is moving into computer disks and on-line services. Buy.

IN ITS present mood the market is uninterested in recovery stocks even when, as with Northumbrian Fine Foods, they turn a near- pounds 600,000 operating loss into a profit of more than pounds 500,000. So the shares remain at 10p, barely above the year's low. Yet Northumbrian has been transformed over the past couple of years and is marketing an impressive flow of new cakes and biscuits such as Dunkers. Its major shareholder, the Italian food giant Unichips with 23 per cent, is reportedly prepared to back expansion, including the recent purchase of Jesse Oldfield, maker of Bronte cakes. Buy.

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