City talk: Investors blow smoke at Gallaher

Markets

The FT-SE 100 took a breather, with a 51-point fall on Friday, reawakening fears for a market which has looked dangerously overheated for months - though the fact that the Dow recouped an earlier 88-point loss, to close virtually unchanged, will be a calming influence tomorrow.

So it was a poor time for Gallaher, the tobacco company, to come to the market. Its shares opened at 282.5p and slid to 275.5p at the close - well below earlier indications of a starting price of 310p. It looks as if US investors will continue as heavy sellers of the stock, leaving plenty of scope for bargain hunters.

Japanese stockbroker Daiwa has issued a "buy" note for GKN. While the company's shares have come off on sterling's strength, the Meineke case and its growing exposure to the car industry, medium-term prospects still look very positive. Daiwa estimates pre-tax profits of pounds 400.8m this year, rising to pounds 414.6m. At these levels, shares trade at 9.7 times current- year earnings - hardly demanding.

The fact that United News & Media has had to pull out of the Movie World development on the outskirts of west London, with its partner Warner Brothers, may not knock the share price. But it raises questions about the group's grasp of, first, how to extract the maximum from a joint venture; second, of whether it understands how to work alongside foreign partners; and third, whether it has sufficient resources to manage external projects such as this. It shouldn't affect earnings in the long term, but it takes the shine off the company's projection of a bright, multimedia leisure future.

As Chancellor Gordon Brown's mini-Budget draws near - probably some time towards the end of June - machinations over the windfall tax continue. The latest to stick its neck out is Yorkshire Water. The company that drew scorn for having to use a fleet of 700 tankers to bring in water during the drought of 1995 has offered the Treasury a deal. Yorkshire wants a measure in Ken Clarke's last Budget to be dropped. The company says the proposal, which would reduce the value of tax allowances for long-term investment, could cost it pounds 7m a year. In return, it seems it would be prepared to accept a windfall tax of some kind.

The evidence is mounting that a tax aimed at the electricity and water companies would have the most widespread acceptance. Outside those two sectors, there is still plenty of confusion. The sooner the Chancellor decides on what and how companies are to be taxed, the better. Further delay will only send investors the wrong signals.

A belief that the Monopolies Commission will end recommended retail prices in the electrical goods sector has already damaged the share prices of Dixons and Kingfisher. However, there is a contrary view: strong retailers, such as Dixons, will benefit from any further price pressure on smaller independents and weaker chains, with further consolidation likely in the sector.

Still on the retail front, one of the weaker performers, Laura Ashley, further annoyed the market with a cautious trading statement.

Rumbling down the runway is Debonair, a new no-frills airline, which expects to float its shares on Easdaq - the European stock market for start-up companies. Debonair, based in Luton, has entered the European airline fray at a good time: Brussels has shaken up the market, with deregulation and liberalisation allowing smaller companies to capture a slice of the business.

Like EasyJet and Ryanair, whose shares were recently floated on Nasdaq and soared to a 40 per cent premium, low-cost carriers could have a glowing future. Debonair expects to float before the summer break; watch out for further details.

Finally, Amersham International shot up 92.5 pence to 1,392.5p in response to reports in Sweden that the company may merge with Pharmacia Biotech to create a pounds 1.25bn company.

Amersham confirmed it is in talks with Pharmacia & Upjohn over a possible merger of the two companies' life science businesses. A link-up has been widely mooted for some time, with analysts describing the synergies as extensive.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Life and Style
Suited and booted in the Lanvin show at the Paris menswear collections
fashionParis Fashion Week
Arts and Entertainment
Kara Tointon and Jeremy Piven star in Mr Selfridge
tvActress Kara Tointon on what to expect from Series 3
Voices
Winston Churchill, then prime minister, outside No 10 in June 1943
voicesA C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
News
i100
News
An asteroid is set to pass so close to Earth it will be visible with binoculars
news
Arts and Entertainment
Benedict Cumberbatch has spoken about the lack of opportunities for black British actors in the UK
film
News
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
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: Tax Assistant

Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

Recruitment Genius: Outbound Sales Executive - OTE £25,000

£16000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Java Developer / J2EE Developer - Watford - £45,000 - £47,000

£45000 - £47000 per annum + bonus + benefits: Ashdown Group: Java Developer / ...

Ashdown Group: Marketing Product Manager - (Financial Services) - SW London

£35000 - £38000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Day In a Page

Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore
'I'm gay, and plan to fight military homophobia'

'I'm gay, and plan to fight military homophobia'

Army general planning to come out
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
America: Land of the free, home of the political dynasty

America: Land of the free, home of the political dynasty

These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
A graphic history of US civil rights – in comic book form

A graphic history of US civil rights – in comic book form

A veteran of the Fifties campaigns is inspiring a new generation of activists
Winston Churchill: the enigma of a British hero

Winston Churchill: the enigma of a British hero

A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
Growing mussels: Precious freshwater shellfish are thriving in a unique green project

Growing mussels

Precious freshwater shellfish are thriving in a unique green project