City talk: Investors blow smoke at Gallaher


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
Arts and Entertainment
Joel Edgerton, John Turturro and Christian Bale in Exodus: Gods and Kings
Arts and Entertainment
Brendan O'Carroll as Agnes Brown in the 2014 Mrs Brown's Boys Christmas special
tvCould Mrs Brown's Boys have taken lead for second year?
Members and supporters of the lesbian, gay, bisexual, transgender (LGBT) community walk with a rainbow flag during a rally in July
footballLive! Chelsea vs West Ham kicked off 10 Boxing Day matches, with Arsenal vs QPR closing the action
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Arts and Entertainment
Amy Adams and Christoph Waltz in Tim Burton's Big Eyes
film reviewThis is Tim Burton’s most intimate and subtle film for a decade
Arts and Entertainment
Jack O'Connell stars as Louis Zamperini in Angelina Jolie's Unbroken
film review... even if Jack O'Connell is excellent
Arts and Entertainment
Madonna is not in Twitter's good books after describing her album leak as 'artistic rape and terrorism'
music14 more 'Rebel Heart' tracks leaked including Pharrell Williams collaboration
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

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Day In a Page

A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

Christmas without hope

Gaza fears grow that conflict with Israel will soon reignite
After 150 years, you can finally visit the grisliest museum in the country

The 'Black Museum'

After 150 years, you can finally visit Britain's grisliest museum
No ho-ho-hos with Nick Frost's badass Santa

No ho-ho-hos with Nick Frost's badass Santa

Doctor Who Christmas Special TV review
Chilly Christmas: Swimmers take festive dip for charity

Chilly Christmas

Swimmers dive into freezing British waters for charity
Veterans' hostel 'overwhelmed by kindness' for festive dinner

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all