Coal provides interest in day of gentle drift MARKET REPORT
Friday 14 April 1995
As the market drifted gently ahead of the Easter holiday, RJB was busily traded, with the shares touching 416p before settling for a 23p advance to 406p.
The strength of "King Coal" stemmed from the firmness of coal prices, expansion plans and influential forecasts that demand is set to grow significantly.
There is also talk the newly-privatised UK coal industry is set for corporate activity.
This week's move by Coal Investments to increase its holding in Mining Scotland, running most of the former nationalised Scottish pits, is seen as a further indication that the main players are jockeying for position.
Coal Investments is thought to be eyeing Waverley Mining's significant stake in MS. If it captured the Waverley interest it would snatch control.
There is a suspicion Coal Investments, beaten by RJB for the choice elements of British Coal,is anxious to increase its UK mining exposure.
Besides its interest in MS, Waverley takes in 49 per cent of Monktonhall Mineworkers, running a successful Scottish operation. It also has extensive overseas interests.
Waverley's shares have been active this week, closing 3p higher at 124p with the feeling growing that CI's need for more UK pits could tempt it to bid for the group.
Lurking in the background, the market suspects, is Hanson, with considerable coal experience. RJB, with a capitalisation approaching £700m, would be an obvious target if it decided to barge into the industry. Hanson, unchanged at 241.5p, is holding an investment road show with SG Warburg.
Since it arrived at 250p in 1993, RJB has had an eventful time. Many thought it overpaid for the British Coal interests. But the strength of the coal price has justified its generosity. Last year it made profits of £16.1m; this year about £145m is on the cards.
Trading in the rest of the market was at a low ebb. The FT-SE 100 index ended 1 point down at 3,208.8, with weaker US retail sales easing disappointment over higher UK inflation numbers.
Rolls-Royce, up 5p at 170.5p, was the highest-flying blue chip, rising 5p to 170.5p following an Airbus deal worth £30m to the company.
Cable and Wireless climbed 11p to 422p, helped along by comments from James Capel and Crdit Lyonnais Laing.
Laporte, the chemical group, firmed to 715p as the stockbroker Matheson said the shares deserved to be re-rated. It expects profits of £141m this year; £158m next and £176m in 1997.
Pearson, the media group, slipped 6p to 558p after Morgan Stanley cut its profit forecast from just over £300m to £270.3m.
Rumours of a US deal continued to swirl around the insurance broker Willis Corroon, up 4p to 157p. New commission terms lifted Sotheby's "A" 58p to 813p.
Northern Electric rose 7p to 780p on talk Wyser-Pratte, the US arbitrageur, had won the 10 per cent support needed for a special shareholders' meeting to reconsider the Trafalgar House offer.
Financials were firm. Mercury Asset Management rose 13p to 792p. Ivory & Sime, the fund manager, added 1p to 224p; discreet buying on takeover hopes has lifted the price 21p this month. Schroders improved 33p to 1,628p. Abbey National was weak, down 12.5p to 462p.
Granada held at 562p.as it moved towards clinching the £125m acquisition of Pavilion, the unquoted motorway services group.
Electrocomponents gained 7p to 537p as Henderson Crosthwaite made positive comments. It looks for profits of £83.5m for last year with the dividend increased 20 per cent to 11.4p. This year's profit is expected to emerge at £96m.
Rainford, a maker of boxes for mobile telephone equipment, dialled up support for its first day's trading. Placed at 270p the shares hit 307p. Coral, a plastic products group, achieved a 3p premium at 63p.
Rhino, the computer games retailer, followed up the US tender offer with a 2p gain to 10.5p.
Southern Business responded to bid number three with an 8p jump to 86p. But there are hopes the outbid Danka Business Systems, down 11p at 404p, will return with a higher offer.
Berkeley Business, which started the auction, decided the 84p-a-share Alco offer was too rich and retired from the fray. The shares rose 7p to 56p in relief.
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