Croda soars as phantom buyer lurks in shadows

Market Report

CRODA INTERNATIONAL was one of the few mid-cappers to keep up with the blue-chips' rip-roaring rally as bid speculators piled in. The long-suffering speciality chemicals group surged 20p to 272.5p - the biggest riser in the FTSE 250- on sizeable volume.

The legendary boys in dark glasses swear that a foreign predator is sniffing around Croda, attracted by its bombed-out share price and improving prospects in core markets. On Wednesday, the company, which makes chemicals for cosmetics and drugs, painted a positive picture of its current trading, telling shareholders that its sales in Europe and the Americas were "usefully ahead" of last year.

This upbeat assessment could have triggered some interest amid its foreign- based rivals. The US giant Dow, the German group Henkel or even Ciba Speciality Chemicals of Switzerland were all mentioned as possible bidders. The main attraction of Croda, which survived a hostile bid from Burmah over 15 years ago, is that it is cheap, having fallen from 1998 peak of 467p. According to the broker CSFB, which yesterday repeated its "buy" advice, the stock should be around 314p, a 15 per cent premium to the current levels.

The speculative buying in Croda focused attention on long-forgotten chemicals stocks. In recent times, the chemicals brigade has been savaged by poor demand and shrinking margins, but yesterday they came back with a vengeance. British Vita was 12.5p higher to 270p, ahead of an analysts trip to its Belgian plant. Another bid favourite Laporte, whose marriage with Clariant collapsed not long ago, rose 6p to 712p. The stock is one of broker Sutherlands's favourites, together with Croda and Elementis, unchanged at 98p. Albright & Wilson, another battered chemicals group, lost 0.5p to 162.5p after the bid from French company Rhodia looked set to succeed.

The FTSE 100 was oblivious to the chemicals' gyrations and preferred to focus on the big picture. The index soared 113.5 to 6456.6 as Wall Street rallied strongly after some interest rate-positive economic data. A firm bond market on both sides of the Atlantic underpinned sentiment.

The bid speculation surrounding Legal & General continued to attract hot money. The insurer settled 6.5p higher at 175.75p as rumours of a strike by Lloyds TSB, up 16p to 908p, or an overseas rivals grew louder. Banks were strong with HSBC and Dresdner Kleinwort Benson making bullish noises on the sector. Bank of Scotland outperformed its peers, rising 53p to 907.5 with the help of some roguish trades. Royal Bank of Scotland cashed in a 61p rise to 1,375p as brokers highlighted its attractions and dealers dreamt of deal with Barclays, up 10p at 1870p.

Some of the out-favour sectors came back from the brink. Computer stocks benefited from Nasdaq' s recent jumps and rallied. Sema soared 34.5p to 575p, while the volatile Misys surged 19.5p to 509.5p. Dixons logged on to its Internet status and rose 68p to 1,266p after buying a stake in the US on-line financial news service GlobalNet Financial. BT rang up a 34p rise to 1,074p after agreeing to provide internet access through Sega's new game console. Strong results are expected next week.

Drugs, another recent dog, were in demand. AstraZeneca shot 116p up to 2575p after the sale of its chemicals unit. Glaxo, up 41p to 1,850p and SmithKline Beecham, 21.5p higher to 825p rose in sympathy amid vague talk of a merger.

Allied Domecq finished unchanged at 539p amid speculation of imminent corporate developments. Dealers believe that the sale of its pubs to Whitbread, up 4.5p to 1116p, or privately owned Punch could be sealed soon. Allied's drinks side could also be shaken-up. Merger talk between Tesco, 2.75p stronger at 188p and Marks & Spencer, up 3.75p to 406.5p, continued. Safeway bought back 10 million shares but still lost 2.5p to 253.5p. BG fell 7.75p to 378p despite a wild rumour that it could be taken over by an overseas rival. Media stocks were also in the doldrums as investors shunned the sector. Carlton lost 17p to 518p, United News was 15p lower at 663p and Daily Mail slipped 53p to 3482p.

The smaller indices underperformed their big brother, with the midcap finishing a mere 8.3 higher at 5815.2 and the Small Cap closing only 6.2 up at 2588.

The usual raft of bid rumours provided most of the excitement. Rank firmed 7.5p to 231.5p as talk of a takeover returned. There was also speculation that the leisure group's long-serving finance director Nigel Turnbull could leave the group after the new chief executive Mike Smith gets his feet under the table.

Viridian, the Northern Irish power group, surged 28.5p to 690p. There are whispers of a bid by an overseas group and of an imminent cashback. Macfarlane, the packaging group, rose 6.5p to 87p amid continued talk of a takeover offer. The food group Hillsdown digested a 26p rise to 112.5p after confirming a takeover approach. The smart money is on a break-up bid by a US financial buyer at around 120p per share. Trade bidders such as Northern Foods, up 6.5p to 144p and AB Food, up 18 at 495.75p were also mentioned. Other foodies were popular with Hazlewood Foods rising 16.5p to 143p on bid speculation. Takeover candidate Albert Fisher shed 0.5p to 12p on strong volume. The Burger-King burger maker Sims Food received a 55p-per-share offer from a financial buyer and rose 5p to a 12-month peak of 50.5p. The biotech group Skyepharma leapt 3p to 59p on hopes of forthcoming positive developments. The plant hire group Ashtead shed another 8.5p to 170p after Wednesday's downgrades. Builders hit a brick wall amid interest rates worries. Redrow crumbled 9p to 205p, Bryant lost 4p to 139p. Alfred McAlpine, stalked by a financial buyer, bucked the trend and rose 4.5p to 226p. A share buyback and a disposals programme are on their way.

The airport group TBI confirmed the sale of its commercial properties but ran into profit-taking and shed 3.25p to 97.5p. The oil driller Lasmo shed 6p to 143p on concerns over its Iranian venture and an ABN Amro "sell" advice.

Park Estates, a property minnow, soared 75p to 290p after agreeing a 300p-per-share offer from rival Grainger Trust, flat at 375p.

VOLUME 1.1 billion

SEAQ TRADES: 68,759

GILTS: 109.55 +0.49

UNITED CARRIERS, the delivery group, could be close to clinching a merger with a rival.

Shares in the company, where the pizza entrepreneur Luke Johnson has a stake of around 7 per cent, yesterday rose 4p to 26p, valuing the group at over pounds 8m.

The parcel group Fastrack, unchanged at 10p, is tipped as the favourite partner, but there is some talk that a bigger player could scupper the deal.

EXPECT SOME near-term developments at Alphameric.

The supplier of software for broadcasters was beamed 4.25p higher to an all-time high of 79.75p with more than 270,000 shares traded. The stock was a mere 35p last summer. Insiders believe that a multi-million pound contract to provide two large bookie chains with broadcast equipment is around the corner. A major deal with a large satellite channel could also be on the cards.