Footsie rebounds on takeover action
Tuesday 15 September 1998
New York, up more than 200 as London closed on expectations that President Clinton will survive, was a major influence. The Japanese move to reshape its banking system, signs that Russia could be moving towards stability and indications that Helmut Kohl may cling to power in Germany were other favourable factors.
But there is nothing like a round of old-fashioned takeover activity to inspire a stock market, particularly one bedevilled by fears that the good days are over.
Much of the bid action occurred in two heavily depressed sectors, oils and textiles. British-Borneo's pounds 900m-plus merger with Hardy Oil & Gas coincided with Courtaulds Textiles' takeover talks with troubled Claremont Garments and a move to take woollen group John Haggas back into private ownership.
Hardy flared 15p to 180.5p but BriBorneo lost 32p to 209.5p. Claremont rose 6p to 22.5p and Haggas 15.5p to 56.5p. Courtaulds shaded 3p to 162p.
Alvis, the armoured vehicles group, and the much bigger GKN confirmed weekend speculation of a possible new grouping. The most likely development is Alvis buying GKN's armoured side in exchange for shares, with GKN emerging as the major shareholder in the enlarged group. Alvis rose 25p to 197.5p (after 208). GKN firmed 6p to 683p.
With the market still football crazy the "funny old game" remained in the centre circle. Tottenham Hotspur gained 13p to 85p after it transpired that chairman Alan Sugar had turned down an 80p-a-share offer from ENIC, up 5p to 150p. Sheffield United, a division one club, scored the day's best gain, 61.9 per cent to 34p, after admitting it was in talks which could lead to private investors pumping cash into the business.
The rush for football shares, sparked off by Rupert Murdoch's descent on Manchester United, provided further strength for Leicester City, up 7.5p to 44.5p; Southampton Leisure, 7.5p to 64.5p, and Burnden Leisure (Bolton Wanderers), 4.5p to 23.5p.
Newcastle United, said to be talking to a range of media groups, jumped 18p to 107p and ManU, with Salomon Smith Barney threatening to produce a rival bidder to the Murdoch-controlled BSkyB offer, rose a further 6.5p to 228p.
Vaux, one of the market's most bewhiskered bid stocks, frothed 11.5p higher to 289p as it called time on its brewing side to concentrate on its hotels and higher-margin pubs.
Footsie was in positive mood from the start, encouraged by New York's Friday recovery. When transatlantic shares resumed their advance it threw off any hesitancy, ending at 5,268.6. A number of big programme trades helped to swell turnover and were generally more buy than sell exercises. The supporting shares, however, were left behind. The mid cap index gained 39.4 to 4,736.7 and the small cap could manage only a 6 advance to 2,094.
Underperforming Reuters, helped along by Warburg Dillon Read, jumped 42p to 790p and Hays was lifted 67p to 882p by its strong results.
Pearson rose 40p to 1,090p after BT.AlexBrown said the media group had made a "flying start" to the year and put a 12-month target of 1,120p on the shares.
What appeared to be a rogue late trade - 593 shares at 790p - boosted building materials group RMC and the shares closed at 790p, up 83p. Most of the late afternoon trades were around 740p.
Unilever, the Anglo-Dutch giant, firmed 11p to 550p ahead of London meetings with analysts next week; US presentations are due in a few weeks. Hillsdown, splitting into three, is another holding briefings. The shares shaded 2p to 131.5p.
Jarvis Hotels, a shade firmer at 115p, was also holding investment meetings. The market expects profits of around pounds 34m (pounds 31.5m).
Vodafone, reflecting recent investment meetings and bid hopes, jumped 37p to 804p, and Norwich Union was another inspired by expectations of corporate action, improving 38p to 467p.
Ahead of results today, the pub chain JD Wetherspoon dipped 10p to 167.5p; Thomson Travel fell 5.5p to 135p on its maiden figures.
Ladbroke cantered 15.75p to 240p. A monopolies decision on the betting and hotel group's takeover of the Coral betting shops from Bass is due this week. Bass was one of the few blue chips to give ground, off 18p to 817p on worries about its hotel spread. Imperial Chemical Industries was another, easing 11p to 555p on Merrill Lynch caution.
Peterhouse, a construction group, hardened 2p to 82.5p after Williams de Broe calculated a sum-of-the-parts valuation of 180p with a short term target of 120p.
Creighton, the toiletries group, made a slippery return. Suspended at 23.5p while it attempted to take over the Potter & Moore toiletries group, the shares traded at 8p.
SEAQ VOLUME: 922 million
SEAQ TRADES: 62,608
GILTS INDEX: n/a ALAN SUGAR may be immersed in the affairs of the takeover bid candidate Tottenham Hotspur, where he is chairman, but he is taking time out to meet electronics analysts in connection with his original operation. As chairman of the Amstrad electronics equipment group he plans to hold an investment meeting later this month. The shares firmed 1.25p to 29p; a few months ago they were 58.5p.
COULD A rival bid appear for Robert Walters, the recruitment group. Interestingly the rival PSD operation has quietly lifted its Walters stake to 1.79 per cent through Salomon Smith Barney. Since a US group made what is in effect a share exchange offer the value of the bid has slumped and Walters shares have fallen from approaching 400p to 306p. They have been as high as 574.5p.
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