Fund manager MAM could find itself a bid target

MARKET REPORT

Are the tables about to be turned on Mercury Asset Management? The fund management group, which played a pivotal role in the bitter bid battle between Granada and Forte, may find itself on the end of a bid, according to rumours circulating around the market yesterday.

Shares in MAM moved notably in the opposite direction to the rest of the market and closed the session sporting a rise of 15p to 883p. That price values the company, which was last year demerged from Warburg when the merchant bank was bought by Swiss Bank Corporation, at more than pounds 1.6bn.

Turnover in the tightly held MAM stock was quite chunky at almost 3 million, amid gossip that a bid pitched in excess of pounds 10 a share was on the way.

The cash-rich National Westminster Bank, which apparently recently ran its slide rule over the Gartmore fund management group, is widely tipped as the bidder. NatWest shares dropped 7p to 667p.

Royal Bank of Scotland, a penny firmer at 589p, was also mentioned by some dealers as having looked at buying MAM, which ranks second only to Prudential in terms of funds under management. At the last count MAM's funds were put at pounds 72bn.

Some analysts reckon that MAM, already knee-deep in cash, made more than pounds 100m out of the Granada bid. Its annual results for 1994 showed a cash balance of pounds 162m and only pounds 26m of short-term debts.

Separately, MAM has boosted its holding in Thorn EMI, which is soon to announce its demerger plans, by almost a full percentage point to 12 per cent. Thorn, 3p higher in early trading, finished 4p down at pounds 16.39p.

For the rest of the market, the session was one to forget. Share prices among the leaders tumbled with the temperature in London. The FT-SE 100 share index lost all of the previous day's gains - which took it to a record - with a 24-point drop to 3,734.2.

Investors were quite content to pocket profits, and brokers took plenty of commission fees from more than 35,000 deals that resulted in a very high 1 billion shares changing hands.

A large part of the day's trading came courtesy of some special situations. More than 6 per cent of the session's total business was in BAA, steady at 496p, as the Government placed its remaining stake. Total volume in BAA was 63 million.

Shares in Forte, which lost its takeover battle earlier this week, were also heavily traded, with 20 million going through the books. Granada, which could end up selling hotels back to Sir Rocco Forte, fell 3p to 704p.

Second-line stocks, buoyed by yet more takeover rumours, fared considerably better than the leaders. The FT-SE 250 index fell just 0.2 of a point to 4,086.7 and the FT All-Share rose 0.5 per cent to 1,837.17.

Takeover speculation continued to run rife in the breweries, pubs and restaurants sector. Guessing what Whitbread, 0.5p easier at 690p, will buy has become an established game.

A further high was set by JD Wetherspoon, the pub company, which added 7p to 741p. Regent Inns, also rumoured as a possible target for Whitbread, hit a peak 737p with a rise of 8p.

Falls were recorded by some share prices that have been buoyed recently by takeover rumours. This group included Vaux Group, down 2p 296p, MyKinda Town, off a penny to 131p, and Group Chez Gerard, which lost 2p to 238p.

The market's appetite for biotech stocks remained insatiable - particularly for British Biotech, which spurted 70p to pounds 22.38p. The shares traded at 500p last autumn.

Ian White, analyst at Robert Fleming, reiterated his buy recommendation for British Biotech. There was talk that the shares could run up considerably higher, and even top pounds 30.

The biotech sector is now setting fresh highs on a daily basis. Other movements yesterday saw Cantab Pharmaceuticals rocket 85p to 530p, Cortecs International sprint 33p to 270p, and Scotia Holdings climb 19p to 603p. ML Laboratories, traded on the USM, increased 46p to 457p on a pounds 25m placing to fund development of its Icodial dialysis solution.

Elsewhere, Bluebird Toys was lifted by the Mattel takeover move for Hasbro, and closed 15p better at 339p. Hasbro has a 7 per cent stake in Bluebird, which in turn has many of its toys distributed by Mattel.

Maiden results from Jasmin, traded on AIM, went down well. The shares, floated at 88p last November, climbed 12p to 103p.

Among the main fallers were Standard Chartered, down 26.5p to 636p, as the company issued a statement saying it knew of no reason for its recent strong share price performance.

TAKING STOCK

r There was strong demand for shares in Aegis, up 1.5p to 43p. Morgan Grenfell Asset Management was said to be a big buyer of stock in the media-buying agency, which has a lengthy blue-chip client list featuring Kellogg's, Levi's, and Asda. The European-wide $200m-billing account of Philips Electronics is set to join the fold.. Almost 13 million Aegis shares were dealt, equal to 1.6 per cent of the total in issue.

r Keep a watch on Manx & Overseas, traded on AIM. The price yesterday rose 2p to 21p as buyers appeared on the scene. There are rumours that the company, headed by Geoffrey Maddrell, former head of Tootal and ProShare, may be looking separately to float Enterprise, the Internet access provider in which it has a 30 per cent stake.