Hanson steps up the teasing talk of a major strike

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The Independent Online
Once again, Hanson, the ubiquitous conglomerate, is intriguing the stock market.

Interim figures, said by stockbroker Panmure Gordon to be the best "for many years", are due on Tuesday; dealings start in a "when issued" form in the shares of its American spin-off, US Industries, two days later.

Hanson has been busy holding City investment meetings explaining the merits of the demerger. Many have come away with the impression the prime function of the exercise is to put Hanson in a much stronger position for the long-expected mega-takeover.

Rumours of a big Hanson deal have assumed folklore status in the market. The group has been linked with a wide range of often unlikely targets as the market has striven to identify its likely victim.

Argyll, the Safeway supermarket chain, United Biscuits and Yorkshire Electricity have featured on the supposed Hanson hitlist. So has Chrysler Corporation, the US car giant faced with a hostile bid.

Although the group has so far remained aloof from speculation, there is no doubt it is contemplating a major strike.

It has, as near as it is ever likely to, admitted as much by pointing out the US split will reduce its gearing, leaving it "to consider making significant acquisitions as opportunities arise".

So although USI, made up of some but not all of the group's American operations, could be financially hamstrung after repaying $1.35bn to Hanson, the old takeover warrior could be trigger-happy.

PG analysts Charles Pick and Tim Harris point to the advantages of a June strike. It would allow the target to be reflected in the year-end display and included for all or most of next year.

Hanson, they point out, acquired the American Quantum Chemical Corporation in June two years ago.

"What better time for a bid than after what will be spectacularly good interims in mid-May? These will remind the investment community of how Quantum was either a gamble that came good or a stunningly timed and executed acquisition which was 100 per cent vintage Hanson," they say.

PG looks for interim profits of £615m, up from £352m. In busy trading, Hanson rose 5p to 250p, the highest this year. The shares climbed 13p this week.

The rest of the market had a more subdued session, ignoring another New York power display. A three-day winning streak, which lifted the FT-SE 100 index 66.2 points, came to an abrupt end although the modest 7.6 decline to 3,310.3 looked more like a pause before the next charge.

Since the bull market started ten weeks ago, the index has surged more than 300 points; the Dow Jones Average has risen more than 400.

Water shares, which have missed much of the party, were buoyed higher by Smith New Court attention. The securities house is looking for earnings to grow by an average 11 per cent and dividends by 13 per cent. Thames added 6p to 486p and Severn Trent 14p to 543p.

Latest financial development - the banks planning to sell more 3i shares - left the price 9p lower at 346p. SG Warburg continued to retreat, off 22p at 772p, with Mercury Asset Management 32p lower at 824p.

Perpetual, the fund manage,r shaded 26p to 1,439p following its disappointing figures, but Smith New Court added 10p to 434p.

Imperial Chemical Industries responded to the threat of US litigation in connection with the Oklahoma bombing with a 7p slip to 763p.

Pearson fell 12p to 601p, with "satisfactory" trading overshadowed by a profit downgrading reportedly from ABN AMRO Hoare Govett. J Sainsbury firmed to 435p; trading in its ADRs starts next week.

Chubb Security held at 315p. Last year's figures are due next month and Williams de Broe is looking for a £10.4m advance to £87.5m. This year's estimate is £100m. "The current year's rating does not make sufficient allowance for the growth potential over the next two to three years", says analyst Mike Smith.

The Tadpole Technology suspension tormented some of the other high-flying technology shares. Magnum Power slumped 19p to 176p, and Unipalm 20p to 218p.

Premier Consolidated Oilfields held at 27.5p. Amerada Hess, the US group, has acquired 1.1 million shares, lifting its stake to 24.99 per cent. The buying stems from PCO's acquisition of Pict Petroleum, where Amerada was a big shareholder.

Two tiddlers that have attracted attention recently continued to find support. Farringford, with just a solitary hotel in the Isle of Wight to its name, rose 0.75p to 7.25p as talk of a reverse takeover persisted.

Midland & Scottish Resources rounded off a remarkable week with the 25p shares up 1.5p to 7.5p. a 5.5p gain since Tuesday. The 10p shares were up 0.5p to 6.5p. The group was almost sunk by its involvement in the Emerald North Sea oil field. The company said delivery of its Spirit of Columbus oil platform was near and talks were proceeding about its use with "a number of interested parties".