Hot gossip fails to warm up shares

Market Report

DIAGEO, the wine and spirits giant, had a hungover look as worries grew that LVMH, the French luxury goods group, was planning another cut in its shareholding.

Bernard Arnault, the Paris-based financier who created the sprawling LVMH empire, has in the past sold off shares in the drinks behemoth to raise cash to develop LVMH. So confirmation that talks are going on which could lead to LVMH buying the Sanoft beauty business sent alarm bells ringing among Diageo followers.

The spirits group, taking in such brands as Johnnie Walker scotch whisky and Smirnoff vodka, was formed by the merger of Grand Metropolitan and Guinness. LVMH once had 24 per cent of Guinness but its stake was reduced ahead of the merger, an event which did not please Mr Arnault.

LVMH now has 10.84 per cent of Diageo and Mr Arnault is a director of the spirits group. He would, no doubt, like to realise some of his involvement, particularly as the distribution and marketing association between Diageo and LVMH's Champagne and Cognac brandy interests no longer needs the support of a shareholding.

Although well below their 778p high, Diageo's shares have held up relatively well. But with the LVMH story swirling around they were the worst-performing Footsie constituent, falling 31.5p in busy trading to 615.5p.

Zeneca, the drugs group, provided the other hot story. In volatile trading the shares rose 73p to 2,587p, accompanied by stories that the proposed merger with Astra was about to be scuppered by a hostile bid, possibly from SmithKlein Beecham. Doubts about the feasibility of the Anglo-Swedish merger have been growing and the market is clearly receptive to any suggestion of a counter-offer. SB, which has been involved in unsuccessful takeover talks with Glaxo Wellcome and American Home Products, rose 17p to 787p.

Merck, the US drugs group, is also thought to be unhappy about the alliance as its marketing link with Astra is a casualty of the deal. It is not expected to mount a bid but could attempt to unsettle the relationship. It is said to be likely to demand a high ransom for allowing its marketing link with Astra to unravel. Astra has an agreement to buy the Merck involvement in their joint venture in 2008, but any merger by the Swedes before then could require heavy compensation.

Tarmac, after the surprise collapse of its deal with Aggregate Industries, fell 12.25p to 101.75p; Aggregate lost 2.25p to 68.75p.

Elsewhere on the merger front Sears gained 6.5p to 259p on high-street entrepreneur Philip Green's conditional offer. Newcastle Utd's mystery suitor left the shares 6.5p down at 98.5p.

Footsie, after a struggle, ended with a 22.6-point gain at 5,557.1, with telecoms constituents contributing most of it. Supporting shares remained under pressure, and government stocks moved ahead.

Drink and restaurant shares gave ground as worries about Christmas spending cast a shadow. Bass slumped 34.5p to 755p.

Pearson, the banking and media group, recovered from Monday's weakness as the signalled trading statement was more positive than expected. The shares rose 48p to 1,110p. Pearson's comments helped Reuters, 17p higher to 540.5p, and Reed International, 12.25p to 442p.

Telecoms rejoiced from the relatively lenient mobile phones review. Vodafone topped the Footsie leader board with a 42p gain to 945p; Orange rose 25p to 638p and BT 21p to 881p. Even Cable & Wireless, on the hunt for a new chief, managed a 13.5p gain to 706.5p.

House of Fraser, the department store chain, was unloved, tumbling 2.5p to 53.5p, a new low. The market was unsettled by stories that the group is having a particularly disappointing Christmas. Marks & Spencer was another casualty of the festive shopping malaise, off 12p to 396.25p. The MFI furniture chain, despite a pounds 26m half-time loss, rallied 4p to 30p.

Alpha Airports rose 4p to 49.5p on talk that the Harrods stake is about to change hands. Lopex, the marketing group, gained 6p to 47p as Incepta, the City public relations group, lifted its stake to 26.9 per cent. Southwind, a company run by Incepta chairman Bob Morton, has just over 3 per cent.

Healthcare group Oxford Biomedica added a further 1p to 13p following its genes link with Rhone-Poulenc Rorer. Reunion, the miner, softened 5p to 42.5p after announcing a pounds 505,000 placing with institutional investors. They are being offered shares at 50.5p.

Rumours that Premier Oil plans a write-down of its exploration and production assets knocked the shares 2p to 17p. Cox Insurance was the day's worst performer, slumping 45 per cent to 186.5p after a profits warning. Analysts now expect year's figures of around pounds 17m, down from the earlier pounds 28m.

SEAQ VOLUME: 806.9 million

SEAQ TRADES: 63,764

GILTS INDEX: 115.16 +0.82

SHIELD DIAGNOSTIC, raising pounds 2.3m through an institutional placing at 470p, appears to have upset one big shareholder. A trade of 149,000 shares went through at 468p a few hours after the call was known. The shares were sold at 25p, even 30p, below the then price. One suggestion was that an institution took exception to the placing because it understood that Shield would not need more cash. The shares ended at 510p.

ACORN, a high-yield fund, is being launched to capitalise on the slump in small company shares, which have underperformed by 40 per cent in two years. With many tiddlers offering high-dividend yields Acorn, to be quoted in London and Guernsey, will specialise in shares such as Leeds, the textile group, now offering a return of around 16 per cent. Peter Webb and John McClure of Eaglet investment group will be Acorn's advisors.

Start your day with The Independent, sign up for daily news emails
News
Amazon's drones were unveiled last year.
business
Arts and Entertainment
Russell Tovey, Myanna Buring and Julian Rhind Tutt star in Banished
tvReview: The latest episode was a smidgen less depressing... but it’s hardly a bonza beach party
Life and Style
Worth shelling out for: Atlantic lobsters are especially meaty
food + drink
News
i100
Sport
Gareth Bale
footballPaul Scholes on how Real Madrid's Welsh winger would be a perfect fit at Old Trafford if he leaves Spain
Arts and Entertainment
Lily James in ‘Cinderella’
film
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Claims Administrator

£16000 - £18000 per annum: Recruitment Genius: A position has arisen within th...

Ashdown Group: Development Manager - Rickmansworth - £55k +15% bonus

£50000 - £63000 per annum + excellent benefits : Ashdown Group: IT Manager / D...

Recruitment Genius: Security Officer

£16500 per annum: Recruitment Genius: Applicants must hold a valid SIA Door Su...

Ashdown Group: Business Analyst - City, London

£50000 per annum: Ashdown Group: Business Analyst - Financial Services - The C...

Day In a Page

The saffron censorship that governs India: Why national pride and religious sentiment trump freedom of expression

The saffron censorship that governs India

Zareer Masani reveals why national pride and religious sentiment trump freedom of expression
Prince Charles' 'black spider' letters to be published 'within weeks'

Prince Charles' 'black spider' letters to be published 'within weeks'

Supreme Court rules Dominic Grieve's ministerial veto was invalid
Distressed Zayn Malik fans are cutting themselves - how did fandom get so dark?

How did fandom get so dark?

Grief over Zayn Malik's exit from One Direction seemed amusing until stories of mass 'cutting' emerged. Experts tell Gillian Orr the distress is real, and the girls need support
The galaxy collisions that shed light on unseen parallel Universe

The cosmic collisions that have shed light on unseen parallel Universe

Dark matter study gives scientists insight into mystery of space
The Swedes are adding a gender-neutral pronoun to their dictionary

Swedes introduce gender-neutral pronoun

Why, asks Simon Usborne, must English still struggle awkwardly with the likes of 's/he' and 'they'?
Disney's mega money-making formula: 'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan

Disney's mega money-making formula

'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan
Lobster has gone mainstream with supermarket bargains for £10 or less - but is it any good?

Lobster has gone mainstream

Anthea Gerrie, raised on meaty specimens from the waters around Maine, reveals how to cook up an affordable feast
Easter 2015: 14 best decorations

14 best Easter decorations

Get into the Easter spirit with our pick of accessories, ornaments and tableware
Paul Scholes column: Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season

Paul Scholes column

Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season
Inside the Kansas greenhouses where Monsanto is 'playing God' with the future of the planet

The future of GM

The greenhouses where Monsanto 'plays God' with the future of the planet
Britain's mild winters could be numbered: why global warming is leaving UK chillier

Britain's mild winters could be numbered

Gulf Stream is slowing down faster than ever, scientists say
Government gives £250,000 to Independent appeal

Government gives £250,000 to Independent appeal

Donation brings total raised by Homeless Veterans campaign to at least £1.25m
Oh dear, the most borrowed book at Bank of England library doesn't inspire confidence

The most borrowed book at Bank of England library? Oh dear

The book's fifth edition is used for Edexcel exams
Cowslips vs honeysuckle: The hunt for the UK’s favourite wildflower

Cowslips vs honeysuckle

It's the hunt for UK’s favourite wildflower
Child abuse scandal: Did a botched blackmail attempt by South African intelligence help Cyril Smith escape justice?

Did a botched blackmail attempt help Cyril Smith escape justice?

A fresh twist reveals the Liberal MP was targeted by the notorious South African intelligence agency Boss