Kleinwort approach confirms 1995 as year of mega-bid

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The Independent Online
The bid action the stock market felt it so desperately needed arrived yesterday with Kleinwort Benson finding itself a German target.

Confirmation of Dresdner Bank's long-suspected interest in the old-established London securities group gave shares a powerful shot in the arm, pushing the FT-SE 100 index 30.6 points higher to 3,370.4.

The German approach is the latest evidence that 1995 is living up to forecasts it will be the year of the mega-bid.

Already Wellcome has fallen to Glaxo; SG Warburg bowed to Swiss Bank Corporation and Trafalgar House launched its abortive assault on Northern Electric.

There is also the bid action surrounding VSEL and Medeva and Commerzbank's successful strike for control of Jupiter Tyndall, the fund manager.

Such an array of takeover action should, under normal circumstances, have satisfied even the most bloodthirsty market operators. But they have become bid-happy. And the shot for Kleinwort has, if anything, merely increased their lust for more corporate action.

Kleinwort is, of course, just one element in the present frenzy of bid speculation. Cable & Wireless, Thorn EMI and Zeneca are among blue chips that have felt the impact of intense speculation in the past few weeks.

Arjo Wiggins Appleton, Kwik Save, Smith & Nephew, TSB and Yorkshire & Tyne Tees Television are others firmly in the bid frame.

The big surprise must be that United Biscuits, one of the longest-running bid candidates, has survived for four months without an outbreak of frantic bid speculation.

Kleinwort shaded 5p to 419p following the announcement of talks with Dresdner with the rest of the dwindling merchant banking sector looking firmer.

Smith New Court, the securities group that recorded the expected sharp profit decline, rose 21p to 438p on the dividend increase and hopes of a Schroders bid. Mercury Asset Management, seen as vulnerable to a bid, added 16p to 833p.

Zeneca, up another 9p to 1,091p in busy trading, has become the market favourite to follow the Kleinwort path. Hoffman La Roche, the Swiss group, remains the most likely bidder.

Cable, firm at 437p, and Thorn, up 6p at 1,317p, cannot be far behind. ABN Amro Hoare Govett's James Ross suggests Cable's break-up value is 600p a share.

The market achieved a little help from New York, with the Dow Jones Average crossing 4,500 points, and the Chancellor's Mansion House speech. Government stocks weakened.

Reuters, the information group, had another strong session, up 14.5p to 525p. Trading was brisk, with US buying said to be responsible for the advance. The shares have jumped 36p this week.

British Petroleum was another responding to US backing, rising 8p to 451.5p as the American securities house Oppenheimer repeated buy advice.

Kwik Save, besides talk of a Hong Kong bid, had the advantage of James Capel support, advancing 25p to 653p. The stockbroker is thought to have lifted its forecast by pounds 10m to pounds 147m. The shares were 605p on Monday.

Supermarkets were largely unmoved by the J Sainsbury trolley offensive; Sainsbury lost 3.5p to 446.5p.

Some retailers were ruffled by the cautious Allders statement. Storehouse fell 8p to 267p; Allders 16p to 221p. MFI, up 6.5p at 120p, was given a helping hand by buying support from Kleinwort.

The builder George Wimpey fell 3p to 117p as Warburg put a 100p valuation on the shares. The same house issued a buy recommendation for Forte, lifting the catering and hotel group 5.5p to 240p.

Vodafone jumped 8p to a year's high of 234.5p, acknowledging its 2-millionth mobile telephone customer.

Badgerline shaded to 146p and GRT Bus held at 274p ahead of dealings, due to start today, in FirstBus, the result of the pounds 265m merger of the two bus companies.

Tinsley Robor, the packaging group, jumped 10p to 83p on the better-than- expected profits advance and Huntleigh, the medical group, rose 45p to 688p following an upbeat trading statement. Ugland International, the shipping group, sank 10p to 91p following losses of pounds 701,000.

Enviromed, the health care group, held at 80p. The shares could have an uncertain time today.

After the market closed the company, floated at 110p two years ago, said it had received an approach.

Shandwick, the public relations group, edged forward another 1.5p to 40p in brisk trading. Active Value Trust, run by Brian Myerson and Julian Treger, has lifted its shareholding to over 10 per cent.