MARKET REPORT : Lloyds Abbey Life saga revisited
Wednesday 01 February 1995
Lloyds Abbey Life jumped 31p to 359p as Nomura, the Japanese-controlled securities house, suggested Lloyds Bank was ready to mop up the 37.3 per cent of the shares it does not already own.
Nomura's analyst, Michael Lever, in a highly unusual move, resuscitated the rumours of a Lloyds strike in an investment note suggesting a 440p offer. Lloyds refused to comment but sources close to the bank were inclined to dismiss the Lever proposal as baseless.
Ever since Lloyds injected its financial services businesses into what was then Abbey Life seven years ago rumours have often surfaced that it would pounce for the outstanding minority.
Mr Lever felt sufficiently confident to suggest that just under 60 per cent of the deal would be financed by a rights issue on a one-for-nine ratio at 475p.
Lloyds, due to report year's figures this month, slipped 5p to 539p. The bank is expected to produce £1,325m, up from £1,031m last time. Its advance will not be as spectacular as Barclays and National Westminster because of progress it has already made recovering from bad debts.
The rest of the stock market had a listless session, weighed down by interest rate considerations. But shares clambered off the floor as New York drew encouragement from the smaller than expected Mexican rescue package.
The FT-SE 100 index, at one time down 12.5 points, ended 4.3 lower at 2,991.6. Once again trading was thin, with a programme trade accounting for a large slice of the 558.4 million volume.
Nomura strategist Nicholas Knight added to the unease by forecasting the index would soon fall to 2,500. But John Siddall, the Manchester stockbroker, in research charting the market's performance since the 1987 crash, suggested shares would bottom in April, then enjoy a bull run taking the index to 4,090 in June next year.
As the market closed Scottish & Newcastle, the brewing and leisure group, attracted attention as rumours swirled it had clinched a deal to buy the Courage brewing group from its Australian owner, Foster's.
Talks between the two have been going on for 18 months, although they did not start to leak until the autumn. Scottish has been battling against Whitbread to win Courage, although there have been suggestions the UK's second-largest brewer will be dividedbetween the two predators.
It was said Scottish had agreed to pay £430m for substantially all the Courage production interests. Excluded from the package could be Courage's Mortlake brewery.
Anheuser-Busch, the US group ranking as the world's largest brewer, is thought to be keen to buy the Thames-side brewery and is believed to have offered £40m. Its Budweiser lager is brewed under licence at Mortlake.
Scottish shares held at 509p; Whitbread firmed 4.5p to 563.5p.
Newspaper shares were firm following comments by Rupert Murdoch that cover prices would have to be increased. Speaking at a world economic forum at Davos, Switzerland, the News Corporation chief blamed soaring newsprint prices for the possible easing of the newspaper price war.
Newsprint prices have increased by 30 or 40 per cent in the past three months and a further advance was announced yesterday.
Lonrho slipped 2p to 152p as rumours circulated that James Capel was attempting to place 10 million shares at 150p. Bankers Trust was said to be the seller, although some wonder whether retiring director Tiny Rowland was lightening his shareholding.
ShareLink, the execution-only stockbroker, tumbled 9p to 159p as worries surfaced about its trading performance.
Argyll, the Safeway supermarket chain, tumbled 7p to 273p on a rumoured Barclays de Zoete Wedd downgrading. The suggestion that J Sainsbury planned a new round of price promotions also unsettled sentiment.
Tibbett & Britten, the transport group, fell 20p to 658p on talk James Capel had cut its estimates.
Profit warnings took their toll. Sidlaw, the packaging group, fell 25p to 173p; James Finlay, 8p to 67p, and OMI International, a measuring equipment group, 8.5p to 32.5p.
Tadpole Technology dipped 3p to 196p as Fidelity International confirmed market speculation it had cut its stake. The investment group said it had sold 1,920,000 shares, 7.7 per cent.
British Petroleum held at 409.5p. Its 39.4 per cent-owned Japanese associate is seeking a Tokyo share listing.
FII, a footwear group, jumped 38p to 323p as an investment group led by Charles Ryder, formerly chief executive of Magellan Industries, moved in, buying 11.7 per cent.
Rights-issue fears continued to haunt Bensons Crisps, down 2p at 30p, and Zetters remained weak on the impact of the National Lottery, off 9p 116p.
Airtours rose 8p to 439p in keen trading. The holidays group, which recently made an upbeat trading statement and held meetings with Scottish institutions, is due to present its case to US investors in two weeks. Its last American road show produced a strong transatlantic demand for the shares, which have moved beween 416p and 578p in the past year.
Dalgety, the food group, is thought to be battling with Nestle, the Swiss giant, to buy the European pet food operations of the US Quaker group. A price of about £450m is expected, and Dalgety, if successful, would have to mount a rights issue.
Barclays De Zoete Wedd expects Dalgety to make profits of £130m this year, against £120.1m.
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