MARKET REPORT : TSB seen as takeover target again
Wednesday 25 January 1995
The stock market scents takeover blood. Flushed with its success in anticipating the Glaxo bid for Wellcome, it is busy hunting the next target.
TSB, the old Trustees Savings Bank, achieved the dubious distinction of being selected as the most likely victim. In busy trading the shares gained 8.5p to 232p, to the accompaniment of talk of a Continental predator.
The bank is no stranger to takeover gossip. Its shares have often advanced on swirling rumours of an offer. Lloyds Bank, now immersed in buying Cheltenham & Gloucester Building Society, was for long the favourite to strike.
But with German investment banks descending on London, it is not hard to construct a realistic yarn that they may feel the desire to tack a retail banking chain onto their UK base. There is also talk of French interest.
TSB was not, however, the only bid favourite to be resurrected. These days SG Warburg is never far from speculative attention and the shares rose 12p to 748p. Kleinwort Benson put on 15p to 588p. Argyll, the Safeway supermarket chain, is still seen as a possible Hanson target and gained 3.5p to 277.5p and Vickers, the Rolls-Royce cars group, was said to be in line for German interest, up 3p at 175p.
United Biscuits gained 4p to 309p and Scottish Television 23p to 438p.
The market is already convinced that 1995 will be the year of the mega-takeover. Besides the Wellcome shot, Warburg has been involved in talks with Morgan Stanley; Cadbury Schweppes is striving to buy Dr. Pepper/Seven-Up and Trafalgar House has launched its controversial offer for Northern Electric.
To add to the corporate action, Jupiter Tundall, the fund manager is in talks with Continental banks, and De La Rue, after a long courtship, captured Portals, the specialist paper group.
Electricities, firm yesterday, are seen as a likely takover battleground if the Trafalgar bid for Northern overcomes the minefield of regulatory obstructions.
A rush of big takeover deals should lift the market. But as was demonstrated by the reaction to Glaxo's spectacular strike, the market is in a perverse mood.
Worries about Japan, Mexico and higher interest rates evaporated, but even so shares made only a modest response to the surge of takeover fever the market is experiencing.
The FT-SE 100 index managed a 14.8-point gain to 2,969, with again the more profitable blue chips attracting much of the action.
After its heady upsurge on the Glaxo bid Wellcome had a much more settled session, easing 6p to 955p; Glaxo, weak on Monday, rallied 9p to 608p. Zeneca dropped 30p to 886p.
Vodafone, up 3p to 187.5p, was another to attract takeover talk. The shares have been weak as worries have grown about the fierce competition it is facing from Cellnet, the BT/Securicor rival.
Turnover was printed at 47 million. But the biggest trades were not completed yesterday. They appeared to be the residue from last week's reputed £800m programme trade by Goldman Sachs.
Racal Electronics, Vodafone's former parent, was another busily traded, although there was no obvious Goldman Sachs influence. Turnover was put at 13 million. The price fell 4.5p to 227.5p.
Prudential dropped 14p to 295p as the market continued to speculation avidly about the sudden departure of Mick Newmarch from the insurance giant.
Kingfisher slipped 3.5p to 389.5p. It denied stories it planned to sell Darty, its French electrical group. Storehouse was unchanged at 223p, despite Hoare Govett support.
British Airways recovered a little of its recent weakness, climbing 8.5p to 357.5p on hopes that its USAir associate will not perform as badly as some fear; there was also talk of a US securities house promoting the shares.
Saatchi & Saatchi eased 2p to 114p as BA asked four advertising agencies - including S&S and the new Maurice Saatchi operation - to pitch for its £60m account.
Shell jumped 11p to 707p as Hoare Govett speculated about a possible share buy-back. It could comfortably afford to pay up to 1,100p a share.
Cadbury Schweppes gained 7p to 396p as some speculated that its Dr Pepper bid could appear today.
Tadpole Technology had another difficult session, falling 23p to 208p. One suggestioin was that a big institutional shareholder had to withdraw a large line of stock because it could not find any takers.
Meggitt, the engineering group, fell 12.5p to 64.5p on its downbeat trading statement. Profits are now not expected to exceed £15m, against earlier hopes of up to £20m.
Copymore, the office equipment group which recently had abortive takeover talks, continued to strengthen, prompting suggestions that bid action could be on again. The shares, a narow market, gained 10p to 130p.
CIA, the media buying group, held at 130p as it confirmed its German deal. It has acquired 21 per cent of Mediahaus Strubel, a media group, and will accommodate the rest of the capital in 1998. The German group has offices in eastern Europe.
Jeyes, the disinfectant group, attracted buyers, up 17p at 164p.
Fisons could be the next pharmaceutical group to engage in corporate action. But it may not be on the receiving end of the long suspected bid. Instead there is speculation that the group will sell its scientific equipment operation to allow it to developits drugs side. An announcement on the subject is expected in a few weeks. The shares held at 108p.
Pelican, the acquisitive restaurant group, held at 80p as Ian Berry at Beeson Gregory suggested profits would climb to £4m this year with £7.8m likely next. He expects its chain to top 60 by March and regards the shares as a buy. Pelican is one group associated with Robert Earl of Planet Hollywood fame. He is now developing Pelican's operations in the US.
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