MARKET REPORT

Texas deal boosts takeover hopes
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The Independent Online
Bids, real and rumoured, continue to dominate. The expected J Sainsbury swoop on the Texas do-it-yourself chain was seen as providing further evidence that the stock market could be set for a rip-roaring takeover romp.

With a few exceptions the current crop of bid favourites was lifted, with the TSB banking group leading the way.

In heavy trading the shares surged 16p to 248p after touching 253.5p. Even a statement from TSB that it could offer no explanation for the advance failed to have much impact.

Simon Samuels, at Smith New Court, suggested a 300p bid valuation was "not unreasonable", judged by recent US prices.

A Continental predator remained the market's favourite option but that bidder for all seasons, Hanson, crept into the frame. It is generally accepted that there is a huge scope for cost-cutting at the old Trustees Savings Bank, an exercise that could appeal to Hanson.

The transatlantic conglomerate, which needs a UK acquisition for tax reasons, is also linked with Argyll, the Safeway supermarket chain, which is also seen as ripe for the Hanson treatment.

Argyll, after Wellcome the second best performing Footsie stock this year, rose a further 2.5p to 280p, with trading often busy.

Other likely targets still had their supporters. Kleinwort Benson gained 11p to 599p and SG Warburg 6p to 754p. United Biscuits rose 12.5p to 321.5p.

The £290m Sainsbury acquisition of Texas from Ladbroke had little impact on the respective shares; Sainsbury edged ahead 5p to 418p and Ladbroke stuck at 165p. The sale increases the possibility of Ladbroke trying to buy all, or at least part, of the Hilton Hotels chain of the US.

The paint maker Kalon, a leading supplier to Texas, slipped 10p to 99.5p. Sainsbury's Homebase chain relies on the rival Crown Paints.

The day's other deal - an £83m offer for Lombard Insurance - caught the market on the hop. Lombard shares surged 61p to 231p. They came to market in May at 160p.

The takeover euphoria helped submerge the continuing interest rate jitters and lift the FT-SE 100 index 13.2 points to 2,982.2.

But Wellcome fell 1p to 954p. Prudential, still wounded by the sudden departure of Mick Newmarch, fell a further 3.5p to 291.5p.

Tadpole Technology was again under pressure, slipping 8p to 208p. At one time the shares were down 34p. The decline was arrested by share buying by Tadpole directors. They picked up 42,500 at 165p, with George Grey, chief executive, accounting for 30,000of them.

Rolls-Royce and Smiths Industries were lowered on reports of Boeing production cutbacks.

RTZ edged forward 5p to 778p. NatWest Securities, encouraged by revised metal prices from its Australian office, has upgraded its profit estimates. This year's figure is lifted from £695m to £720m and next from £825m to £875m.

Enterprise Computers gained a further 1.25p to 4.5p. Results are due soon. The shares have more than doubled since Friday. In November it announced losses of £2m and said it was in discussions with its bankers over its future.

RAP, an industrial distributor, gained 3p to 146p after meeting analysts. It came to market at 142p last month.

Elbief, a photo frame maker, attracted a sudden round of attention, gaining 4p to 19p. The company has suffered a run of losses and its market capitalisation is only £2m.

Arcolectric, a switch and neon sign manufacturer, jumped 22p to 175p as Ringwood, a company closely associated with the entrepreneur David Williams, has picked up 4 per cent. In the first half of last year the company produced profits of £454,000, more than it made in the previous year, as investments in new products paid off.

Mr Williams is head of Mosaic, up 1.5p to 29p, and has interests in other quoted companies including European Colour.

Glaxo slipped 8p to 600p.

Last night there was talk that the pharmaceutical giant, not content with its £9bn takeover shot for Wellcome, would announce a significant deal today. The identity and size of the acquisition was shrouded in mystery but it is thought it could involve anoverseas operation. Glaxo's sudden takeover spree follows 18 years without a bid.

PDFM, the fund manager, has increased its involvement at First Choice, the holidays group, picking up a large line of convertible preference shares. It now has 48.1 per cent of the preference stock. Its latest buy could stem from a big holding held by its UBS associate which helped to save First Choice from Airtours. UBS has 19 per cent of the ordinary shares, off 1p at 120p.

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