MARKET REPORT

Old takeover hopeful Fisons too expensive unless bid materialises

Takeover rumours have swirled around Fisons with relentless monotony since the drugs group ran into trouble in 1991.

It has probably become the stock market's favourite bid candidate, a bewhiskered old faithful that has experienced so many false dawns that many seasoned campaigners have given up any hope of a predator ever appearing.

But the shares refuse to lie down. In busy trading, and in a flat market, they jumped 7.5p to 172.5p, highest since the summer of 1993. In January, the shares bumped along at 105.5p.

Stuart Wallis, the group's third chief executive in three years, has undertaken a dramatic reshaping exercise. He has pulled the group back on course, but, at the same time, increased its vulnerability to a takeover swoop.

In the past month he has announced the sale of two troublesome divisions for £404m but huge write-offs devastated last year's trading figures, leaving a thunderous £483m loss. But the group should be back in the black this year; NatWest Securities is looking for £65m.

After sorting out the catalogue of disasters he inherited Mr Wallis has, in effect, admitted the group's days of independence could be numbered by saying he would consider offers for the core pharmaceutical arm.

Although it would, perhaps, be unwise after past disappointments to express confidence a bidder will this time materialise there is little doubt that, on trading considerations, the shares are too high

Zeneca, down 10p at 880p, was rumoured to be one possible bidder; another was Medeva which has moved ahead powerfully this month. Its shares were lowered 4p to 214p.

SmithKline Beecham ran into profit-taking after FDA approval for over- the-counter sales of its Tagamet drug, falling 13p to 502p.

Elsewhere, the stock market had a subdued session. The meeting of the American Federal Open Market Committee to discuss interest rates was an inhibiting influence. Once again an early advance was eliminated and the FT-SE 100 index finished 21.5 points down at 3,128.3.

Among blue chips, Inchcape recovered some of Monday's fall, improving 11p to 289p.

Nurdin & Peacock, the cash-and-carry group, jumped 12p to 183p as a disagreement with 14 per cent shareholder SHV surfaced. The secretive Dutch investment group wants to merge its Makro cash-and-carry chain with N&P. Bookers, the other big cash-and-carry operator, was pulled into the speculation, gaining 7p to 404p. It was argued that Nurdin could prefer Bookers to SHV.

Vickers, the engineering group, put on another 3p to 184p ahead of a meeting with analysts; the Granada analytical get-together left the shares 3p off at 539p. Northern Foods gave up 6p to 186p as several analysts suggested a switch into Unigate, firm at 379p.

T&N was stung by further asbestos claim worries, falling 7p to 151p; Vodafone, despite a sharp increase in US ADR shareholdings through the Bank of New York, fell 3p to 205.5p.

Next, the high street fashion retailer reporting figures today, held at 287p. Up to £110m is expected against £73.5m last time.

Smith New Court, the securities house, dipped 16p to 455p. Profits this year are forecast to emerge at £43m (down from £92.5m). But there are fears they could be even lower. Last week Smith surprised the market with staff cuts. ShareLink, the no-frills stockbroker which has admitted bid talks are on, gained a further 7p to 211p.

Jeyes, the disinfectant group, fell 19p to 145p after a £4.2m loss and the departure from the board of former chief executive Jimmy Moir.

Zetters, the pools group, continued to reflect the increasing competition from the National Lottery. The shares retreated 4.5p to 96p, lowest for more than two years.

Newcomer Expro International, an oil services group, ended at its placing price of 175p.

Coats Viyella, the textile group, dipped 4p to 190p. It has suffered a surprisingly high exceptional loss of £40m on the sale of its fabrics and yarns division to management. The loss will be included in today's results, already carrying a write-off of £10m on the carpet operation and £13m of reorganisation costs.

Printer Wace fell 14p to 232p. There is talk of a management buyout. Price cuts dulled electricities although waters ended a touch firmer.

Filtronic, a maker of mobile telephone components, fell 12p to 256p as the Fidelity fund management group, said it had sold 60,000 shares, reducing its interest to 7.86 per cent.

Black & Edgington, the marquee group, confirmed its modest move into drugs. It has paid £20,000 for options to develop two diabetic treatments. The shares edged ahead half-a-pence to 4.75p with Seaq printing a turnover topping 18 million.

Berkeley Business held at 6.5p as it disclosed its offer for Southern Business had been accepted by shareholders with 22.7 per cent of the shares.

But the Southern board jilted Berkeley, switching its allegiance to a counter-offer from Danka Business Systems.

Sherwood Computer Services, which covers the London insurance market and runs Citydeal, a share-dealing service, has recovered from past disasters and, with new contracts on the horizon, looks set to make headway. Mees Pierson, its stockbroker, is likely to lift its current year profit forecast to about £2.3m (from £2.1m) and suggests the shares should be near 190p. They are 131p.

CIA, the media buying group, eased 5p to 129p as co-founder Ian Payne, who lives in Spain, cut his links. Through Smith New Court he sold 1.7 million shares (about 4 per cent) at 125p. They were picked up by four institutions. Mr Payne launched CIA with chairman Chris Ingram in 1976. The company produced profits of £5.3m last year; about £6m is expected by Smith this year.

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