Market Report: City sees smaller, slimline Securicor as a sitting duck
Friday 12 November 1999
Securicor provided the more eye-catching story. The stock romped 30p, or 25 per cent, higher to 150p on its return to the midcap after a spell in the FTSE 100. The volume was simply astonishing: over 172m shares, nearly a third of the whole group, changed hands as punters and institutions locked themselves into the company on hopes of a bid. After selling its 40 per cent stake in mobile operator Cellnet to BT, 107p higher to 1254p after excellent results, Securicor is seen as a sitting duck. For a start, the new slimline Securicor is a much smaller group than it was in its Cellnet days.
The disposal of the holding in the phone company has triggered a 492p- per-share cash back to shareholders. It has also pushed Securicor out of the blue-chip index to be replaced by computer group Logica, 116.5p higher to 1164.5p, as its market value fell back to pounds 900m
The outcome of this reshuffle is that Securicor is now a focused security business which could be easily swallowed up by a rival. The name of business services giant Rentokil Initial, 10.25p lower to 207.25p, was inevitably mentioned. The cleaning group's boss Sir Clive Thomson has just returned from a US roadshow and an earnings-boosting deal would be just the thing that Rentokil needs. The company has been dogged by a sales slowdown and there are rumours of additional problems in its European operations.
Other mooted UK bidders included fire and security struggler Williams, down 4.75p to 324p. Services group Hays, up 9p to 806p is less likely as it has divested of most of its security operations. The foreigners could also wade in, with firms such as Sweden's Securitas and Pinkertons of the US likely to be interested.
As for Cable & Wireless, the phone group stood out in the market's telecom bonanza with a 115p rise to 780.5p. Talk of a foreign bid from the likes of France Telecom, Deutsche Telekom, US giant MCI WorldCom was behind the rally. A push from Goldman Sachs and Deutsche Bank, which has a 1,000p price target, also helped.
The strength in C&W, BT and other telecom stocks triggered a rip-roaring rally in the FTSE 100. The leading index recaptured the 6,500 level for the first time since July, finishing 104.4 higher at 6551.4.
Turnover, at over 2bn shares, was the second-highest of the year, thanks to Securicor's mammoth volume and aggressive buying in Rugby, up 1.5p at 134.25p by broker Cazenove on behalf of bidder RMC, down 14p at 839p. RMC now holds over 37 per cent of Rugby. The Dow helped London with a slight increase, but for once, most of the focus was domestic.
GEC, now a telecom company, rang up a 77p rise to a record 819.5p after US rival Cisco came up with positive results. Rehashed rumours of a bid from Germany's Siemens were also heard.
Energis jumped 51p to 2200p after buying a Dutch rival. A placing of 14.7m share to finance the pounds 352m deal was completed in less than a day by broker DKB. The price of the offering, to be announced today, should be at a slight discount to the share price.
Cable group Telewest beamed 20.75p higher to 305p after solid third quarter results and inevitable talk of a bid from NTL. Media stocks were in the spotlight. ITV group Carlton rose 21.75p to 470.5p on wild rumours of a bid from a foreign rival, possibly Italian group Mediaset. Rival Granada, 39.5p better at 563.5p, was supported by growing acquisition talk.
Kingfisher, 15p down to 636.5p led the retailers lower amid fears of a slowdown in its French operations. Beleaguered Somerfield shed 10p to an all-time low of 84p after unveiling plans to sell some of its stores, while Marks & Spencer, 4.25p down to an eight-year-low of 268.25p, was caught in the malaise. Bad results from German rival BASF sent chemical giant ICI 31p lower to 618p.
The FTSE 250 soared 45 to 5896.5, helped by its hi-tech constituents. Software group MERANT buzzed 37p higher to 319.5p on whispers of good interims next week and new contract wins. Computer services midcapper Admiral jumped 232.5p to 1325p after an upbeat trading statement. The new techMark index jumped 124.4 to 2642.64. It has gained around 15 per cent in its first week. Video games retailer Electronics Boutique, 9p lower to 81p missed the hi-tech boat amid rumours of slow sales of Sega's Dreamcast system.
On-line yellow pages Scoot.com logged on to a 9p rise to a best-ever 57.75p. Brave dealers talked of a 65p-per-share bid. However, cooler heads said Scoot is close to announcing its partner for a European roll-out of its service. Mooted names include AT&T, Vivendi, Time Warner and Vodafone Airtouch - down 3.5p to 317.25p on talk of a hostile bid for Mannesmann.
Back in the real world, oil driller British Borneo confirmed talks over corporate action and dug up a 30.5p rise to 204.5p. The Small Cap also had a day to remember, surging 23.2 to 2752.8.
Advertising tiddler 10 Group jumped 0.63p to a yearly record of 2.25p on talk of an Internet deal and whispers that Shami Ahmed, the Joe Bloggs entrepreneur, has bough 5m shares. AIM-listed Majestic Wine uncorked a 45p rise to 397.5p on talk of buoyant trading and forthcoming good results, while Phonelink rang up a 9p rise to 39.5p as the successful US flotation of Ebookers focused attention on its own online travel agent. Conference group Gearhouse confirmed the rumoured bid approaches and jumped 10p to 126.5p.
OFEX-listed Turbo Genset, the maker of a unique electricity generator, was flat at 405p despite talk of a licensing deal and a move to the main market next year.
Bar and nightclub operator Perthshire Leisure lost 0.5p to 9.25p despite talk of a number of bid approaches. Military parachute-maker Wardle Storeys, 93p higher to 412.5p, landed on its feet after receiving a 441p-per-share bid approach. Housebuilder Artisan climbed 1.75p to a best-ever 12.5p after solid interims.
In the junior Ofex market, investment vehicle Arlington jumped 10p to 72.5p amid rumours that it has stakes in a number of hi-tech stocks, while information technology group Global Communications firmed 1.5p to 10.5p on whispers of a major contract.
SEAQ VOLUME: 2.078bn
SEAQ TRADES: 116,026
GILTS INDEX: 107.22 +0.08
THE IRISH oil driller Bula Resources is rumoured to be close to an important announcement. The group rose 0.5p to 1.75p in hefty volume of 47m shares. Punters believe that Bula is about to widen its strategic alliance with oil giant Tamoil to develop its Iranian and Libyan oil assets. The word is that more partners, probably from the Far East, could join soon. One of them could take a stake and provide a director to Bula's board.
KEEP AN eye on Intrinsic Value, up 2.5p to 106.5p. This small investment trust is the brainchild of the Pizza Express entrepreneur Luke Johnson and Mark Horrocks a former fund manager at Guardian Asset Management. Insiders believe the two have put their investment prowess to good effect, taking stakes in a number of small hi-tech companies which have benefited from the recent tech-based rally.
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