Market report: Hopes of extra value propel BAe higher

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The Independent Online
Hopes are running high that British Aerospace will accompany record-breaking profits on Thursday with a package of value-enhancing deals.

Last year the once-ailing group flew in with profits of pounds 456m. This time round there are expectations it will hit pounds 590m, lift the dividend 25 per cent-plus to 20p a share and throw in a hefty share split, perhaps four- for-one.

Developments on the Arlington property side are also likely; so is the sell-off of BAe's 21 per cent shareholding in the Orange mobile telephone group.

It was enough to propel BAe shares 62p higher to 1,775p, within hailing distance of their peak.

BAe has also been helped by the success and likely flotation of Airbus Industrie, where it has a 20 per cent interest. Airbus is on the verge of getting a $4bn Latin American order.

BAe's high flying performance is attracting overseas investors. They have lifted their shareholdings to 29.28 per cent of the capital, uncomfortably close to the 29.5 per cent limit.

If they stray above the ceiling the last to arrive on the share register will be forced to sell, which could depress the price. The Government is thought to be near to lifting the ceiling.

The rest of the stock market turned in a solid if featureless display with Footsie climbing 37.6 points to 5,619.9, just 9.8 from its peak. With New York closed, the market was left to plough its own furrow, which contributed to the rather dull display.

Still the bids continued to roll. Somerfield and Kwik Save confirmed they were in "nil premium" merger discussions. Somerfield, where Asda has displayed a passing interest, fell 3.5p to 253p and Kwik Save gained 17p to 307.5p.

B Elliott, once a giant of the machine tool industry, added 5p to 106.5p after its management produced a pounds 45m cash offer and among the tertiary oil shares Sibir, off 5.5p at 28p, mounted an agreed share exchange offer for its parent, Pentex, down 3p at 17.5p. Car dealer Alexanders motored 5p to 19.5p after saying it was in bid talks. Healthcall, a health support group, rose 6p to 87.5p on a management buyout at 90p.

Bass, thought to have lost the tender battle for Intercontinental Hotels and Resorts to the US Marriott International group, rose 16p to 950p. The company has cancelled analyst meetings pencilled in for this week. Ladbroke, out of the Intercontinental running, rose 1.5p to 284.5p.

Marston Thompson & Evershed, the Burton-on-Trent brewer, firmed 3p to 259p as managing director David Gordon departed. Thorn, the rental group, lost 9p to 146.5p after chief executive Mike Metcalf left following a profit warning.

Chemical group Courtaulds hardened 6p to 269.5p despite sell advice from stockbroker Sutherlands. British Petroleum fell 8p to 787p with SG Securities suggesting the "tide has turned" and shares should be sold.

For a time financials put on another storming display as the story of a Barclays bid for National Westminster Bank went the rounds again. NatWest ended 34p (after 43p) higher at 1,174p and Barclays, figures today, closed up 45p (after touching 59p) at 1,931p. Abbey National rose 35p to 1,219p and Lloyds TSB 27p to 900p.

ML Laboratories fell 6p to 125.5p after Glaxo Wellcome dropped an option on one of its products; Shire Pharmaceuticals rose 4p to 339.5p as stockbroker Panmure Gordon cut its current year's profits forecast but lifted its estimate for the following year.

This year's figure has been slashed pounds 1.2m to pounds 4m largely because of an acquisition. Next year's forecast is now pounds 15m, up from pounds 12.6m.

Tadpole Technology had another tantalising session, hitting 62p at one time. The shares closed at 46.5p, up 12.5p. They have soared from around 10p on stories of a major contract and the arrival of stockbroker Colin Blackbourn with 3.1 per cent. The company said it "has nothing new to report".

The shares have become the darling of small investors. Turnover has been heavy. Volume was put at more than 15 million shares yesterday.

Little Bula Resources, the Irish oil group which already has more than 1.6 billion shares in issue, created a few more - 90 million. They were placed at 1.125p a share with Capital International, a US fund manager, which now has 14.7 per cent. Bula held at 1p, putting a pounds 20m value on the company.

In heavy trading Emerald Energy went to a 9.5p peak, up 1p. A statement is expected this week about its Colombian exploration.

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