Market Report: It's good to talk for Kingston as bid rumour rages

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The Independent Online
TRADERS WERE ringing up buying orders for Kingston Communications amid suggestions that its existence as a quoted company might be shortlived. The phone company owned by Hull City Council shrugged off a heavy tumble in the market and jumped 26p to 319p in heavy trading.

In two days of conditional dealings Kingston has soared more than 41 per cent and some insiders believe that something is afoot. The whisper is that one of Kingston's main rivals is buying heavily in the market and could use its stake as a launchpad for a bid.

The stake-building has been disguised by the institutional scramble for the stock, but it could be revealed in the next few weeks when full dealings begin.

Energis, down 86p to 1587p, was mooted as a potential acquirer. The telecoms group could benefit from Kingston's highly-valued Torch subsidiary, a specialist supplier of business phone lines. Energis itself is rumoured to be in the sights of Deutsche Telekom and some imaginative souls muttered that the German giant could try an audacious Energis/ Kingston double buy. Other foreign players, such as France Telecom, could do with the UK exposure Kingston offers.

In the neighbouring cable sector, Telewest Communications shed 12.25p to 286.75p on rumours that the company could raise up to pounds 1bn through a loan or bond issue. The obvious use of the money would be a bid for Cable & Wireless Communications, up 38.5p to 657.5p. After months of talks, the two groups have still not consummated their marriage and CWC was said to be flirting with NTL, the other cable player. A mega-bid by Telewest could trigger a change of mind.

This high-tech excitement failed to spill over to the FTSE 100. The blue- chip index was perturbed by negative events abroad and plunged 99.9 to 6,445.6. Fears of a financial crisis in Latin America unsettled Wall Street and London followed in its wake. A mixed set of domestic inflation figures did little to alter the index's depressed mood.

The gloomy atmosphere put an end to the FTSE 250's spectacular run. The Mid Cap index shed 41.6 to 6,048.1, its first fall after six consecutive record closing highs. The Small Cap was the best of the lot, closing unchanged at 2,735.1.

Bid rumours were behind the handful of rising blue chips. EMI rose 16p to 569.5p as talk of a bid, possibly from Rupert Murdoch's News Corp, returned. Its recent foray into the Internet music market helped.

Web darling Dixons rose another 45p to 1325p as investors bought the retailer as a way into its Freeserve business.

Rentokil Initial, the cleaning group, mopped up a 2.5p rise to 231.25p amid vague whispers that its 35-per-cent Danish shareholder is preparing to sell. Any stake disposal could trigger a bid.

The aerospace engineer Smiths Industries flew 6.5p higher to 861.5p on talk of some interest from US rivals.

Pharmaceuticals were boosted by their safe-haven qualities and perennial talk of a merger between Glaxo Wellcome, up 9p to 1759p, and SmithKline Beecham, up 0.5p to 861p. The decision to cut drug prices, announced after the close, could hit the stocks.

Gas group BOC fizzled 39p lower to 1,348p as the expected 1,460p-per- share offer from Air Liquide and Air Products failed to excite. Chubb locks owner Williams was robbed of 60p to 356p after ending merger talks with US rival Tyco.

A Merrill Lynch banking review pushed Halifax 7.5p better to 728.5p. However, the US broker does not like Kingfisher's near-term prospects and the retailer fell 13.5p to 729p. Granada was close by, shedding 26p to 617p after buying 9.9 per cent in Liverpool Football Club. Shares in the unquoted club, traded in the Liverpool grey market, jumped some pounds 15 to pounds 50.

The deal excited Ofex-listed Arsenal, up pounds 100 to pounds 270 on hopes of a link- up with Carlton, down 5.5p to 556.5p. After the close Carlton and Granada announced the shock departure of Ondigital chief Stephen Grabiner. Manchester United, up 6.5p to 230p, and Leeds Sporting, 1.25p better at 18.25p, were also kicked in the football bid frame.

Photo-Me was the star midcapper, shooting 105p higher to a best ever 985p. Analysts visited the photo-booths group's French operations and liked what they saw. Bid rumours are still around.

Hopes of imminent disposals sent First Leisure 10p higher to 221p. The venture capitalist 3i, down 20.5p to 803.5p, is believed to be close to buying its bowling alleys and caravan park, while Luminar, down 5p to 890p, should land the nightclubs. Engineer TT jumped 6p to 139.5p on persistent bid talk. Cash-rich Wassall, down 2.5p to 261p, or a US rival could strike. Continued bid talk sent Pilkington 3.5p higher to 105p. A downbeat trading statement increased the chances of a bid for Safeway and the food retailer rose 3.5p to 240.75p.

Restructuring conglomerate Tomkins fell 20.75p to 270p after a Merrill Lynch downgrade and amid rumours of a bid by a private equity buyer for its bread division. House of Fraser rose 4p to 87.5p on the expected property joint venture with British Land.

Property minnow Cussins unveiled bid talks and jumped 13p to 105.5p while rival RCO Holdings rose 16p to 265p on revived talk of a strike from a European rival. Internet group Baltimore soared 80p to 957.5p on continued hopes of an Intel deal. Facilities manager Semple Cochrane climbed 30p to 375p amid talk of buoyant trading and imminent contract wins.

Seaq volume: 1.2bn

Seaq Trades: 82,304

Gilts: 106.76 +0.40

THE WALLPAPER group Walker Greenbank was brushed by a series of corporate action rumours. The shares climbed 5p to 63p as dealers talked of a possible bid at around 75p-80p per share. Walker's management is believed to be considering an offer but it could be pipped to the post by a mystery Northern-based retailer looking for a stockmarket quote.

Talk of a pounds 2.5m deal to develop one of Walker's sites in Leicestershire added to the excitement.

THE FURNITURE retailer Calderburn is rumoured to be close to agreeing a takeover. After weeks of wrangling, the maker of office desks and airport furniture is believed to have settled on a bid north of 100p from one of its European rivals. The offer should value Calderburn, which last year had profits of pounds 4.6m on sales of pounds 44m, at around pounds 33m. Rumours of the imminent development sent the shares 4.5p higher to 84.5p, within a whisker of their 87.5p 12-month peak.

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