Market Report: Lasmo admission gingers up all the old chestnuts

Click to follow
OLD takeover candidates were taken out of storage, dusted down and paraded around the stock market as speculators, flushed with their success over the Lasmo oil group, searched for the next victim.

United Biscuits, Fisons and Racal Electronics stole pride of place.

American Brands, with dollars 1bn expected from the sale of its US cigarette interests to BAT Industries, was linked with United; Fisons, the struggling drugs group, was again caught by rumours of a Canadian offer; and Racal was back in the shadow of a bid from Cray Electronics.

It was enough to push UB 11p higher to 359p; Fisons 6p to 155p, and Racal 7p to 236p.

The latest German interest-rate reduction and the success of the pounds 2bn government stock auction, 1.7 times subscribed, helped sentiment. But it was the speculation created by the Lasmo affair that fuelled much of the excitement.

Lasmo held centre stage, following the reluctant admission from Enterprise Oil that it was considering a strike. The shares started trading at 153p, sank to 143p, recovered to 165p and ended at 162.5p. The nil-paid rights topped 60p, closing at 57.5p, up 8.5p.

Seaq put share volume at a remarkable 44 million, with the rights attracting a 7.4 million turnover. Option trading was again huge, with Lasmo by far the most actively traded contract. Lasmo has been in heavy demand since its pounds 219m rescue rights issue. It is widely suspected that a shareholding has been built through the rights shares.

Many are convinced another hat will be thrown into the ring. Elf, the French group, Atlantic Richfield, the big US oil business that once owned the Observer newspaper, British Gas and PowerGen were pulled into the equation.

Enterprise, thought to be prepared to open the bidding today, fell 6p to 445p.

The spotlight was also directed at some of the smaller oil groups with Monument Oil & Gas, up 0.75p to 69.5p and Premier Consolidated Oilfields, 2p at 31p, said to be vulnerable to predators.

British Petroleum was also strong, but nobody was suggesting that a bidder hovered. The demand, lifting the shares 9p to 399p, was due to US investment house Salomon Brothers. It is impressed by the group's cost-cutting and restructuring and said the shares were a buy.

But P&O, the property and shipping group, had that sinking feeling, down 12p at 715p. Rumours of a profit downgrading went the rounds and there were also worries about government incentives for Eurotunnel.

British Airways rose 8p to 420p, reflecting the decision to start two new London-Paris flights following the European Union decision that France must open up routes to and from Orly airport.

The market had little difficulty absorbing two cash calls, seeking pounds 513m. Conglomerate Williams Holdings fell 9p to 379p and contract caterer Compass 6p to 310p. Airtours, which has signalled a rights issue to pay for the SAS holidays business and a cruise liner, fell a further 18p to 448p. The deals are likely to cost pounds 90m.

The revival in corporate activity provided a fillip for merchant banks, weak lately on worries of big derivative losses. Hambros rose 13p to 364p; Kleinwort Benson 38p to 483p and SG Warburg 22p to 732p.

Schroders put on 30p to 1,285p. There is growing speculation it plans a big US strike. One suggestion is it wants to buy full control of Wertheim Schroder, the New York-based banker and broker. It already owns 42.5 per cent.

Vodafone was again dismissive of Hutchison's Orange challenge. The shares greeted the launch party with its promise of aggressive pricing with a 7p gain to 534p. BT gained 2p to 384.5p with the partly-paid up 2p at 266.5p.

Grand Metropolitan gained another 10p to 475p on the Panmure Gordon upgrading and BAT Industries, up 4.5p to 461p, captured a host of positive notes following its US acquisition.

Waters made headway with NatWest Securities saying buy, and electricities added coppers as they continued to steady after their recent mauling.

A gloomy trading statement and passing of the final dividend left Colorvision, the retailer, down 15p at 48p.

The group is poised to make pounds 200,000 in the year ended 31 March, down from pounds 1.8m. Guy Bell at Beeson Gregory expects pounds 800,000 this year.

Rathbone Brothers, a financial group, dropped 29p to 279p following the sudden boardroom departure of director JG Ruffer over 'a fundamental difference' on future policy. He remains an employee of the company.

Baldwin, a leisure and printing group, gained 11p to 119p as take- over rumours resurfaced. Shuffling among the main shareholders has lifted the stake of one, Augsburg Investments, to 28.3 per cent.

In a thin market WSP, consulting engineers, jumped 14p to 63p. The group is expected to advance strongly with Williams de Broe forecasting profits of pounds 1m this year against pounds 262,000.

Another narrowly traded share, Eidos, a video-editing system group, jumped 41p to 223p. It has developed an in-flight video-on- demand service.

The FT-SE 100 index climbed 24.7 points to 3,150 and the FT-SE 250 index 16.2 to 3,793.9. Turnover was 618.8 million shares with 24,983 bargains. The account ends on 13 May with settlement on 23 May. Government stocks were firm.

Bakyrchik Gold, floated at 120p in August, edged forward 7p to 322p. It is developing a mine in Kazakhstan which ran out of cash after the collapse of the Soviet Union. The venture is 60 per cent owned by the Kazakhstan government and 40 per cent by Bakyrchik. Analyst Adrian Finch of Willaims de Broe says the shares should trade around 850p at the current gold price.

Expect details today of the ambitious takeover of the Co-operative Wholesale Society's food and drink division by little Hobson, a toiletries business thathas become the stock market vehicle of Andrew Regan, 28-year-old son of Roger Regan, called in to restore Spring Ram. The deal could value the Co-op business at more than pounds 100m. Hobson was suspended at 27p in February.

Comments