Market Report: Lasmo awash with talk of takeover or shake-up

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The Independent Online
INTRIGUING stories are circulating about Lasmo, the once high-flying oil group still suffering from its disastrous takeover of Ultramar at the end of 1991.

There has been keen trading in the shares in the current account and the price has edged forward 9p to 142p.

Takeover speculation is never far from the surface but the latest stories have assumed a sophistication that is making many wonder whether corporate developments are afoot.

A straightforward takeover strike is still regarded as a distinct possibility but perhaps more tantalising are suggestions of enforced management changes. There is talk of a consortium stake-building to put pressure on the group to make boardroom changes. Another story is that disillusioned institutional shareholders are gathering to demand a say in the direction of the group.

One name, John Walmsley, features in both suggestions. He surprised the stock market two weeks ago when he announced that he was quitting as managing and finance director of Enterprise Oil at the end of this year.

Mr Walmsley, 46, has been a leading force at Enterprise for a decade. He was regarded as the most likely candidate to replace Graham Hearne should he step down as chairman and chief executive. Mr Walmsley said he had not lined up a new job but wanted a fresh challenge.

Lasmo would certainly provide the challenge he apparently seeks. Then valued at pounds 1bn, it successfully bid pounds 1bn for Ultramar. But such has been the disenchantment with the enlarged group that Lasmo's market capitalisation is still about pounds 1bn. Its chief executive, Chris Greentree, departed early this year clutching a record pounds 2.2m pay-off.

In 1990, Lasmo shares were above 500p. They have been in sad decline ever since as trading has deteriorated and the dividend has been cut. The payment is unlikely to be restored to its former 8.5p level for some time.

With the crude oil price remaining relatively weak, profits are expected to stay under presssure and the clamour to reshape the group to intensify. A modest increase in crude prices, due to political uncertainty in Nigeria, is likely to be too small to have much impact on Lasmo.

It could have helped its shares a little yesterday, up 3p at 142p. Other oils drew strength from the Nigerian situation; British Petroleum rose 7p to 305.5p and Enterprise 8p to 436p.

The rest of the market regained a little of its exuberance with the

FT-SE 100 index clinging to a 7.3- point gain at 3,049.3 in quiet, uneventful trading. A tingle of interest rate hopes, ahead of tomorrow's Bundesbank meeting, caused a little excitement but with market-makers again on the defensive trading remained low key.

Standard Chartered, the banking group, was one to generate excitement. The shares were at one time down 30p as various rumours went the rounds. Just before the close Standard disclosed that a pounds 98m legal claim had been lodged in Singapore by a Malaysian businessman, Data Yap Yong Seong. Standard, which has claims against the Malaysian, said it would 'vigorously and confidently' defend the action. The shares ended 18p off at 925p.

But Lloyds Bank improved 6p to 539p with Panmure Gordon suggesting the shares had been left behind in the recent sector re-rating.

Composite insurers were a drag on sentiment, with James Capel producing a negative review of the industry. The stockbroker fretted about increased US pollution claims. Commercial Union slipped 7p to 614p and Royal Insurance 8p to 319p.

British Aerospace steadied at 438p as Taiwanese sources expressed confidence that the important jet joint venture would go ahead. BAA, the airports group, appeared to receive a sudden expression of support from Smith New Court, gaining 6p to 788p.

Euro Disney forgot, for a moment at least, its debt dinosaur and gained 25p to 645p as it confirmed that the French theme park would continue to function during the winter.

Imperial Chemical Industries ended 1p lower at 690p despite a profit upgrade by Barclays de Zoete Wedd. The securities house lifted from pounds 197m to pounds 215m and from pounds 470m to pounds 500m.

Gestetner, the office equipment group, rose 7p to 146p on the appointment of David Thompson as chairman.

He has been recruited from Rank Xerox, putting more pressure on the Rank Organisation, already feeling the impact of the package holiday price war. Rank shares fell 9p to 761p.

Vodafone was back in demand, reflecting continuing US activity. Bank of New York ADRs now account for 25.2 per cent of the cellular telephone group's capital.

Societe Generale Strauss Turnbull helped sentiment with positive comments.

On the property pitch what appeared to be clumsy buying pushed the shares of Warnford Investments 22p higher to 215p.

The remarkable march of Eidos, a little video-editing group, continued. In an exceedingly narrow market the shares rose 18p to 108p, a two- day advance of 38p. When a marketing deal was announced last month they were around 30p.

Excitement at Sims Foods, the pre- packed meat group. The shares rose 15p to 109p with an agency cross at 95p drawing attention to possible stake building. One suggestion was that a former executive was buying and may attempt to regain his former power base. Sims has had a difficult time. Last year the shares touched 339p. But profits have given way to losses and the dividend cut.

A slow but sure profits revival at Hornby, the toys group, is predicted by the stockbroker Greig Middleton. Proifts reached pounds 3.8m in 1990 but the success of electronic games took its toll and last year the group achieved pounds 1.5m. A modest advance to pounds 1.6m is expected this year with pounds 1.8m next. The shares, the analyst Ian Berry believes, are a buy. They closed at 143p. In 1989 they touched 262p.

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