MARKET REPORT Mega-takeover tales do the rounds

The FT-SE 100 index rose 10.7 points to 3,200.9 and the FT-SE 250 index 14.1 to 3,482.4. Turnover was 754 million shares, with 34,134 bargains recorded.
Click to follow
A strong share market inevitably generates takeover excitement and another advance reinforced the suspicion a mega-bid is being lined up to follow the near-£9bn Glaxo spectacular for Wellcome.

As the FT-SE 100 index closed 10 points higher at 3,210.9, an array of takeover stories, often involving Hanson, were going the rounds.

But Cable and Wireless did not require any help from Hanson. The US giant, AT&T, was the main power behind a 10p gain to 413p, a 25p advance this week.

It could be argued Cable has merely kept in line with a rising market. Even so the possibility of the US link cannot be dismissed. The feeling is AT&T is near to clinching a deal to take a significant stake, perhaps a half share, in Cable's Mercury telecommunications off-shoot.

Some are even prepared to contemplate an offer for Cable. The group is a world-wide player with tremendous potential. Through its 57.6 per cent stake in Hongkong Telecom it has the busiest line with mainland China.

The Far East links also give rise to the story a break-up bid could be in the wings, with the Hong Kong side being sold to Asian interests.

The continuing bid speculation helped the stock market ignore the Tory wipe-out in Scotland. British Aerospace, up another 8p at 499p, continued to reflect the revival of the GEC takeover story. And BAe's rights issue units, an ideal avenue for a stake build-up, rose 5p to 149p.

GEC added 2p to 306.5p and VSEL, awaiting the Monopolies and Mergers Commission decision on the GEC/BAe bids, rose 18p to 1,610p. According to market whispers, GEC is not going to wait for the MMC to report but strike next week for BAe.

British Gas, up 2.5p to 298.5p, is now firmly on the back burner but electricities are slowly returning to favour, with Northern Electric up 5p to 773p and Yorkshire Electricity, the subject of huge speculative losses, 10p to 650p.

Since the present bull run started a month ago the 100 index has surged more than 200 points. The currency turmoil has been largely ignored, with buyers prepared to draw encouragement from economic data on both sides of the Atlantic.

New York's strength has also helped, although yesterday's early Dow Jones Average retreat, stemming from comments the economy could be outstripping capacity, was largely ignored.

Kleinwort Benson, for long a takeover candidate, dropped 18p to 643p as a director, Sir Nicholas Redmayne, off-loaded 100,000 shares at 654p.

Willis Corroon, the insurance broker, stuck at 142p, just above its year's low. There are whispers a predator may take advantage of the weak share price. Another rumour is its US operation may be sold to the Alexander & Alexander giant.

Profits, following a restructuring, will be disappointing. About £18m is expected for last year against £76m in 1993.

Hillsdown Holdings, helped by Smith New Court buy advice and talk of a higher offer for its Canadian associate, was firm at 189p. Tesco, ahead of results, jumped 6.5p to 276p. NatWest Securities expect £600m against £528.4m. Cazenove weighed in, suggesting a switch out of J Sainsbury, off 2p at 434p.

Racal Electronics, up 5p to 247p, benefited from a buy circular, thought to be from Crdit Lyonnais Laing. Henderson Crosthwaite is due to host a dinner for the group on Monday.

RJB Mining rose 9p to 380p on forecasts of a big increase in the demand for coal. Waverley Mining joined in, up 5p to 116p.

Figures indicating a slowdown in the decline in smoking in the US lifted Rothmans 13p to 501p and BAT Industries 4p to 453p. Properties were hit by asset downgradings by NatWest, which expects the sector to underperform. Land Securities lost 9p to 573p and British Land 6p to 368p.

Fitzwilton, the Irish group where Dunnes Stores has built a 9.1 per cent stake, gave up another 2p to 46p. It is collecting Ir£25.1m for its 75 per cent interest in Novum, a maker of electrical appliances.

WMGO, the advertising agency, held at 8.5p as it became apparent there had been a boardroom upset. Chris Woollams was reported to have quit as chief executive, although the company has not issued a statement. There is talk of a management buyout of the Woollams Moira Gaskin O'Malley off- shoot, reversed into the group, then called MMI, last year.The shares have come down from 31.5p.

Hartons, the plastic group, edged forward to 6.75p as Suter, the conglomerate, nudged its interest to 21.54 per cent, buying 1.3 million shares.

Dealings in Stanford Rook, a drugs group, started on the 4.2 market yesterday at 50p. The company It has raised £1.75m, giving it a market value o £8.75m. Its main product is M Vaccae, which is being developed to treat tuberculosis, which kills more than 3 million people a year. SR intends to use its new cash to seek licences in the UK and US.