Market Report: New fans end Glaxo Wellcome's stint in isolation ward
Tuesday 18 June 1996
A variety of influences have combined to invigorate the market standing of Britain's largest drugs group. The latest buzz is that the group, which already embraces the Retrovir Aids drug, is about to disclose positive Phase 11 results on another, more impressive Aids treatment.
With two securities houses, NatWest Securities and Societe Generale Strauss Turnbull, making encouraging noises, a US business publication waxing eloquent and a successful US investment presentation last week the Glaxo fan club is back in full voice.
Steve Plag at Barclays de Zoete Wedd described Glaxo as "fundamentally the cheapest" of the big drug groups in a research circular published last week.
In February Glaxo shares reached 969p. They then drifted lower, before perking up in recent weeks. It was not, however, cheer throughout the drug sector. British Biotech fell 123p to 2,575p and Amersham International gave up 15p to 995p.
The rest of the market managed modest headway with the FT-SE 100 index up 7.9 points to 3,761.5. Second-line shares were mostly weak. The Manchester bomb created havoc for securities houses based in the City with many traders forced to rely on their mobile telephones. Some firms, with branch offices outside the City, could still process deals but those without facilities in other centres, were severely handicapped. Fittingly, Vodafone, on James Capel support, gained 3.5p to 246.5p.
A few takeover rumours made a contribution to the proceedings. Carlton Communications rose 13p to 528p on talk of a US bid and the theory there could be an outbreak of corporate activity among department stores lifted House of Fraser 5p to 184p.
Sears, said in some quarters to be looking to expand its department store operations, was unchanged at 104p.
Siebe, the engineer, added 19p to 907p; its US investment roadshow is under way. Thorn EMI slipped 15p to 1,819p as presentations on its demerger continued.
British Gas had an uncomfortable session, falling 4.5p to 187.5p as worries surfaced about its ability to hold its dividend if the confrontation with the industry regulator becomes even more bruising.
The pounds 74.5m bid for Goldsborough Healthcare sent the shares surging 55p to 174p with hostile bidder Westminster Healthcare off 4p at 314p. Hopes of further takeover activity in the sector lifted Ashbourne 4p to 153p.
The investment group, 3i, fell 9p to 448p as Barclays cut its shareholding, raising pounds 61m. It sold 20 million shares - 3.4 per cent - at 450p, cutting its stake to 2.1 per cent. Last week National Westminster Bank sold its 17.7 per cent interest at 445p, producing pounds 464m for its already overflowing coffers.
In January Midland Bank, part of HSBC, unloaded its final 5.3 per cent shareholding and last year four banks, including the Bank of England, disposed of 21 per cent. At one time 3i was owned by the clearing banks and the Bank of England.
The Russian elections provided a modest boost to shares with links with the old Soviet Union. JKX Oil & Gas gained 2p to 184p and FNR, which has logging interests, 3p to 42p.
Land Improvement, one of Britain's largest rural landowners with a portfolio of 27,000 acres, arrived via an introduction, closing at 132p.
ViewInn, providing information systems to hotel guests, gained 20p to 575p as a story circulated it was near to clinching a deal with a big US hotel chain. There is also talk the company is about to hold its first investment presentation. French, the curtain tape maker, held at 60p. Pilot Investment Trust, one of the trusts specialising in smaller companies, has picked up a 9.15 per cent stake.
Surrey Free Inns fell 25p to 275p as Regent Inns seemed disinclined to add to its 6.6 per cent shareholding. Last week when Regent was apparently seeking out SFI sellers the shares touched 310p.
Coral Products, which has added to its packaging range, put on 4p to 87p. Its stockbroker, Collins Stewart, is looking for profits of pounds 1.6m for the year ended April. In the previous year the company produced pounds 1.2m.
On Ofex the Skynet Corporation, placed at 27.5p earlier this month, added another 15p at 170p. It is developing a system to provide information, rescue and safety services for mobile telephone users.
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