Market report: Pilkington shattered by French rival's plan to expand in Britain

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The Independent Online
Another shattering stock market experience for Pilkington. For once, a share slump was not due to the group's own shortcomings - it was a threatening move by its major competitor. The shares fell 17p to 131p with a 43.3 million turnover, the biggest for any share. In the glory days before the 1987 crash Pilks traded at more than 300p.

Since then the St Helens-based group has struggled against intense competition and squeezed margins.

Saint Gobain, the French group which has made life so difficult for Pilks, prompted the fall by disclosing it intended to build a flat glass plant in Britain. Such a move was immediately seen as piling more pressure on the St Helens group.

But the French may, at least on the surface, have a rather different agenda. They seem intent on supplying Europe with most of their British glass and could, therefore, be attempting to hedge their position when the single currency arrives.

With British Petroleum and Marks & Spencer going euro when EMU starts in 1999, Saint Gobain could be taking advantage of the continuing availability of sterling.

The French group, which is Europe's largest glass-maker, hopes to be in production here by the end of 1999.

The French invasion comes as Pilks, under Paolo Scaroni, its new chief executive, is undertaking a savage cost-cutting exercise.

Mr Scaroni probably prevented Pilks shares falling even further by acquiring 300,000 at 132p, near the day's low. He heard about the fall at a meeting in Italy. "A terrific buying opportunity," he is said to have exclaimed before contacting his stockbroker.

The rest of the market had another depressingly uneventful day. Footsie meandered between a 50.2 points gain and a 34.1 loss, ending 10.9 higher at 4,908.3.

Supporting shares made progress. Domestic and overseas interest rates remained one of the market's major concerns. Among blue chips higher were National Power and PowerGen, reflecting Credit Lyonnis Laing buy advice.

There is continuing unhappiness with order-driven trading, which suffered a computer failure at the opening, when trading is now relatively thin. A late rogue trade in Pearson, the media group, illustrated one of the new order's drawbacks. Pearson shares, according to the closing quote, were up 31p at 790p; the spread was a remarkable 685p to 820p. A proposed trade of 108 shares at 805.5p created some of the confusion.

Although technically the new order has been a success, the cry for a revamp, extending beyond the current fine tuning, is growing. Private client stockbrokers are often at a loss to provide realistic prices for their clients.

Much of the action was in the quote-driven MidCap shares. Besides Pilkington, Vickers, on the audacious approach from Mayflower, rose 20.5p to 248p although Mayflower fell 15p to 189.5p.

Allied Colloids scored the best MidCap gain, up 14 per cent to 117p when the company quashed fears interim figures would be disappointing. The shares hit a 12-month low on worries the strength of sterling had damaged the group.

Tullow Oil improved a further 3p to 126p on a mixture of bid and exploration hopes and motor dealer Charles Sidney firmed 1p to 86.5p as Sanderson Bramall emerged as the bidder with a pounds 37.4m offer.

Recruitment group Robert Walters rose 18.5p to 445p after a pounds 5.34m Australian acquisition prompted stockbroker Collins Stewart to lift next year's profits estimate from pounds 9.5m to pounds 10.4m.

Insurance broker Willis Corroon held at 124p as Nikko cut its profits forecast from pounds 95.5m to pounds 89m.

Cortecs International introduced a little comfort to the drugs sector, gaining 27p to 203.5p as its oral insulin for diabetics enjoyed successful phase II tests. Kay's Food rose 0.75p to 2.75p on the Kevin Leech stake and Devro, the sausage skin group, sizzled 14p to 388.5p following ABN Amro Hoare Govett support.

Ushers of Trowbridge, the brewer which came to market at 110p in March, is the latest to produce a profits warning. The shares fell 6p to 94p with a big trade, 489,000, going through at 99.5p before the announcement.