Market Report: Possible spin-offs add to the excitement of Merger Monda y

Click to follow
The Independent Online
It was more action packed than even the more rumbustious takeover days of the 1980's. Suddenly four major deals, worth a staggering pounds 67bn, hit the stock market in quick succession, inevitably provoking speculation about future corporate activity.

Shares of the principal players romped ahead. BAT Industries, hoping to merge its financial operations with Zurich of Switzerland, rose 58p to 609p and Reed International, on the proposed merger of Reed Elsiver and Wolters Kluwer, reacted with a 97p jump to 629p.

With LVMH bowing to the Grand Metropolitan and Guinness merger the two drinks groups were in celebratory mood with GrandMet up 21p at 604p and Guinness 28.5p to 605.5p.

Redland, the hard pressed building materials group, added 79p to 336.5p as Lafarge, the French group, bid pounds 1.7bn, or 320p a share.

Heavy trading in Redland, which quickly rejected the offer, indicated the French picked up stock.

The possible spin-offs from the deals added to the intense excitement of merger Monday.

Shorn of its financial operations BAT could seek to develop its tobacco side. Gallaher, floated in May, is the market's favoured target and the shares rose 34p to a 329p peak. Imperial Tobacco was also caught in the smoke signals, swirling 20.5p higher to 391.5p

The BATs adventure also drew attention to insurance shares. The market is appreciative of the existing strains and stresses which could prompt more corporation action and was quick to hoist such shares as Prudential Corporation, up 29.5p to 698p, and GRE, 17p to 342p.

On the drinks front Allied Domecq was a beneficiary of the sudden LVMH compliance. The suspicion the GrandMet/Guinness alliance will force it into a defensive merger - Seagram of Canada or Pernod Ricard of France? - boosted the shares 12.5p to 509p, highest since last year.

The market was so besotted by the sudden outbreak of merger mania that even a deal which was put on hold drew applause. Kingfisher's decision to defer plans to take control of BUT, the French chain, by buying a further 30 per cent prompted a 25p gain to 857.5p. The Woolworth's group already has 26 per cent of the electrical retailer.

The sheer deluge of corporate action sent Footsie racing 72.8 points higher to 5,300.1 and the two main supporting indices moved to new peaks.

Friday's two modest bids prompted further activity as the Far Eastern Jardine Motors scooped up 8.78 per cent of its intended victim, Appleyards, at 78p a share; Peek, the traffic control group, signalled a 36.5p gain to 78.5p following the after-hours pounds 98m (80p) offer from the US Thermo Power, which moved into the market to lift its stake to 9.64 per cent.

British Aerospace, which said overseas investors had reached 28.7 per cent of its capital, and Rolls-Royce were higher on talk the Government is on the verge of lifting the ceiling on foreign shareholdings from 29.5 per cent to 49.5 per cent. Rolls, up 7.5p to 236p, greets Scandinavian investors on Thursday under the auspices of Henderson Crosthwaite. BAe was 27p harder at 1,726.5p.

Imperial Chemical Industries was a significant absentee from the sea of blue. It shaded 4p to 982p as worries persisted about its third-quarter results. BSkyB, the satellite broadcaster, was another subdued blue chip, softening 2p to 445.5p as Merrill Lynch downgraded its stance to neutral.

Halifax had the dubious distinction of being the worst performing blue chip, falling 11.5p to 730.5p in brisk trading.

Tradepoint, the stock market in miniature, continued to benefit from next week's switch to order-driven trading, gaining 12p to 148.5p. Flare, an engineer, firmed to 118p despite the departure of chairman Ian Gowrie- Smith; his family's 8 per cent interest was placed with institutions at 116p.

Dawn Til Dusk, a chain of convenience stores, fell 15p to 242.5p after admitting getting a decimal point in the wrong place. On Friday the company said like-for-like sales were up 31.5 per cent. Yesterday the advance was corrected to 3.15 per cent.

Comments