Market report: Racal hits peak on high hopes of Telecom float

RACAL TELECOM, due to become the third spin-off from Racal Electronics, should enjoy a stock market valuation of pounds 675m.

Stockbroker Henderson Crosthwaite believes Racal's shares are therefore worth around 450p. They rose 15.6p to 371.5p, a peak.

Sir Ernest Harrison, Racal's chairman, has already successfully hived off Vodafone and Chubb Security (now part of Williams) as stand-alone companies. His intention is to float 25 per cent of RT although if the Vodafone formula is followed the group will eventually severe its link with its parent.

Henderson's telecom analyst Chris Godsmark, formerly business correspondent of The Independent, says Sir Ernest has built one of Britain's largest telephone services from a 1988 standing start. He believes Telecom Italia and Deutsche Telecom thought about buying RT when Racal started to review its options last year.

At least one bid did materialise. Duncan Lewis, former chief of Granada's media division, got together a pounds 450m offer but Sir Ernest said no and decided to follow the flotation path.

"Racal's decision to pursue a flotation as the best way to maximise shareholder value has proved fortuitous," says Mr Godsmark. "In the six months since that decision share prices in the telecom sector have risen strongly on a combination of bid speculation and more optimistic predictions of the growth of data traffic."

Energis, RT's closest competitor, has climbed from 251p in the autumn to 779p, he points out.

Sir Ernest, who is 72, has been chairman of Racal, which has 26.6 per cent of National Lottery organiser Camelot, for 32 years.

As RT prepares for market, the struggling Ionica wireless telephone group crashed 49p to 36p. It is seeking more cash and is looking for a strategic investor which could result in "significant dilution to existing shareholders". The shares were floated last summer at 390p, producing a pounds 460m war-chest. They touched 421p.

Footsie turned on a mixed display, ending 20 points up at 5,955.6. Supporting indices were once again in rampant form. The mid cap surged 43.3 to a 5,897.8 peak; the small cap added 6.1 to a 2,788.4 high.

Among the mid caps Electrocomponents enjoyed a 34p gain to 584p with the help of vague takeover speculation.

Bus and train shares, such as Stagecoach and FirstGroup, were again given the green light as the market continued to drew encouragement from the coming Government White Paper on the transport industry. Stagecoach advanced 72.5p to 1,367.5p and FirstGroup 17p to 443.5p. Railtrack gained 23.5p to 1,229.5p, a high.

Barclays, after meeting analysts, put on 26p to 1,696p; Halifax rose 33.5p to 842.5p. Rolls-Royce was another to score from investment presentations. As its US roadshow drew to a close the shares climbed 6p to 300p.

EMI, figures next week, fell 19.5p to 522.5p as Seagram, in effect, clinched the takeover of PolyGram, ending any lingering hopes of a another strike at EMI.

Rentokil Initial, up 18.5p at 431.5p, was one of the Footsie leaders. Many await a strike for Compass, the contract caterer, up 42p to 1,269p.

Safeway, on continuing speculation about a break-up bid, rose 12.75p to 393p. British Land, in association with Asda, remains the most likely predator.

Any deal would involve Asda cherry picking around 60 Safeway stores. Such a manoeuvre could overcome the Government's objection to an Asda/Safeway merger. A suspicion that Somerfield could also enjoy pickings from Safeway's stores portfolio gave the shares a 12.5p lift to 374p

Mirror, the newspaper group, rose a further 6.5p to 218p as the German Axel Springer Verlag group admitted it may bid. The shares have climbed 21.5p this week.

Misys, the computer group elevated to Footsie this week, fell a further 37p to 3,380p. Newcomer ComputaCenter was another catching its breath, off 22.5p to 743.5p.

The Falkland Islands oil tiddlers had another gushing session although profit takers took their inevitable toll. Desire touched 475p; it closed at 415p, up just 1p. Greenwich Resources, after hitting 41p, ended 1.5p off at 36.5p. Westmount, at one time around 275p, ended at 245p, up 10p.

Imperial Chemical Industries managed to resist an ABN Amro downgrading. The investment house described the shares as "overvalued". It expects profits of pounds 531m this year, up from pounds 518m.

Ladbroke was another to shrug off uncomfortable developments - the likelihood that it will have to sell more than 100 betting shops. The shares were 2p off at 345p.

Start your day with The Independent, sign up for daily news emails
Kim Wilde began gardening in the 1990s when she moved to the countryside
peopleThe singer is leading an appeal for the charity Thrive, which uses the therapy of horticulture
Alexis Sanchez celebrates scoring a second for Arsenal against Reading
Life and Style
An easy-peel potato; Dave Hax has come up with an ingenious method in food preparation
voicesDave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
Japan's population is projected to fall dramatically in the next 50 years (Wikimedia)
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

Ashdown Group: Training Programme Manager - City, London

£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

Day In a Page

NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

Who's monitoring the outsourced NHS services?

A report finds that private firms are not being properly assessed for their quality of care
Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

How do Greeks feel about Syriza?

Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
From Iraq to Libya and Syria: The wars that come back to haunt us

The wars that come back to haunt us

David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

Too busy to surf? Head to The Pool

A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders
Heston Blumenthal to cook up a spice odyssey for British astronaut manning the International Space Station

UK's Major Tum to blast off on a spice odyssey

Nothing but the best for British astronaut as chef Heston Blumenthal cooks up his rations
John Harrison's 'longitude' clock sets new record - 300 years on

‘Longitude’ clock sets new record - 300 years on

Greenwich horologists celebrate as it keeps to within a second of real time over a 100-day test
Fears in the US of being outgunned in the vital propaganda wars by Russia, China - and even Isis - have prompted a rethink on overseas broadcasters

Let the propaganda wars begin - again

'Accurate, objective, comprehensive': that was Voice of America's creed, but now its masters want it to promote US policy, reports Rupert Cornwell
Why Japan's incredible long-distance runners will never win the London Marathon

Japan's incredible long-distance runners

Every year, Japanese long-distance runners post some of the world's fastest times – yet, come next weekend, not a single elite competitor from the country will be at the London Marathon
Why does Tom Drury remain the greatest writer you've never heard of?

Tom Drury: The quiet American

His debut was considered one of the finest novels of the past 50 years, and he is every bit the equal of his contemporaries, Jonathan Franzen, Dave Eggers and David Foster Wallace
You should judge a person by how they peel a potato

You should judge a person by how they peel a potato

Dave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
Beige is back: The drab car colours of the 1970s are proving popular again

Beige to the future

Flares and flounce are back on catwalks but a revival in ’70s car paintjobs was a stack-heeled step too far – until now
Bill Granger recipes: Our chef's dishes highlight the delicate essence of fresh cheeses

Bill Granger cooks with fresh cheeses

More delicate on the palate, milder, fresh cheeses can also be kinder to the waistline
Aston Villa vs Liverpool: 'This FA Cup run has been wonderful,' says veteran Shay Given

Shay Given: 'This FA Cup run has been wonderful'

The Villa keeper has been overlooked for a long time and has unhappy memories of the national stadium – but he is savouring his chance to play at Wembley
Timeless drama of Championship race in league of its own - Michael Calvin

Michael Calvin's Last Word

Timeless drama of Championship race in league of its own