Market Report: Rumours of a counterbid spark rise in UNM shares
Thursday 16 December 1999
The ITV-to-Daily Express group bucked a falling FTSE 100 to rise 11.5p to 746.5p on growing talk that a rival could spoil its pounds 7.8bn merger with Carlton, 1.25p better at 611.25p. The dealing rooms were abuzz with rumours that a UK or foreign media giant was seriously considering a counterbid for United.
The obvious name in the UK frame would be Granada, 9p higher to 603p. The hotels and TV group has been seen as a a major loser from the Carlton/United deal and a strike at the latter could solve its problems.
Granada has the firepower for a counterbid and its cash pile could come handy in order to better Carlton's all-share offer. Foreign groups could also enter the fray, although cautious dealers suggested that a cross- border deal could be hindered by competition issues.
In a neighbouring sector, the cable group Telewest was mauled by the bears and dropped 28.75p to 313.25p on negative rumours concerning its merger with TV producer Flextech, down 142.5p to 1210p.
The pounds 2.5bn deal could be announced as early as today but investors appear to have already given it the thumbs down.
Sceptical dealers were hitting the "sell'' buttons quicker than a channel- hopping couch potato amid whispers that Telewest was planning a highly- discounted rights issue to finance the deal. The rest of the market had a tense session as the much-hyped technology stocks took a hefty tumble and fears of a rate hike came back to the fore. The FTSE 100 was down more than 113 points by lunchtime after a strong set of employment data put a January rate rise back on the agenda. New York proved an additional negative influence as Nasdaq opened sharply lower after a profit-warning from US giant Cisco. A late bout of buying helped London's leading index to pare some of the losses to close 68.3 down to 6633.8, but did little to dispel the feeling that the hi-tech bubble had been pricked.
The undercard was also in the doldrums, with the FTSE 250 ending 53.5 lower at 6229.6 and the Small Cap closing 30.3 down to 2966.7.
Robust selling in the hi-tech sector and a couple of big placings offset the pre-Millennial reduction in trading, leaving turnover at a respectable 1.7bn.
Hotel group Hilton, down 6.75p to 184.75p, was at the receiving end of a placing of a 3 per cent stake at a cut-price 165p. Fund managers MAM, Prudential, HSBC or Fleming were all mooted as sellers although some said the trade could have been a derivatives-linked deal. Same story for the textile group Coats Viyella, up 0.25p to 40p despite the sale of a 3 per cent stake at 34p. The Prudential or PDFM could be the sellers.
United Biscuits, 5.5p higher to 60p, was once again heavily traded as a Nabisco-led consortium outmanoeuvred a European rival by upping its stake to 29.9 per cent by buying in the market at 254p - well above its 245p offer.
Some of the recent high-fliers took a pasting as the Cisco warning caused a flurry of profit-taking. Computer group Logica plunged 142.5p to 1405.5p, while rival Misys shed 33.5p to 820p. Telecom were also on the bears' target list. Colt plummeted 200p to 2758p, Cable & Wireless lost 70p to 972p, while Marconi, the old GEC, fell 84.5p to 924p.
The hi-tech midcappers were hit even harder. Palm-top computer maker Psion logged on to a 234.5p fall to 2430p, while computer services specialist Admiral collapsed 135p lower to 1420p. The techMark 100 index for hi-tech companies shed 113.8 points to 3368.75.
As if by magic, some of the recent lo-tech dogs had their day in the sun. The most intriguing rumours concerned ICI, 64.5p higher to 671p amid wild talk of a takeover. Less imaginative minds said that the chemical giant was benefiting from a switch into cyclical sectors.
The steel group Corus hardened 11p to 148.5p on a positive industry conference and talk of upgrades, while Shell flared 25.5p higher to 499.5p after a bullish analysts' update.
Utility National Power fell just 0.25p to 402.5p on continued break-up rumours, while water group Hyder gushed 19p higher to 287p on whispers that its chief executive might soon depart. Railtrack, 114p better to 1001, continued to steam ahead as the watchdog confirmed market rumours of a lenient regulatory review. The prospect of a huge railway repair work sent Jarvis 10p higher to 240p.
Drug stock rebounded with Glaxo, 50p better to 1695p and SmithKline Beecham, 14.5p higher at 792p, excited by renewed takeover talk. However, AstraZeneca lost 71p despite denying being involved in a US suit on genetically-modified food.
In the midcap, hotels group Greenalls checked in a 25p rise to 283p on growing bid talk and the prospect of a juicy cashback in the near term, while car hire group Avis Europe motored 12.5p ahead to 205p after a bullish trading update.
Talk of a bid deal pushed freight specialist Ocean 69p better to 1290p, while on-going Wal-Mart bid talk sent supermarket group Morrison 4p higher to 124p. Clothes retailers did not look so clever after broker CSFB issued a sweeping sector downgrade citing concerns over Christmas sales. Downtrodden Arcadia shed 4.75p to 65.75p, while Marks & Spencer lost 15.5p to 270p.
CSFB's bearishness was also behind a 37p fall to 241p in transport group Arriva.
Among the minnows, drug group SkyePharma shot 3.5p higher to 49.75p on whispers of a major licensing contract. Rival Medisys fell 1.75p to 69.25p despite talk of a deal with tomorrow's results. Vague bid rumours sent media agency Hunstworth 4p better to 23.5p, just like property tiddler Regalian, down 0.25p to 30p. Education specialist Lorien put on a learned 24.5p to 118p on corporate action talk. Software company Pegasus was flat at 401.5p despite whispers of a bid, possibly from the US.
SEAQ VOLUME: 1.7bn
SEAQ TRADES: 78,514
GILTS INDEX: 107.26 +0.16
THE WALLPAPER maker Walker Greenbank could soon see its name plastered all over the Internet. Followers of the stock believe that the company is preparing to launch a website to market its products. The foray would enable
Walker to save money ondistribution and keep a tighter rein on its stocks. It could also help its
ailing share price, which have slumped from a
high of 107p in 1995 to yesterday's 44.5p.
KEEP AN eye on two AIM Internet floats. Tomorrow, e-primefinancial is expected to debut at a large premium to its 2p float price. The group, run by former derivatives guru Gene Grant, plans to set up or buy an Internet- based bank to rival the likes of the Prudential's egg. Another, Internet Indirect is rumoured to be coming to AIM next week at 5p. It plans to invest in low-risk on-line firms such as software and infrastructure providers.
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