Market Report: Storehouse takes a starring role in bid-happy market

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The Independent Online
STOREHOUSE STARRED in a bid-happy market yesterday amid growing whispers that a takeover might put the struggling retailer out of its misery.

The owner of the Bhs and Mothercare chains soared nearly 10 per cent, or 4.75p, to 53.25p - the best performer in the FTSE 250 - as a pool of hot money moved in on talk that an offer is nigh.

Market watchers said that several cunning investors were pushing through large buying orders - a classic sign that something is afoot and the final volume - a hefty 11.5 million - appeared to confirm rumour-mongers' suspicions.

The rationale for a bid is bullet-proof. A series of profit warnings and management mishaps has made Storehouse one of the disaster stories of recent times and sent the shares into a tailspin. The stock has now lost more than pounds 1 from its 156p high, reached in May, and the share register is full of disgruntled investors.

The company recently announced plans to split the Bhs department stores from the Mothercare children's chain in 2001, but the market believes that a predator will do that for it.

The list of potential bidders includes Archie Norman's Knutsford, flat at 240p, and entrepreneur Philip Green. These two old favourites were yesterday joined by a long list of venture capitalists. According to the market's sages, Storehouse, with its break-up potential and big stores, could be the ideal prey for a cash-rich private equity group such Hicks Muse Tate Furst or Alchemy Partners.

The rest of the retail sector had mixed fortunes. Clothes chain New Look, 11p lower to a 12-month low of 113.5p, and Arcadia, 6.5p lower to 89p, were hammered by fears of bad trading and the prospect of exclusion from the midcap next week. Rivals Debenhams, down 9p to 189p and Oasis, 14p lower to 167.5p, were savaged by a downgrade from respected broker SG.

However, supermarket struggler Sainsbury jumped 19.75p to 329.25p on rehashed rumours of a foreign bid and a family stake sale, while Marks & Spencer fell 5p to 246.5p despite continuing talk of a bid from Tesco, 5.25p better to 174.75p. Fashion chain Next rose 30p to 540p amid whispers that its pre-Christmas trading is better than most.

The rest of the market gratefully received a pre-Christmas present from Wall Street. The FTSE 100's 48.8-point rise to 6,646 was mostly due to a spike in the Dow, where benign economic numbers allayed fears of a rate hike. Before the New York opening, the leading index had been torn between feeble attempts to rally and persistent bouts of profit-taking.

Consolidation talk in the heavyweight telecom sector was once again the main domestic prop for the FTSE 100. Marconi, the old GEC, soared 98p to a record 899.5p in chunky turnover. The boring reason for the rise was a bullish note and 900p price target from CSFB. However, more imaginative dealers said that the company could soon be targeted by a US rival.

BT was close by, rising 67p to an all-time high of 1,325.5p after broker Deutsche Bank said the shares are worth 1,700p. News of bullish trading in Japan and rumours of corporate action were also heard.

Vodafone AirTouch contributed to the telecoms bonanza with a 7p jump to 302.25p as fund managers began to turn positive on its hostile bid for Mannesmann.

The sector's favourite bid target, Cable and Wireless surged 19p to 824p.

Drug giant AstraZeneca shot 47p higher to 2,845p ahead of Monday's analyst presentation, amid rumours that Swiss rival Novartis will today announce a spin-off of its agricultural division. AZ is seen as potential buyer of the business.

The strength in these heavyweight sectors outweighed falls in some large blue chips. BP Amoco shed 4.5p to 633.5p on reports that its Arco takeover may be blocked by the US regulator. Railtrack, 64p lower to a yearly low of 901p, was derailed by the Government's decision to cancel its contract to run part of the London Underground.

Defence group British Aerospace rose 7p to 365.75p on rumours of a large deal, while rival Smiths Industries jumped 22p to 850.5p on talk that it might bid for Allied Signal and Honeywell's aerospace units.

The FTSE 250 had a good day, rising 5.2 to 6,200 amid a host of bid stories. Electronics group Fairey buzzed 40p higher to a year high of 498.5p amid whispers of a takeover, while distributor Premier Farnell surged 24p to 361p amid talk of forthcoming good results and a corporate restructuring. Radio groups GWR, 40p better to a record 632.5p and Capital Radio, 67.5p higher at 1,427.5p continued to dance to the bid whisper tune. Perennial talk of a strike from Prudential, down 1p to 1,028.5p, lifted insurer St James's Place 9p higher to 215.5p.

On the downside, Enterprise Oil fell 19p to 431p on speculation that it might mount a costly bid for rival British Borneo, up 7.5p to 194.5p, while housebuilders Barratt, 12p down to 291p, and Bovis Homes, 10p lower to 286.5p, crumbled under fears of rate hikes.

The Small Cap had an off session losing 3.8 to 2,869.4, but there were plenty of stories to excite investors' minds.

Insurer LIMIT lost 0.5p to 145.5p despite a report by a leading Internet bulletin that Luke Johnson, the man behind Lionheart and Pizza Express, had bought 750,000 share on hopes of a bid.

Bob Morton's Freecom.net, a website operator, debuted on AIM with a stunning 123 per cent rise to 291.5p. Football website 365, which floats today at 160p, could equal this feat. Internet investor evestement jumped 7.5p to 27.75p on rumours of a fund raising and a major deal, while gourmet food distributor Pordum Food gobbled up a 1.75p rise to 2.5p on whispers of an Internet deal.

Fund manager Savoy Asset Management was flat at 182.5p after interims. The company has lost the contract for the pounds 72m-a-year St David's Trust but is believed to be close to an acquisition of a private client fund manager.

Security systems tiddler IES was flat at 19p despite whispers of a reverse takeover from an Israeli hi-tech company.

SEAQ VOLUME: 2bn

SEAQ TRADES: 100,786

GILTS INDEX: 106.61 +0.02

f.guerrera@independent.co.uk

AMAZING THINGS are happening at MV Sports. An army of punters jumped on the former skateboard distributor yesterday amid rumours of a deal with a major US company. Shares in MV, chaired by former tennis star David Lloyd, jumped 113 per cent to 2p on unbelievable volume of 385m - more than double the combined turnover of Vodafone, BP and Tesco. The frenzy was spurred by talk that MV, which sells toys and Barbie dolls - has struck a deal with Disney.

THE INSURANCE broker Bradstock is back in the bid frame. The shares rose 6p to 34.5p after some knowledgeable investors piled into the stock. Bradstock admitted in June that it had received a couple of approaches but the talks never came to anything. Rumour has it that one of the spurned partners is back at the negotiating table with an offer. Bradstock's results, due out soon, should help solve the mystery.

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