Market Report: Takeover fever fails to stem market retreat

THE MARKET is convinced that a major international deal is planned. As equities continued their ragged retreat, attention was focused on Unilever and J Sainsbury.

The Anglo-Dutch detergent and food giant was said to be about to descend on Revlon, the US beauty business, while Sainsbury was rumoured to be in the sights of Royal Ahold, the highly successful Dutch supermarket chain. Unilever shares dipped 10p to 555p and Sainsbury rose 20p to 390p.

Besides the thought of what could be an expensive takeover, Unilever shares had to contend with caution from Lehman Brothers, the US investment house. It said: "The weakness in the Latin America region and collapse in Russia will dampen the group's organic growth in 1999, especially in the first half."

The major retailers are encountering increasing bid speculation, with Ahold, Wal-Mart of the US and others keen to expand in Europe and the UK.

Ahold was quick to pour cold water on the Sainsbury story. It was, it said, "unfounded". Ahold admits it is interested in the UK, as well as Germany, but it said: "There are only a few players in those markets and they are far too expensive."

Sainsbury, now capitalised at pounds 7bn, is much cheaper than it was in the autumn. Since then its shares have tumbled from 580p and it could look vulnerable if a determined strike materialised.

It was not, however, the only supermarket chain in the Dutch bid frame. Tesco and Asda were also caught in the speculation, with Tesco, underlining the growing retail internationalism with its move to set up shop in South Korea, up 4.5p to 170.5p and Asda 2.5p better at 153.5p. Their defensive appeal also helped the supermarket chains.

Hard pressed Booker, the cash-and-carry chain that is also seen as a Wal-Mart target, firmed 2p to 62.5p.

Footsie was at one time down 92.2 points; it closed 43.8 off at 6,016.7, its lowest for seven weeks. Nine trading days ago it hit a 6,335.7 peak.

The worsening situation in the Balkans is beginning to have an impact on sentiment, and further weakness in New York also took its toll. Turnover was again high, nudging 1.3 billion shares, as fund managers indulged in a little window dressing ahead of their first-quarter valuations. The supporting indices also weakened; the mid cap fell 40.1 points to 5,435.5 and the small cap 13.1 to 2,382.

As is often the case when shares are under pressure, the takeover rumour mill becomes hyperactive. Pilkington, the struggling glass group, firmed 2p to 67.5p as speculation returned yet again. Rexam, the packaging group, firmed 4p to 209.5p.

Bid action occurred on the undercard. Stanley Leisure, the bookie, popped up as the bidder for Capital, the casino group. The approach lifted Capital 8.5p to 75p and Stanley 10.5p to 294p.

Gremlin, the computer games group, flicked 2.5p lower to 117p as Infogrames Entertainments, a French group, launched an agreed 120p-a-share offer. Granada, expected to bid for Scottish Media, gave up 61p to 1,143p. SM was little changed at 864p.

Internet fever blew hot and cold. WH Smith surfed 67.5p to a 657.5p peak after duly confirming its arrival on the World Wide Web - an Internet service agreement with Microsoft and BT. The retailer plans free Internet access and a wide range of education and entertainment content.

But Dixons, which has surged on its Freeserve Internet offer, had a volatile session, at one time nursing a 152p fall. The shares closed off 113p at 1,239p in busy trading.

Cable & Wireless, following an investment dinner with Henderson Crosthwaite, firmed 13p to 743.5p. The telecoms group is considering floating or selling its One-2-One mobile phone operation that it owns with MediaOne, the US group merging with Comcast. It is suspected that MediaOne will unload most, if not all, of its UK interests, which include a 30 per cent stake in Telewest Communications, the cable group, off 12.75p at 250.5p.

P&O, the shipping line, continued to win friends following its results and planned disposal programme. The shares made the Footsie leader board, steaming ahead a further 56p to 916.5p.

Bass was lowered 30p to 881p on fears that arch rival Scottish & Newcastle is preparing to roll out a profits warning. Scottish fell 10p to 665p, just above its 12-month low, and Whitbread lost 17.5p to 944.5p.

RMC, the cement group, shrugged off negative comments from Credit Lyonnais, firming 4p to 753p. Dresdner Kleinwort Benson said to sell EMI, lowering the shares 9.75p to 424p.

Fashion retailer Next, following its results, fell 23.5p to 718p: Warburg Dillon Read suggested a 900p target.

BAA, the airports group, rose 33p to 675p following an upbeat meeting. With talk of positive passenger growth - the company appears to be banking on 2.5 per cent a year for the next 20 years - the shares attracted analytical support. Credit Lyonnais shifted its stance from sell to buy. SG Securities reiterated its buy advice; it said: "BAA should increasingly be seen as a cheap retailer rather than an expensive utility". Its target is 800p.

Pearson got a lift from a positive US investment presentation, gaining 35p to 1,286p

Delta, the electrical group that halved its dividend, switched on a 12p gain to 148.5p as the market pondered whether its difficulties will encourage a predator. TT, the aggressive conglomerate stalking Hall Engineering, is known to be eyeing the company. HSBC put a 220p target on the shares.

Kenwood Appliances produced its second warning in two months, indicating a second-half loss. The shares were whisked 19p lower to 76p. Sira Business Services, the contract cleaner that produced a late warning on Tuesday, fell 0.75p to 2.75p.

KS Biomedix firmed 6.5p to 322.5p after saying it had developed 14 antibodies for breast and lung cancers. French, the textile group, firmed 4p to 24.5p on the arrival, with 7.69 per cent, of Julian Richer, the hi-fi retailer.

SEAQ TRADES: 1.3 billion

SEAQ VOLUME: 99,553

GILTS INDEX: 115.65 -0.03

SOUNDTRACS, the audio equipment group, hit a 12-month high note, gaining 3p to 67.5p. It is scoring from the switch to digital technology.

Chairman Richard Owen said that turnover in the first 16 weeks of the year was up by more than 90 per cent and the order book was "very strong". EastEnders, the BBC television soap, has moved to digital production and is a Soundtracs client. Profits last year were pounds 256,000.

ARLEN, the electrical group, is believed to be near to completing the sale of some of its operations for around pounds 10m.

It is already well endowed with cash, and it is thought that once the deals are completed Arlen will flex its muscles and seek a major acquisition. There is also the possibility an outsider will barge in with a bid. Arlen is capitalised at pounds 12.7m. The shares are 19p; they were 34p last summer.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
Arts and Entertainment
Attenborough with the primates
tvWhy BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
News
Kelly Osbourne will play a flight attendant in Sharknado 2
people
News
A bartender serves beers
news
Arts and Entertainment
Daniel Craig and Rory Kinnear film Spectre in London
film
Life and Style
The finale at Dolce and Gabbana autumn/winter 2015
fashion
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

SThree: HR Benefits Manager

£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

Recruitment Genius: Office Manager / Financial Services

£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...

Jemma Gent: Year End Accountant

£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...

Jemma Gent: Management Accountant

£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...

Day In a Page

The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn
Yvette Cooper: We can't lose the election. There's too much on the line

Yvette Cooper: We can't lose the election. There's too much on the line

The shadow Home Secretary on fighting radical Islam, protecting children, and why anyone in Labour who's thinking beyond May must 'sort themselves out'
A bad week for the Greens: Leader Natalie Bennett's 'car crash' radio interview is followed by Brighton council's failure to set a budget due to infighting

It's not easy being Green

After a bad week in which its leader had a public meltdown and its only city council couldn't agree on a budget vote, what next for the alternative party? It's over to Caroline Lucas to find out
Gorillas nearly missed: BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter

Gorillas nearly missed

BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
Downton Abbey effect sees impoverished Italian nobles inspired to open their doors to paying guests for up to €650 a night

The Downton Abbey effect

Impoverished Italian nobles are opening their doors to paying guests, inspired by the TV drama
China's wild panda numbers have increased by 17% since 2003, new census reveals

China's wild panda numbers on the up

New census reveals 17% since 2003
Barbara Woodward: Britain's first female ambassador to China intends to forge strong links with the growing economic superpower

Our woman in Beijing builds a new relationship

Britain's first female ambassador to China intends to forge strong links with growing economic power
Courage is rare. True humility is even rarer. But the only British soldier to be awarded the Victoria Cross in Afghanistan has both

Courage is rare. True humility is even rarer

Beware of imitations, but the words of the soldier awarded the Victoria Cross were the real thing, says DJ Taylor
Alexander McQueen: The catwalk was a stage for the designer's astonishing and troubling vision

Alexander McQueen's astonishing vision

Ahead of a major retrospective, Alexander Fury talks to the collaborators who helped create the late designer's notorious spectacle
New BBC series savours half a century of food in Britain, from Vesta curries to nouvelle cuisine

Dinner through the decades

A new BBC series challenged Brandon Robshaw and his family to eat their way from the 1950s to the 1990s
Philippa Perry interview: The psychotherapist on McDonald's, fancy specs and meeting Grayson Perry on an evening course

Philippa Perry interview

The psychotherapist on McDonald's, fancy specs and meeting Grayson Perry on an evening course
Bill Granger recipes: Our chef recreates the exoticism of the Indonesian stir-fry

Bill Granger's Indonesian stir-fry recipes

Our chef was inspired by the south-east Asian cuisine he encountered as a teenager
Chelsea vs Tottenham: Harry Kane was at Wembley to see Spurs beat the Blues and win the Capital One Cup - now he's their great hope

Harry Kane interview

The striker was at Wembley to see Spurs beat the Blues and win the Capital One Cup - now he's their great hope
The Last Word: For the good of the game: why on earth don’t we leave Fifa?

Michael Calvin's Last Word

For the good of the game: why on earth don’t we leave Fifa?