Market Report: Takeover talk fuels enthusiasm for drugs

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The Independent Online
TAKEOVER speculators are hooked on drugs. Another uninspiring stock market display failed to deter enthusiasm for Wellcome and Zeneca.

Talk persists that some of the leading lights of the British drugs industry will be caught in the fever gripping the US pharmaceutical groups. And, it is suggested, if the Americans remain aloof, then Glaxo could go on the offensive with an attack on one of its main British rivals.

With stories persisting of a bid for a Footsie constituent, Wellcome and Zeneca are seen in certain quarters as likely takeover fodder.

Wellcome jumped 28p to 685p and Zeneca 22.5p to 833p.

The two shares have often outstripped the rest of the market - and indeed the other members of the drugs sector - with market men pointing to persistent US buying.

Glaxo failed to join in the excitement although, after stripping out its dividend payment, the shares edged ahead 6p to 572p.

The rest of the market steadied after Friday's ragged retreat and the FT-SE 100 index managed a modest, none too convincing, 14- point gain to 3,079.1 in thin trading. Dividend payments reduced progress by 7.9.

BT firmed as Cazenove was said to have upgraded its estimates. The shares rose 3.5p to 380p and the partly paid 4p to 260.5p. The final 120p-a-share instalment on the partly-paid is due next month.

Allied-Lyons failed to celebrate its new Allied Domecq identity, falling 3.5p to 568p. The name change follows the pounds 739m takeover of Pedro Domecq, the Spanish brandy and sherry group.

Supermarkets were mostly firm on talk the Government is planning to make it even more difficult to get planning permission for out-of-town superstores. Argyll put on 6p to 296p and Asda 1p to 67p.

Tesco, interim figures today, improved 2.5p to 251p. Yamaichi, the Japanese securities house, rates the shares a buy. Its analyst, Bill Myers, is looking for profits of pounds 248m against a restated pounds 231.4m. For the year he is shooting for pounds 562 (pounds 520.5m).

Kwik Save dipped 3p to 604p, a surprise reaction to the ending of a standstill agreement with Dairy Farm International, the Hong Kong group. Although Dairy Farm said it had 'no present intention' of bidding for Kwik Save the ending of the standstill makes it much easier for it to do so.

Under the agreement Dairy Farm faced difficulties increasing, or even selling, its stake, which has crept from 25 per cent seven years ago to 29.4 per cent.

Regional electricities performed powerfully, thanks to bullish comments from Panmure Gordon.

Its analyst, Angelos Anastasiou, looks for dividend growth of up to 10 per cent a year until the end of the decade and suggests the flotation of the National Grid could be worth at least 150p, possibly 200p, to electricity shares. South Wales Electricity continued its buying in programme, picking up 250,000 at 813p.

Eurotunnel greeted news of next month's start of passenger services (for shareholders and 'opinion-formers') with a 5p gain to 279p. British Airways ended 2.5p lower at 380p on worries about transatlantic price-cutting.

Barratt Developments had an eventful session on reports Sir Laurie Barratt, who came out of retirement to rescue the housebuilder, was about to give up executive duties.

Year's figures are due tomorrow; NatWest Securities is looking for pounds 31m, up from pounds 20.4m. The shares fell 12p, settling 6p down at 177p.

RMC, interim figures on Thursday, slipped 10p to 927p. London Wall Equities expects pounds 90m against pounds 61.6m.

RIT Capital, the investment trust, fell 6p to 177.5p on reports that its fund manager, David Weill, backed by RIT, is being forced to liquidate his portfolio because of falling bonds. It is said RIT's stake, once worth pounds 28.8m, is valued at less than pounds 15m.

The expected Azerbaijan oil deal lifted Ramco Oil Services a further 16.5p to 272.5p and filtered through to British Petroleum, 3.5p higher at 417p.

MAI, the money broking and television group, fell 23p to 255.5p on its figures.

Goldborough, the nursing homes group, rose 6p to 157p. It intends to take up its option at 74.8p on 3.6 million shares in Healthcare. Some will be sold in Healthcare's flotation.

The FT-SE 100 index staged a modest 14-point rally to 3,079.1 but the supporting FT-SE 250 index fell 8.1 to 3,608. Turnover was an unimpressive 469.1 million shares with 24,512 bargains recorded. Gilts were firm.

Business Technology, run by Alan Baldwin (ex-Securiguard) and rechristened Berkeley Business, returns tomorrow after putting through two deals. There are hopes the shares will nudge 14p against an 8.5p suspension price. Berkeley, an office services company, has moved into parcel delivering and is keen on a security buy.

Another recruit to the 4.2 market. Dealings are due to resume today in the shares of African Gold. They were suspended at 11p in December, 1992, when the company received a takeover approach. But an offer failed to materialise. AfGold, run by the Irish entrepreneur John Teeling, has two gold mines in Zimbabwe and is debt-free.

(Graph omitted)

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