Market Report: Talk of French foray by BAT brings rights fears

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The Independent Online
SHARES of BAT Industries plunged 23p to 470p as the stock market braced itself for a massive cash call with today's figures.

Rumours flowed that the financial and tobacco group was about to bid for Groupe Victoire, one of France's biggest insurance groups. Such a deal could cost more than pounds 2bn and there were fears that BAT was about to launch a rights issue of more than pounds 1.5bn.

Cie de Suez, which controls Groupe Victoire, denied it was about to sell. BAT refused to comment.

The French insurance industry is in a state of unease with the planned privatisation of Union des Assurances de Paris, the country's biggest insurer, creating confusion and worries about performance pressures. BAT could feel the time is ripe to strike. And, despite its denial, many observers feel Suez could be tempted by a rich price.

BAT, which owns the Allied Dunbar financial business and Eagle Star insurance in this country and the Farmers insurance operation in the US, is expected to produce 1993 results of pounds 1.79bn, a 9 per cent improvement.

Tobacco profits are likely to be sharply lower, perhaps as much as 18 per cent, following the fierce price war in the US where BAT's Brown & Williamson offshoot is the third placed cigarette operation. But the financial returns should be up by approaching 30 per cent.

Year's dividend could be 20p, up 8 per cent, but if the rights issue rumours are correct a bigger increase could be expected.

BAT shares have been in ragged retreat this year, tormented by the US tobacco downturn and worries about the exposue of its Farmers operation to the Californian earthquake.

Enterprise Oil was regarded as another rights candidate. It reports tomorrow. The shares fell 17p to 420p.

The rest of the market was back on the treadmill as shares collapsed with the FT-SE 100 index tumbling 41.5 points to 3,264.4. Once again bond markets took their toll.

Government stocks were unsettled by the latest round of Whitehall statistics, which appeared to dampen hopes of lower interest rates. Falls of more than a point occurred at the longer end of the market.

Properties were one of the weakest sectors, ruffled by the interest rate thoughts and the worse-than-expected figures from Wates City of London Properties. British Land fell 21p to 414p, Land Securities 17p to 703p, MEPC 17p to 488p and Wates 8.5p to 87.5p.

Racal Electronics, said to be making presentations in Dublin, continued to attract takeover speculation with Cray Electronics still in the bid frame. In keen trading Racal rose 7p to 336p after touching 340p. Cray lost 1p to 190p. Williams Holdings, achieving the reputation of a sleeping conglomerate, perked up 8p to 409p on vague talk that a deal was near.

Standard Chartered, the banking group, rose 16p to 1,180p on hopes that today's figures will be accompanied by a share split.

With heavyweights Reuters and Rank Organisation making moves to increase the marketability of their shares, there is clearly pressure on Standard to adopt a similar course. Profits are expected to be pounds 400m against pounds 197m.

Close Brothers, the merchant bank, continued to score on the back of results, gaining another 40p to 568p.

British Airways was rocked by the mishap over USAir, down 11p at 419p. United Biscuits had to contend with stories that its US offshoot, already suffering from difficult trading, will be hit by additional write-offs, largely relating to its distribution fleet. With a rumoured 1.5 million share overhang the shares fell 11.5p to 338.5p.

Boddington, the pubs group, caught the takeover ferment, at one time 12p higher, ending 8p better at 294p. Whitbread, the rumoured predator, fell 10.5p to 550.5p.

Bass, down 5p at 529p, suffered a two-way pull, with Robert Fleming Securities making favourable noises but NatWest suggesting Bass and Whitbread should be top-sliced.

Gibbs Mew, the family-controlled Salisbury brewer, jumped 18p to 405p. The shares are a narrow maket. Two years ago the group attracted an unsuccessful takeover bid from Brierley Investments, thought to be near to floating its Mount Charlotte Investments hotel group.

Grahams Group, the builders' merchant split from BTR, made a strong debut, reaching 202p from the 183p issue price. The flotation success helped other builders' merchants such as Travis Perkins, up 7p at 342p. Talk of stakebuilding went the rounds, with Seaq putting volume at 34 million shares. BTR, however, ended 3p down at 372p.

MAI, the financial and TV group, rose 10p to 283p, a two-day gain of 18p. Its convertible preference shares issued as part of the Anglia Television takeover started trading at 108p, reaching 110.5p.

The FT-SE 100 index slumped 41.5 points to 3,264.4, while the FT-SE 250 fell 14.6 points to 3,923.1. Turnover was 676.2 million shares with 33,506 deals. The account ends on Friday, with settlement on 21 March.

Enviromed, a biotech and health care group, was suspended at 132p. It announced the pounds 8m takeover of Biozyme, a pounds 1m stake in a US group and placing and open offer of three for every five shares at 125p, raising pounds 9.8m. Among developments under way at Biozyme is a new-style birth control kit based on a women's urine. It should be on the market here by 1996.

Regent, a housebuilder, continues to forge ahead. The shares climbed 3.5p to 27p. The company, once the Waverley Cameron office equipment group and then called Nouvelle, has acquired a number of small housebuilders in South-east England since it was relaunched last year by Christopher Johnson and Carl Turpin. It made modest profits in the half-year to September.

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