Market Report: Unilver feels the brands war backlash

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The Independent Online
An early gain was eliminated and the FT-SE 100 index ended 10.8 points down at 2,847.3. But the FT-SE 250 index rose 5.2 to 3,151.2. Turnover was 633.4 million shares with 28,598 bargains. The account ends on Friday with settlement on 1 June. Gilts recovered early falls.

INTERNATIONAL brands continue to lose investment appeal. Unilever, embracing a host of top-class names, is the latest to feel the impact of the brand whiplash unleashed by Philip Morris, the US giant.

The Anglo-Dutch food and soap group has been unloved in the stock market since it recorded a flat first- quarter performance and talked about 'tight' US competition.

Yesterday BSN, the French food and drinks group, added to its discomfort when it made clear it was prepared to cut the prices of its leading brands in a bid to retain its market share. The BSN declaration seemed an ominous echo of the Philip Morris decison to cut the price of its Marlboro cigarettes.

Philip Morris and BSN do not clash with Unilever on many fronts. But their apparent willingness to sacrifice margins for sales underlines apprehension that the days of the fat, lucrative, almost untouchable brand are drawing to a close.

Since the profit statement Unilever shares have had a difficult time. They fell 22p to 1,036p yesterday, making a 68p fall since the Friday announcement.

However, BAT Industries has been the main casualty since Philip Morris declared its price war. Shares of the owner of the US Brown & Williamson cigarette group have come down from from more than pounds 10, losing a further 24p to 844p as a cautious shareholders' statement inflicted additional damage.

The BSN statement also undermined the likes of Grand Metropolitan, down 10p at 405p, and feverish takeover favourite United Biscuits, off 9p to 412p after early progress.

Grand Met, Hanson (down 5.25p at 237.75p following interim figures) and Philip Morris remain the market's UB bid candidates. Cadbury Schweppes, also in the UB frame, fell 9p to 447p.

The market, after early euphoria prompted by Marks & Spencer's results, had an indifferent session, with the FT-SE 100 index swinging from an 11.1-point gain to a 10.8 decline to end at 2,847.3. But the FT- SE 250 index edged nearer its peak, up 5.2 to 3,151.2.

A clutch of uninspiring trading statements, receding hopes of more German interest rate cuts, lacklustre UK production figures and an uncertain New York opening combined to erode confidence.

Marks, at one time up 10p, ended 9.5p lower at 345.5p despite better- than-expected profits.

However, Asda, the supermarket chain, rebounded from early weakness to score a 3.5p gain to 68.5p as the US investment house Goldman Sachs suddenly appeared as a determined buyer.

Ladbroke Group advanced 7p to 184p. Since Friday's report and accounts the shares have climbed from 163p.

The brewer Greene King held at 446p as the Whitbread Investment Co lifted its interest to 8.19 per cent. Whitbread 'B'shares, the high-voting shares through which the brewer is controlled, rose 37p to 930p on thoughts of a capital reshaping.

Yorkshire TV gained 6p to 178p as WH Smith finally sold its 14 per cent shareholding to LWT.

Linx Printing crashed 36p to 139p after a profit warning and the engineer James Wilkes edged ahead 3p to 81p as Suter, the aggressive conglomerate, nudged up its shareholding to 13.04 per cent.

The day's outstanding performer was Securiguard, the office cleaning and security group. The surprise bid from Rentokil, the Danish-controlled environmental services group, sent the shares surging 104p to close above the offer price at 289p.

Micro Focus improved 58p to 2,288p on NatWest Securities support and newcomer Division Group, after an early gain, shaded 2p to 94p.

British Airways, following its widely-expected cash call, had an erratic sesion, ending 0.5p lower at 296.5p. Allied-Lyons, savouring the non-appearance of a rumoured rights issue, ended unchanged at 543p.

The metals group Frederick Cooper improved 2p to 62p. Barclays de Zoete Wedd has lifted its profit expectation following the acquisition of Spectra, a US metal coating business. It now looks for pounds 3.75m this year and pounds 5m next.

The engineer Downiebrae remained firm in what is becoming increasingly protracted acquisition speculation, gaining 2p to 76p. But Chieftain Group, a fireproofer specialising in the marine industry, fell 10p to 59p as it disclosed that the problems at the Swan Hunter shipyard will leave it with a 'small loss' this year.

The football club Millwall Holdings, which could score from a succession of events planned for its new stadium, held at 3.25p yesterday following the success of its rights issue. One little-appreciated asset is a 29 per cent shareholding it holds in Leisuretime Inns, a pub chain run by Bob Halsey. Leisuretime, which has a 535 facility share presence, is expected to come to the stock market in a few months.

Sheffield Insulations Group rose 3p to 179p as the market continued to warm to the pounds 53m acquisition of WMS, a locks group. It is expected that the combined operation will produce profits comfortably exceeding pounds 10m this year. A rights, at 135p, to help pay for the deal is asssured of success. At one time WMS planned to come to the market under its own steam but opted for the Sheffield link instead.

Six directors of Zeneca, the ICI drugs spin-off, and their wives took advantage of the grey market to buy 46,750 shares in the company. The shares are due to achieve offical market status on 1 June. The directors - including the chairman, Sir Denys Henderson, and chief executive, David Barnes, - paid 638p a share, 6p above yesterday's unchanged closing price. Old ICI climbed 2p to pounds 12.60.

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