Market Report: US buying brings unloved conglomerates in from cold

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The Independent Online
A rare event - the stock market's two leading and unloved conglomerates suddenly attracted a rush of investment support. Hanson was the best- performing blue chip, up 9.25p at 166.5p, and BTR came in with a 9.5p gain to 258p.

Both are still deep in the doldrums and a far cry from their 12-month highs. But their combined rally could be the first sign that, perhaps, the worst is behind them.

Hanson, 221p in September, has slithered as conglomerates lost their appeal and its creator, Lord Hanson, attempted to arrest the decline by signalling the end of the concept by splitting the group into four stand-alone companies.

The break-up, however, has not won much support, despite some analysts suggesting a split value approaching 240p. Special costs and fears of huge tax bills have undermined sentiment.

American investors prompted the rally. They were active overnight and again displayed interest late in the session. The US buying prompted speculation Hanson may have decided to sell at least one of its divisions before the demerger. The chemical side and the Imperial Tobacco business seem the most likely candidates.

There were also suggestions the conglomerate would accompany next week's third-quarter figures with an upbeat demerger progress report.

BTR's advance reflected an announcement its interim results would be declared on 12 September. Fears they will be disappointing with the dividend cut has sent the shares spinning lower; they have fallen from 300p in May.

The warrants, expiring 30 days after the interim figures are posted, jumped 2.75p to 6.5p. The rally lifted the shares to the 258p exercise price.

There have been suggestions BTR is oversold and a poor performance is already discounted. The uplift shows, now the results date is known, that some are prepared to bank on the group confounding its detractors.

Shares maintained - just - their winning run with the FT-SE 100 index closing 0.3 points higher at 3,811.4. It was the seventh consecutive gain.

Insurances came to life following the surprise RefugeUnited Friendly merger. UF surged 105p to 839p; London & Manchester 33p to 381p and Britannic rose 10p to 763p. But Refuge fell 22p to 408p and thoughts that the new grouping represents tougher competition left Prudential 13p off at 419p.

Schroders, the merchant bank, enjoyed a heady run, partly on the return of bid speculation. The shares rose 43p to 1,328p with the non-voters up 30p at 998p.

BAT Industries was lowered to 509.5p on talk the US Food and Drug Administration intended to classify tobacco as a drug. Glaxo Wellcome was little changed at 893p as its Epivir Aids drug was licensed in the UK and Europe.

British Biotech continued to give ground, off 13p at 216p, on the Credit Lyonnais Laing caution but little Polymasc maintained its progress, up 5p to 149p. It has gained 27p this week.

The Rentokil services group improved 16p to 420p, a two-day gain of 28.5p. Figures are due later this month and there are hopes they will demonstrate the merits of the group's contested takeover of BET.

British Gas, on reports it was near a break-through in its protracted talks on its North Sea take-or-pay deals, broke through 200p for the first time since May. The shares reached 202p, up 5p.

Railtrack stretched to a peak, up 6p to 237p. The dividend yield and the takeover activity in the industry prompted the buying.

Rank Organisation was the worst-performing blue chip, off 27p to 441p on disappointment with its planned revamp. Colleagues, a direct marketing group, collapsed 107p to 148p on a warning.

Whitbread, which lifted its stake in bid target Pelican to 9.9 per cent, gained 9.5p to 697p although the Office of Fair Trading is probing the takeover of the restaurant chain.

Mirror Group rose a further 5.5p to 198p on the NatWest Securities upgrading and United News & Media added 24p to 679p on its pounds 100.5m Tolley sale. Blenheim, regarded as a United target, fell another 7p to 406p on the lack of action.

Antonov, the gearbox designer which motored to 151p last year as hopes of spectacular contracts with large motor groups swirled around, fell 3p to 48p.

William Jacks, a garage group heading for an unquoted existence following an 80p offer from its controlling shareholder, motored 27p to 75p.

Jordec, formerly Baris, returned at 61p from an equivalent suspension price of 57p.

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