Market Report: US mega merger puts C&W back in the frame
Tuesday 12 May 1998
The transatlantic deal is a $62bn alliance between SBC Communications and Ameritech. It ranks with Nations- Bank's takeover of BankAmerica as the second largest merger on record, topped only by the $73bn Citicorp and Travelers get together.
Cable was also helped by rumours, later denied, that its Italian partner, Telecom Italia, planned to cement their trading relationship by buying a 10 per cent stake. Slightly better results from its Cable & Wireless Communications off-shoot also helped but it was the deepening suspicion the takeover bell will soon ring which was the major influence.
BT missed the party, falling 6p to 658p. But Vodafone jumped 20p to 690p and Orange 20.5p to 455p. Securicor put on 12.5p to 411.5p on hopes BT will buy its stake in their Cellnet mobile telephone joint venture.
Footsie jumped 58.5 points to 6,028.3 with the supporting indices again hitting new peaks; New York provided much of the momentum.
Among blue chips, Courtaulds, the chemical group, added 23p to 464p as a possible rival offer to the Dutch Akzo Nobel 450p bid was signalled; Rolls-Royce climbed 9.5p to a 304.5p peak as Morgan Stanley lifted its target to 340p and Enterprise Oil, 23p to 556p, and Lasmo, 7p to 271p, strengthened on hopes of North Sea discoveries.
EMI was in a downspin, off 38p (after 49p) on the end of bid talks with Seagram, the Canadian group. Northern Leisure, the disco chain was another where takeover hopes disappeared, falling 35p to 505.5p.
Rank, the leisure group, ended slightly firmer at 385p despite sell advice from Dresdner Kleinwort Benson. The investment house frets the shares could fall to 310p and suggests the dividend may be cut and the group will deliver less than 3 per cent profits growth.
Pearson, the banking to media group, gave up 7p to 938p after confirming long-running speculation it is thinking of buying publisher Simon & Schuster from the Viacom giant for around $4bn. Renewed bid talks lifted Zeneca 70p to 2,620p.
Asda regained 4.5p to 193.5p after it dismissed weekend reports it was again looking at Safeway, up 2.75p to 370.75p ahead of figures tomorrow.
Financials came to life after weeks of indecisiveness. Halifax hardened 23.5p to 814.5p and Woolwich 7p to 351p.
British Energy fell 14p to 550p on reports it planned to buy the infamous US power station Three Mile Island.
Thomson, the packaged holidays group, arrived with a suitable splash. The when-issued shares touched 211p (against the top-of-the-range 170p flotation), closing at 193.5p. Trading was heavy with Seaq putting volume at almost 122 million shares.
Jefferson Smurfit, the paper and packaging group, gained a further 16p to 240p after its 46.5 per cent owned US off-shoot agreed a merger with another American packaging group.
Bids continued on the undercard. Hambro Insurance Services edged ahead 2.5p to 128.5p after controlling shareholder, the soon to disappear Hambros, accepted a 132p a share offer from a group called Lindsey Morden.
Delancey Estates shaded 4.5p to 102p as hopes of a bid evaporated, replaced by the possibility of a big acquisition, funded by shares valued at 100p. Chesterfield Properties fell 15.5p to 642.5p on reports would-be bidder MEPC had lost interest. MEPC gained 21.5p to 593.5p.
Andrews Sykes improved 152.5p to 1,200p after buying Cox Plant Hire from Transport Development for pounds 49.6m. Part of the consideration will be met through an pounds 8.5m open offer.
Signet, the jeweller, was activity traded with two delayed trades of 25 and 21 million. US selling was suspected. The price firmed 0.25p to 46.5p.
Emerald Energy, confirming drilling had started at its Gigante 1A well in Colombia, held at 7p. Monument Oil & Gas is earning a 14 per cent interest by meeting up to $7.3m of the cost.
Housebuilder Fairbriar, five years ago trudging along at 4p, gained 11p to 50p after reporting profits up from pounds 3.2m to pounds 9.5m.
Columbus, a publisher, hardened 3.75p to 21.75p. Figures are due soon. Stockbroker Butterfield, which took a shine to the shares when they were 14p in September, expect year's profits, due soon, to emerge at pounds 3.3m against pounds 1.6m.
Burnden Leisure dropped 5p to 17p on the relegation of its trading operation, Bolton Wanderers.
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