Market Report: Vaux in bid frame again as Footsie frets over the Dow

Click to follow
The Independent Online
VAUX, the brewing and hotels group which has again become a favourite punt of the takeover speculators, was back in the bid frame.

The shares frothed 16p higher to 218.5p as stories circulated that a strike was planned to block the Sunderland-based group's proposed brewing and hotel split.

Earlier this year Vaux, a long-time takeover candidate, soared as a bid approach was disclosed. But the bidder, it would seem, wanted the group's Swallow Hotels chain - the rest of the business would be dumped.

Although the talks, thought to be with the Stakis hotel chain, were eventually aborted, Vaux took the message to heart and decided to break itself into two - retaining the hotels and its top-of-the-barrel pubs and selling its two breweries and remaining 350 pubs.

Director Frank Nicholson is endeavouring to put together a package to take on at least part of the brewing and associated pub businesses, but there are indications that he is having a tough time raising the necessary support.

The latest story is that another bid is being prepared, with the hotels once again the major attraction. If the group is taken over the non-hotel interests will be sold, but at a much more leisurely pace than the present break-up envisages. If buyers for the breweries cannot be found they will, after a suitable marketing time, be shut.

In the summer Vaux shares hit 360p. Break-up value is thought to be around 430p a share. It could be argued that yesterday's bounce merely represented a bottom-fishing move from the year's low. But with Matthew Clark, the ailing cider maker, attracting a bid, the market is keenly aware that takeover possibilities among the downtrodden drinks shares are still worth pursuing.

The market spent the day looking over its shoulder worrying about New York. With America, as expected, offering little encouragement, Footsie. at one time off 70 points, still managed to end only 12.8 lower at 5,217.1. Over the week it has made steady progress.

Supporting shares were mixed. The mid cap ended a 10-day winning streak - even if progress was modest - with a 3.8-point fall to 4,652.2. The small cap rose 2.5 to 1,945.1.

Siebe, the engineer, had a difficult session, falling 12p to 218p with Morgan Stanley doing the damage. The investment house cut its growth forecasts but held its buy stance. It described the present valuation as "compelling". Other engineers caught the Siebe drift with GKN off 23p at 677p and Weir, strong lately on takeover hopes, 6p off at 216.5p.

Shares which had been under pressure made the running. TeleWest Communications rallied 8p to 128p and Asda, hit in the supermarket downturn, put on 7.75p to 165.25p. J Sainsbury, interim figures next week, rose 14.5p to 564.5p.

Asda was again caught by take-over rumours. The old story that Wal-Mart, the US group ranking as the world's biggest retailer, intended to a launch a pounds 5bn - perhaps even pounds 6bn - bid was again going the rounds.

EMI attracted attention. The off-key showbiz group was busily traded, with the shares edging forward 7p to 364p: there was vague talk of corporate action.

Arjo Wiggins Appleton, the paper and publishing group which was once a hot bid favourite, managed a 10p gain to 127.5p.

Corporate action, real or rumoured, was not responsible. HSBC, the investment house which has been exceedingly active this week, was behind the rise; it likes the shares and set a 170p price target. But CSFB cut its profit estimates from pounds 230m to pounds 215m. In the past year AWA has been as high as 254p and five years ago was riding at 315p.

Burn Stewart, the Scotch whisky group, tumbled into losses and fell 2.5p to 8.5p. The departure of chairman LD O'Neill left Stentor, the Irish telecom group, 2p off at 12.5p.

British World Aviation, the old Castle Mill International, started trading at around 13p.

Ahead of figures next week the Pilkington glass group fell 3p to 63p. Interims are not expected to be inspiring, with around pounds 60m against pounds 67m last time. Pilks could accompany its figures with details of more restructuring, and perhaps more job cuts.

Rank, the leisure group, was another in the doldrums. Talk of disappointing figures to come and further pressure for management changes left the shares 5.5p off at 236.75p.

Vanguard Medica, the drugs group, fell 21p to 189p as it abandoned hopes of raising extra cash from warrants. It thought about extending December's deadline, but with the exercise price a cool 500p it realised there was little, probably no, chance of any take-up.

The warrants were issued as part of a fund-raising exercise last year and would, if fully converted, have raised around pounds 22m. Vanguard said it had cash and short-term investments worth pounds 40m and was "well financed" for the next two years. Its shares were 653p earlier this year.

SEAQ VOLUME: 857.1m

SEAQ TRADES: 48,507

GILTS INDEX: n/a

VICKERS, the engineering group which sold off Rolls-Royce Motors earlier this year, could soon find itself engulfed in bid action.

TI Group, little changed at 369p, is thought to be the likely predator. Vickers looks vulnerable - its shares were as high as 286p two years ago, but they have since been caught in the downturn which has eroded the value of so many engineering groups with their sensitivity to sterling's foreign exchange rates.

TI has flexed its take over muscles recently; its shares, too, are far from their 690p high.

HANSON, the rump of the once sprawling Hanson conglomerate, is one of the few shares riding at around a year's high. They held at 395p as investment house SG Securities made bullish noises, talking about a "cash-rich balance sheet and prodigious cash flow".

Analyst Howard Proctor sees the profits of the building materials group coming out at about pounds 240m this year and reaching pounds 272m in the millennium year.

Since the four-way demerger, Hanson shares have had an erratic time. Early this year they were down to 250p.

Comments