Market Report: Votes-for-all decision puts pressure on two-tier system

PRESSURE is likely to increase on the stock market's surviving non-voting citadels to change their archaic capital structures following Great Universal Stores' surprise decision to enfranchise its shares.

GUS voting shares' initial response to the move was to surge 262p to 3,600p. They ended at 3,438p. The non-voting 'A' rose 155p before settling for a 110p gain at 1,875p.

For more than a quarter of a century the market has periodically occupied itself with the possibility of a GUS move. So many dashed hopes left many unprepared for the eventual votes-for-all declaration.

Shares of the remaining two-tier voting groups were, after some early excitement, little changed because of the difficulty in timing enfranchisement moves.

The Whitbread brewing group lost most of its knee-jerk enthusiasm. At one time its low-voting 'A' shares were up 7p, closing 2p higher at 481p. The powerful 'B' shares, through which the group is controlled, were unchanged at 998p.

With most institutions reluctant to invest in two-tier groups, thereby in effect ruling out cash-raising exercises, Whitbread could be the next bastion to fall. It has the added complication of its incestuous relationship with the quoted Whitbread Investment Co to overcome. But with Sir Michael Angus, ex-Unilever, as chairman and the founding family no longer deeply involved in the group any ingrained resistance could disappear.

WH Smith, where par value creates the difference, moved ahead. The 'A' shares rose 9p to 447p and the 'B' 2.5p to 88p.

The voting and non-voting shares of the builder John Laing held at 226p. Hammerson, which plans a votes-for-all switch, made headway with the voters up 16p to 353p and the 'A' 15p to 322p.

The Savoy, which has retained its independence through its two-tier structure, was another unmoved. Forte, which has more than half the Savoy's capital but less than half the votes, held at 200p.

The GUS decision could affect some of the regional brewers, already fearful that EC pressure will end the old-fashioned set-ups that have allowed them to retain their independence.

Next, the retail group, was another under the GUS influence. The boardroom changes at the mail order group have taken Lord Wolfson of Sunningdale, Next's chairman, into the GUS boardroom.

Some wondered whether it was the prelude to a takeover bid, with David Jones, who has rescued Next, earmarked as chief executive of the enlarged group. Next rose 7.5p to 174.5p.

St James's Place, the financial group run by Lord Rothschild, rose 7p to 142p. It has been buying the voting shares and built a 7.1 per cent stake.

The rest of the market turned in a lacklustre performance, more concerned with talk that hard-pressed Lloyd's 'names' were selling than the continuing flow of encouraging statistics from Whitehall.

Rank Organisation, which once had a two-tier structure, had a roller-coaster session following its interim figures. At one time up 16p, the shares ended 20p down at 747p.

LWT (Holdings) preferred were little changed at 444p although Grand Metropolitan disclosed a 2.26 per cent interest. But Grand Met, it appears, is not interested in challenging Granada, which has built a 20 per cent stake. The Grand Met stake is said to represent pension fund holdings.

Marks & Spencer rose 5p to 337p on a positive statement but QS Holdings, a little retailer, plunged 70p to 235p following a profit warning.

Norcros, the building materials group, edged ahead 2p to 154p. Its near- pounds 50m rights issue encountered a 94.4 per cent take-up. The rump was placed by NatWest Securities and SG Warburg at 151p.

Barclays de Zoete Wedd had the task of placing the rump of the Burford cash call - with a 98.7 per cent take-up, just 950,000 shares. The shares of the property group were placed at 66p. The price rose 2p to 69p.

Although M&S encouraged some retailers higher, supermarkets were still depressed by profit downgradings.

Financial shares remained in demand. Standard Chartered attracted takeover gossip, although some wonder whether a rights issue is being prepared. The shares gained 6p to 833p. Lloyds Bank, with more than 4 per cent of Standard, added 13p to 588p.

TSB Group improved 3p to 198p as Swiss Bank Corporation made cheerful noises following a meeting.

ERF, the lorry maker, advanced 21p to 281p in response to a Credit Lyonnais Laing buy recommendation. The security systems group Norbain rose 19p to 158p following more than doubled profits. Cray Electronics slipped 5p to 149.5p as Warburg placed 7 million shares on behalf of an institution.

Laporte, the chemicals group, came in for another profit downgrading. The shares slipped 11p to 598p. NatWest has lowered from pounds 115m to pounds 102m and from pounds 132m to pounds 118m.

Manchester Ship Canal jumped 500p to pounds 26.50 on the proposed mopping-up bid by Peel Holdings, up 11p at 244p.

Avesco, the loss-making broadcast and video equipment group, improved 7p to 95p on talk of action at its VideoLogic offshoot. Plans are known to be afoot to demerge VideoLogic, which links sound and pictures for use on personal computers.

The FT-SE 100 index shaded 0.6 points to 2,831.7 but the FT-SE 250 index rose 3 to 3,225.5. Turnover was 611.1 million shares with 27,170 bargains. The account ends today with settlement on 26 July. Government stocks improved.

Watch Eidos, a little video business yet to make a profit. Some are intrigued by a link it has forged with a company called Enabling Technologies, which will market certain Eidos developments. As part of the deal RS Johnstone, an ET director, has taken a 4.76 per cent stake at 28p a share. Eidos, which has computerised video editing systems and came to market in 1990, rose 6p to 39p.

Cooper Clarke Group, a builders' merchant, achieved the day's best gain, up from 48p to 88p. Directors Peter Clarke and Clifford Maylor created the excitement by buying 7.6 per cent of the capital at 86p a share. They are already substantial shareholders. With a former director, R Ashby, they have 72.68 per cent of the capital. CC's last results showed a pounds 126,000 profit (pounds 274,000 loss) for eight months.