Norweb throws utilities sector into fresh turmoil

MARKET REPORT

The takeover spotlight, which has rarely strayed from electricities this year, focused on the sector with burning intensity as Norweb, the power supplier for the north-west, sign- alled takeover action.

It was enough to send electricities surging to new highs as the stock market attempted to pinpoint the next victims in what has become an industry in corporate turmoil.

With Norweb's suitor emerging from the drought-afflicted water industry, it was left to the privatised utilities to make the running on a day when blue chips failed to hold record levels.

Norweb has admitted it is in talks with its sister utility, North West Water, and other companies, thought to be American. It was enough to lift its shares 58p to 975p with NWW dipping 10p to 611p.

South Wales Electricity, which once had a brief and none too happy relationship with Welsh Water, jumped 30p to 937p as it emerged as the favourite to succumb.

Other electricities higher included Manweb, striving to resist a pounds 1bn bid from Scottish Power, with an 11p gain to 1,000p and Yorkshire, 17p at 862p. Scottish Power was the best-performing blue chip, up 14p at 367p.

Northern Electric flickered 15p higher to 978p ahead of an expected placing today of preference shares by Barclays de Zoete Wedd. They were issued as part of the 507p benefits package that allowed Northern to escape the clutches of Trafalgar House.

The generators joined in the fun spurred by talk of special dividends, share buy-backs and takeover hopes; National Power gained 9p to 548p and PowerGen, helped by Societe Generale Strauss Turnbull support, 8p to 599p.

Waters, which have lagged behind their electricity counterparts as takeover expectations have remained muted, bubbled higher with Wessex Water up 11p at 339p and Northumbrian, where the possibility of a French bid still lingers, 25p to 948p.

But the water sector index, at 2,080 points, is still nearly 350 from its peak.

The rest of the market was stuck in a groove. A degree of disappointment with the deluge of company results, an indifferent New York opening and some old-fashioned profit- taking combined to lower the FT-SE 100 index 12.1 points to 3,545.6.

Second-liners were more upbeat, lifting the supporting index 13.2 points to 3,965.4.

Some lumpy lines of stock were on offer with buyers tending to hold back. Rank Organisation, which had to contend with the added discomfort of poorly- received figures, and Thorn EMI were two casualties. Rank lost 20p to 421p and Thorn 32p to 1,503p.

British Gas, down 8.5p to 265.5p on its results, was the busiest traded share with volume put at 36.3 million.

RTZ, reflecting satisfaction with its results, improved a further 15p to 920p, and RMC, the building materials group, rose 30p to 1,139p following a 32 per cent interim profits advance. Mopping up the 36.4 per cent minority in its German off-shoot and a pounds 459m cash call were well received.

Forth Ports, on figures, rights issue and the pounds 131.6m acquisition of Tilbury port, rose 35p to 625p. The com- pany was privatised at 110p a share in March 1992.

BSkyB added a further 3p to 364p on its elevation to Footsie and newcomer Media Business closed at 3.75p against a 3p placing. Turnover was printed at 21.5 million shares.

Second-line technology shares were often in rampant form. The sector is attracting increasing support with US investors a big influence; Telspec gained 24p to 629p; Azlan 36p to 330p and Quality Software 19p to 624p. On Demand jumped 19p to 90p.

Euro Disney slipped 3p to 204p on the prospect of break-even being achieved by the year-end and Eurotunnel retreated 8p to 147p on worries about its huge debt burden and the shape of any stop-gap financing package.

Enviromed, the troubled health care group where a bidder lurks, gained 7p to 35p, and little Surrey, a betting shop chain, managed a 0.25p canter to 1.75p after it sold 26 of its outlets for nearly pounds 4m. The cash will go towards cutting borrowings.

Graduate Appointments, a recruitment business which arrived on AIM on Monday at 18p, jumped a further 4p to 35p. The company is controlled by Maurice Saatchi and his wife, Josephine Hart. Antonov, the gear box group, rose 5p to 150p. The shares arrived on the soon-to-disappear 4.2 market at 40p in May.

Gowring, the Ford dealer which has developed a chain of Burger King outlets, continued to advance, gaining 5p to 108p.

TAKING STOCK

o BCE Holdings edged to its highest since the old amusement arcade and snooker equipment maker went into computer games in December. The shares added 0.25p to 17.5p. BCE paid pounds 11m for Rage Software and Software Creations, which have links with the likes of Nintendo, in a deal pricing its shares at 11p. The two produced pounds 1m in three months. BCE's results are due soon and a dividend is likely.

o Alliance Resources, the oil and gas group with extensive interests in the US, was suspended at 4.5p. Last year the shares were around 12p. The dealing halt was called "pending the results of certain inquiries, in particular in connection with title to certain oil and gas assets". Chief executive John O'Brien, who developed the group, has departed.

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