Only a bid can relieve the misery at United Biscuits

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The Independent Online
It's almost crunch time for United Biscuits. Tomorrow one of the stock market's most bewhiskered takeover candidates is due to announce its half year figures - and there is no doubt they will be awful.

NatWest Securities is looking for pounds 23m against pounds 80.1m. A dividend cut is widely expected. The shares fell 4p to 275p, their lowest for three years. Their main support now stems from hopes that UB will be taken out of its misery through a take over bid.

There is thought to be institutional pressure for management changes. Eric Nicoli, UB's chief executive, and his team have seen the group's profits slump from almost pounds 200m to little more than pounds 100m.

With such brands as McVitie and KP, United has been under intense pressure on the home market, and forced into rationalisation manoeuvres. But its US exposure has created the most humbling problems. It is now trying to sell its Keebler operation although all the indications point to an unrewarding offloading exercise.

But the US could provide salvation: the suspicion lingers that the likes of Procter & Gamble, Campbell Soups or PepsiCo could dispense with the peripheral Keeblers operation and aim direct for UB.

Two years ago Cadbury Schweppes almost bid for UB, driving the shares to a peak of 435p in the process. Since then Hanson and, probably more realistically, Tomkins, have been linked with the biscuits group.

UB has on numerous occasions acknowledged its vulnerability. Its executives are on three year rolling contracts and chairman Colin Short, who arrived earlier this year, is regarded as an experienced asset in any bid skirmish.

The rest of the stock market had another jaded session with the FT-SE 100 index giving up 13.4 points to 3,535.9, once again ignoring a firm New York display.

Caradon, the building materials group, remained weak, falling a further 8p to 195p as investigations got underway into Friday's hefty share sales. Over the weekend it became clear the group was about to issue a profit warning which duly appeared early on Monday. The shares were 228p at the start of trading on Friday.

Siebe, the engineering group, put on 16p to 701p. Next week Henderson Crosthwaite, the stockbroker, is due to host an evening investment presentation.

Reuters continued to fret about competition from Bloomberg, falling 18p to 561p.

Amersham International's ragged retreat cut a further 42p to 971p. Once again cautious comments from US securities houses Lehman Brothers and Merrill Lynch were cited for the weakness. Since the two investment groups took a dislike to Amersham last week the shares have fallen almost 100p.

ICI remained on the up, with US buying said to be a major influence. The shares rose 8.5p to 815.5p, just below their year's high. It is felt the chemical outlook has improved and ICI should score a striking profit advance this year.

Cray Electronics crashed a further 16.5p to 47p as a bleak statement merely underlined the depth of the group's difficulties. Bullough, the engineer, lost 31p to 134p following a profit warning, resulting from problems in France.

Insurance group Steel Burrill Jones fell 23p to 59p on the double whammy of a profit warning and the termination of bid talks. Results lowered Delta, the electrical equipment group, 27p to 444p.

Atkins, the clothing group, responded to the agreed bid from Coats Viyella with a 16p jump to 108p.

Danka Business Systems jumped 15p to 555p as the market sensed it could emerge as the bidder for Eurocopy, the office equipment group which has received approaches. The shares held at 98p.

Supermarkets were ruffled by the latest example of price competition - a series of price cuts by Somerfield, the unquoted group which operates Somerfield and Gateway supermarkets. Before the Isosceles leveraged buyout, the business was quoted as Dee Corporation. Asda fell 1.5p to 106p, J Sainsbury 4p to 471p and Tesco 6.5p to 329p.

Senior Engineering added 1.5p to 112.5p with at least one securities house pondering the possibility of a bid from the TI Group, up 3p at 430p. Lucas Industries gave up another 5.5p to 180.5p.

Biocompatibles International, the medical group, lost some recent exuberance, closing 15p lower at 335p. The shares were 166p two weeks ago. The surge has stemmed from US clearance for its Proclear contact lens and a pounds 3m investment by US giant Johnson & Johnson.