Rumours of Dutch acquisition weaken Grand Met

Grand Metropolitan weakened on worries that the acquisitive food and drink group is about to make another takeover splash. Bols Wessanen, the struggling Dutch group with a stock market worth of more than pounds 1.1bn was the suggested candidate.

Besides its gin and liqueur business the Dutch group takes in an extensive food spread as well as French wine interests and 35 per cent of the Italian aperitif maker, Davide Campari-Milano.

Bols seems to have given the impression that it wants to retain its food operations and unload its drinks business. It is unclear whether Grand Met is thinking about a drinks swoop, which would cost more than pounds 500m, or swallowing the entire group.

Grand Met shares fell 6p to 414p despite some market scepticism over the rumours of a Dutch strike. It was pointed out that Bols had, in effect, created a "poison pill" by selling off the distribution rights of its products in many growing emerging markets. And it was felt Campari would be reluctant to allow Grand Met to take on the Bols stake.

Bols has struggled to meet expectations since it was created two years ago by the merger of one of the Netherlands' top drink groups with a leading food producer. Earlier this month it disclosed that interim profits had fallen 20 per cent and signalled its intention to reshape.

Grand Met was not the only drinks group under pressure. Allied Domecq tumbled 10p to 516p as rumours swept the market that it would be forced into a dividend cut. Cazenove, the company's stockbroker, was said to be attempting to soothe what at times was a tense atmosphere.

Earlier this year Lehman Brothers suggested that it would be a sensible move for Allied to reduce its dividend. But the US investment house denied market speculation that it was now forecasting that the payment would be cut. Allied has acquired something of a banana-skin reputation. It has often seemed to lag behind other members of the drinks community and a few years ago suffered the indignity of a pounds 147m loss dabbling in the foreign exchange market.

There has been criticism that it has failed to realise best possible prices as it unloaded its food operations and its takeover of Pedro Domecq, the Spanish brandy and sherry group, has failed to live up to expectations. The group's brewing side is under intense pressure and thought to be up for sale. Group profit forecasts have been pulled back. At one time more than pounds 710m seemed likely. Now nearer pounds 550m is being talked about.

The rest of the stock market opened brightly but faltered as enthusiasm waned. The possibility of a German interest rate cut today offered a little encouragement but with New York looking decidedly edgy most investors were content to sit on the sidelines. Waters were lowered again on drought worries and take-profits advice and electricities faded.

The chances, thought to be remote, of a German rate cut lifted Redland 7p to 399p and RMC 3p to 1,104p.

Eurotunnel picked up another 10p to 157p as this week's talk of yet another financial crisis was allowed to drift into the background. Airtours gave up more height on the growing pile of unsold holiday packages, dipping 11p to 358p.

Laporte, the chemical group, jumped 30p to 821p as Jim Leng of the Low & Bonar packaging group was named as chief executive. L&B lost 22p to 496p although some wondered whether Mr Leng's change of allegiance could herald a bid for L&B.

Ladbroke was tormented by National Lottery worries, off 2.5p to 174p, but Kwik-Fit, the exhausts and tyres group, again felt the impact of takeover speculation, up 4p at 182p.

Insurances were ruffled by the possibility of subsidence claims and moves to change French tax rules. GRE fell 7p to 218p. Glaxo Wellcome retreated 12p to 774p in busy trading, unsettled by moves to prevent the signalled extension of the US patent for its lucrative Zantac ulcer drug.

PetroCeltic, the Irish resources group, fell 8.5p to 35.5p as some grew tired of waiting for confirmation of its rumoured strike off the coast near Cork. Barcom edged ahead 2p to 40p. It announced the acquisition of the Chepstow plant hire group and a pounds 7.6m rights issue. Martin International, a textile group, slipped 4p to 26p as it forecast a pounds 1m-plus half-time loss.

Talk that the foreshadowed bid for Unipalm, the Internet provider, could be 600p a share sent the price rocketing 45p to 473p. Upton & Southern, the department stores group, held at 2.25p as it produced its restructuring scheme, which includes raising pounds 1.55m through a convertible preference issue.

Harrington Kilbride, the publisher, raising pounds 3m through an issue at 15p, rose 1p to 28p.

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