Market Report: Morgan Stanley rekindles DSG bid speculation

DSG International, the company behind the PC World retail chain, was firm yesterday after market rumours mooted the possibility of a bid from Best Buy, the American retail giant that recently entered in to a joint venture with Carphone Warehouse.

Traders said the speculation, which first surfaced before Best Buy announced the deal with Carphone, was reignited by a note from Morgan Stanley.

"We think that the new [joint venture between Best Buy and Carphone] will need to make an acquisition if it is to achieve its ambitions, and that [DSG] is a plausible target," the broker said.

"If a bid is forthcoming, we believe that it is likely to happen before the end of this calendar year."

Morgan Stanley also put the stock on its "buy" list for the first time, citing, beside possible bid activity, the company's turnaround potential and the possibility of a general rebound in depressed retail shares.

DSG climbed more than 3 per cent, or 1.75p, to 58.25p.

Elsewhere, bid speculation was evident around Minerva, the property investment and development company. Earlier in the month, Limitless, a division of the Dubai World sovereign wealth fund, revealed its hand and said it was in the "very preliminary stages of considering its options" in respect of the company.

Yesterday, market rumours suggested the Middle Eastern group had decided to make a formal proposal and may offer as much as 160p per share. Minerva rose 8p to 101p.

The FTSE 100 lost 14.6 to 6,053.5 as miners and oil companies fell, owing to weak commodities prices. The FTSE 250 shed 48.9 to 10,049.3.

British Airways drew strength from a temporary lapse in the recent oil price rally and fared the best on the London benchmark, gaining more than 8 per cent or 17.5p to 232.5p.

Fortunes were also reversed in the banking sector, where leading stocks recovered after a grim session on Thursday. Alliance & Leicester climbed 5p to 425.25p and Lloyds TSB added 7p to 384p.

However, HBOS, which was down 14.25p at 400p, Royal Bank of Scotland, which lost 3.25p to 228.5p, and the FTSE 250-listed Bradford & Bingley, which lost 2.25p to 88.25p, remained weak, owing to continuing concern regarding the take-up of their rights issues.

Among oil companies, Tullow Oil was down 32p at 890p, at second place on the FTSE 100 loser board.

Mining companies were also weak and Eurasian Natural Resources Corporation lost 22p to 1,459p.

Vedanta Resources was down 27p at 2,504p, BHP Billiton lost 46p to 1,914p and Xstrata was 51p weaker at 3,989p.

In addition to the weakness in commodities prices, BG, which lost 28p to 1,266p, was hit by news from Australia: Origin Energy rejected the company's A$13.6bn (£6.6bn) takeover bid.

On the FTSE 250, Taylor Wimpey continued to slide, despite some positive broker comment. Goldman Sachs took the stock off its "sell" list and moved it to "neutral", owing to the recent strong underperformance. "We maintain a negative view on Taylor Wimpey's high gearing, weak operating margins, and susceptibility to an accelerating downturn in UK housing as tighter mortgage credit contributes to weaker demand and pricing. However, we believe this is largely reflected in its shares," the broker said.

Goldman's comments were echoed by Panmure Gordon, whose analysts acknowledged the concerns surrounding the business, but said the "share price fall is overdone". Panmure moved the stock to "buy" from "hold". Taylor Wimpey was down 0.5p at 85p.

The online gaming company PartyGaming claimed first place on the mid-cap index, gaining more than 10 per cent or 26.25p to 286.5p, following speculation about a settlement with the US Department of Justice.

According to the rumours, the company had settled charges brought under US betting regulations and was now free from the possibility of future fines. The news soon sparked talk that, without the risk of further liabilities, PartyGaming may become a bid target.

The equipment rental group Ashtead touched an intra-day high of 82p amid speculation that the company had rejected an 110p- per-share bid from CCMP Capital Advisors, the American private-equity firm. By the end of play, Ashtead had relaxed to 76.25p, up 1.25p.

On AIM, OPG Power Ventures, an Indian power company, made its market debut yesterday after raising £65.1m via a placing of 108.42 million shares at 60p each.

OPG said the money will be used to finance the building of four power stations, which will increase its power output from 19 MW to 450MW in less than two and a half years. By the close, OPG had powered ahead 12p to 72p.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Business Analyst - Financial Services - City, London

£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...

SThree: Trainee Recruitment Consultant

£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...

Day In a Page

General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence
Public relations as 'art'? Surely not

Confessions of a former PR man

The 'art' of public relations is being celebrated by the V&A museum, triggering some happy memories for DJ Taylor
Bill Granger recipes: Our chef succumbs to his sugar cravings with super-luxurious sweet treats

Bill Granger's luxurious sweet treats

Our chef loves to stop for 30 minutes to catch up on the day's gossip, while nibbling on something sweet
London Marathon 2015: Paula Radcliffe and the mother of all goodbyes

The mother of all goodbyes

Paula Radcliffe's farewell to the London Marathon will be a family affair
Everton vs Manchester United: Steven Naismith demands 'better' if Toffees are to upset the odds against United

Steven Naismith: 'We know we must do better'

The Everton forward explains the reasons behind club's decline this season
Arsenal vs Chelsea: Praise to Arsene Wenger for having the courage of his convictions

Michael Calvin's Last Word

Praise to Wenger for having the courage of his convictions