Standard Chartered races away on takeover rumours

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The Independent Online
The share price of Standard Chartered Bank raced away in late dealings yesterday, and finished the trading session 43.2p higher at 662.5p on strong rumours of a takeover bid from either the cash-rich National Westminster Bank or BankAmerica.

American investors were again said to be picking up stock in Standard which, largely due to sustained bid speculation and a better than expected trading performance across its extensive Asian banking network, has seen its share price soar over the last year from a low point of 247p. The latest price values Standard at almost pounds 6.5bn.

Banking analysts find the bid rumours difficult to fathom. Standard's book value at the end of last year was pounds 1.7bn, posing a pounds 4.7bn goodwill problem for any would-be bidder.

An additional problem is whether Tan Sri Khoo Teck Puat would sell his 14.95 per cent stake.

The bank's profits have recovered strongly since the disastrous performance in 1992. Profits before tax in 1994 climbed from pounds 401m to pounds 510m, and analysts are predicting a result for the year just finished in excess of pounds 650m.

NatWest, ahead 6p to 674p, is flush with cash from the recent pounds 2.3bn disposal of NatWest Bancorp in the US, but analysts said yesterday there was very little logic in it making a move for Standard.

They added that HSBC, 19p higher at pounds 10.97p, would make a better suitor, but even then there are considerable overlaps in Hong Kong and other regions in the Far East that would make a deal unattractive.

Banking shares generally were yesterday buoyed by the further cut in German repo rates, rekindling thoughts about additional reductions in European interest rates - a move that dealers said was likely to be set in motion by France, which some were betting to announce a cut in rates today.

Barclays closed with a 6p advance to 785p, Royal Bank of Scotland gained 7p to 588p, and Bank of Scotland put on 3p to 304.5p.

Bid rumours and a very strong opening on Wall Street were the prime talking points and drove the FT-SE 100 share index up by 23.2 points to an all- time high of 3,758.2.

The opening 50-point surge in the Dow Jones index owed much to weak industrial output figures, lifting hopes that the Federal Reserve would soon also cut rates.

Buyers were out in force in the London market. More than 861 million shares were dealt, spread across 36,000 bargains.

The crop of bid rumours grows ever larger. There is hardly a sector untainted by speculation that a takeover bid is imminent.

Pub and restaurant shares became the subject of numerous rumours yesterday, with dealers willing to punt on anything viewed as a target for Whitbread, 6.5p better at 690.5p, following its failure to buy the Happy Eater and Little Chef chains from Forte.

Several shares in the pub and restaurant group finished at all-time highs. The speculative list included JD Wetherspoon, which climbed 18p to a record 734p, Regent Inns, which also hit a peak with a 9p gain to 729p, and My Kinda Town, 12p higher at 132p.

Renewed bid rumours pushed Vaux, the Sunderland-based brewer, up by 6p to 298p. Wolverhampton and Dudley Breweries, tipped as a predator, firmed a penny to 590p.

Whitbread is emerging as the front runner to acquire the Welcome Break motorway service stations that Granada, which soared 29p to 707p, has to sell. Bass, up 4p to 736p, is viewed as a buyer of the Meridien hotel chain that Granada has pledged to sell.

Greenalls Group added another 8p to hit a fresh peak of 612p, and looks set to replace Forte in the FT-SE 100 index.

Grist for the rumour mill was also in plentiful supply on the USM and AIM markets.

ML Laboratories was a late mover, rising a penny to 411p just before the closing bell. There is talk that the company will soon announce a big deal with Glaxo Welcome, 11p higher at 911p.

The story goes that Glaxo will manufacture ML's anti-viral drug, which is being tested on four Aids patients at London's Hammersmith Hospital. Results from the tests are expected early next month. Glaxo, the speculators added, may throw a protective fence around any deal by buying a large share stake in ML.

British Biotechnology had another storming session, surging 198p to pounds 21.68p on talk of a promising results from tests its cancer drug. Other biotech and pharmaceutical shares recorded advances amid strong buying by American investors.