STOCK MARKET WEEK: Carlsberg Tetley will be main casualty if `precariou s' takeover fails

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The growing array of regulatory bodies means takeover deals take much longer to complete. The Grand Metropolitan/ Guinness merger is likely to be marooned in red tape for more than six months; BT has been seeking to get together with MCI of the US since November.

With the international ramifications of such mega deals the long-winded nature of the bureaucratic deliberations can, if tolerance abounds, be excused. But when a pounds 200m purely domestic acquisition is still awaiting clearance after 10 months, creating widespread uncertainty, then there is clearly something wrong with the system.

Bass has been striving to get control of Carlsberg Tetley, the struggling brewer, since July. When number two wants number three Whitehall scrutiny is to be expected. But it was not until December that the proposed deal was referred to the Monopolies & Mergers Commission which managed to complete its report a few weeks before the election.

The old Tory government deemed it correct to await the election result; so now Margaret Beckett, resplendent as President of the Board of Trade, is nursing what is the hottest corporate issue the brewing industry has drawn up for some years.

The planned deal, which would allow Bass to recapture its top position in the beerage, has aroused intense opposition in the drinks industry with even Scottish & Newcastle, which replaced Bass as top brewer when it was allowed to acquire Courage without too much official meddling, on the offensive.

In this brewing soap opera the major casualty is Carlsberg Tetley. Ebbe Dinesen, the brewery's chief executive, has complained the uncertainty is blocking investment and blighting the lives of his employees: "The process takes no regard whatsoever of employees and customers and suppliers or the needs of companies involved."

There is no doubt Bass will walk away if the Government imposes too draconian conditions for its approval - there is talk it will demand that 2,000 pubs as well as some brands will have to be sold. The biggest casualty if the takeover is killed would be Carlsberg Tetley which would face an uphill struggle as a stand-alone brewer without a tied pubs estate.

Nick Lyall at Societe Generale Strauss Turnbull believes the deal "is looking increasingly precarious" although Fraser Ramzan of Lehman Brothers says Bass, which has run Carlsberg Tetley since last summer, is well placed to reap rewards from its intended capture even if it is forced to abandoned the deal.

As well as upsetting the two brewers the long-running takeover saga is causing some difficulty in the City as analysts look to assess the ultimate impact. Bass interim figures are seen as coming out between pounds 305m and almost pounds 350m on Wednesday; Mr Lyall is on pounds 312m, Mr Ramzan goes for pounds 319m. Last year the group made pounds 289m. Top of the pack is Graeme Eadie at NatWest Securities who is looking for pounds 346m and, whatever the Carlsberg Tetley result, feels Bass needs to make a major acquisition.

Two former brewers report this week. Greenalls gave up producing pints to concentrate on retailing and wholesaling. It has thrived since abandoning its brewing heritage and should manage interim profits of pounds 65m against pounds 57.2m. The much smaller family-controlled Eldridge Pope of Dorchester switched to pulling pints earlier this year although it still has a minority interest in its brewery; interim profits, believes Nigel Popham at stockbroker Teather & Greenwood, should top pounds 1.3m against pounds 961,000.

Last week shares continued to hit new highs although the unprecedented 11-day winning run came to an end. More strategists have lifted their Footsie forecasts to 5,000 points but Goldman Sachs remain cautious.

Allan Collins, at stockbroker Redmayne Bentley, says he is a long-term bull but is "reluctant to chase prices higher - we could do with a good correction but with so much cash around a correction may be short-lived".

The market, however, remains a divided place. As Footsie has posted new highs, the rest of the share pack has limped sadly behind. Indeed even the blue-chip performance has been decidedly uneven with financials, drugs and, to a lesser extent, utilities making the running and the rest missing the fun.

Second- and third-line companies have so far had a decidedly mixed year and Merrill Lynch does not see them coming back "strongly into favour".

Possibly the most carefully scrutinised profits of the week will come from Storehouse. The BhS and Mothercare chain has encountered what has been described as a "wall of negative sentiment" in the market with its shares hitting 204.5p, lowest for two years.

Profit forecasts have been cut with rumours swirling around that trading was deteriorating. BZW has been particularly bearish on the shares which have come down from 334p in the past year. Profits, due on Thursday, are likely to be slightly lower at pounds 118m.

There is, however, no danger of the nation's retailing peer producing lower profits. Marks & Spencer year's results, due tomorrow, are likely to open the door to the exclusive billionaire's club - membership confined to groups making profits of more than pounds 1bn. M&S should produce around pounds 1.1bn, an 11 per cent gain.

High-flying Blacks Leisure, the sports goods retailer, is expected to comfortably top pounds 10m. Its soaraway shares, less than 30p a few years ago, closed last week at 522.5p.

British Airways, facing a cabin crew strike, should be flying high when it reports today - pounds 605m against pounds 568m is expected despite higher fuel costs. Last week's five-way international airline alliance should improve dramatically the chances of BA's link with American Airlines getting the full run of regulatory approval.

Others reporting this week include Carlton Communications (pounds 161.5m expected against pounds 143.3m); Land Securities pounds 230m (pounds 238.7m); National Power pounds 815m (pounds 806m) and PowerGen pounds 542m (pounds 566m).

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