WH Smith climbs on expectations of Our Price sale

MARKET REPORT

WH Smith and, once again, Ladbroke Group, dominated the stock market's thinking as what has been an uneventful week ended on a weary note.

In occasionally brisk trading Smith climbed 10p to 447p. The shares are still adrift from the 533p peak hit two years ago but have more than recovered from the 324p touched when the group produced a shock profit warning in May.

Since then Smith, often regarded as smug, has appointed Bill Cockburn, formerly in charge of the Post Office, as chief executive and indulged in a few fringe changes.

Now, if the market is on the right track, something more dramatic is planned - the sale of Our Price music chain and the 50 per cent interest in the struggling Do-it-All do-it-yourself operation.

Mr Cockburn, it appears, wants to concentrate on the 200-year-old group's core operations such as bookselling and newspaper distribution.

Drastic action is seen as an urgent necessity as Smith looks vulnerable to a bid.

Thorn EMI and Virgin could be interested in Our Price with Boots, already sitting on 50 per cent of Do-it-All, the most likely candidate to buy the rest. However, there is a school of thought that Boots would also like to rid itself of its DIY encumbrance and Do-it-All could, lock stock and barrel, be sold to a rival operation.

Ladbroke retained its position as the market's favourite takeover bet. Another round of busy trading left the shares at 192.5p, highest close for more than a year, after touching 194p.

Bass, which has emerged as the most likely buyer of the Carlsberg Tetley brewing group, is still regarded as a likely predator. Hilton Hotel Corporation is, however, being mentioned more and more often.

A deal makes sense. HHC runs the US chain of Hilton hotels, with Ladbroke embracing the international Hilton portfolio.

Uniting the two branches of the business, with all the administration and marketing benefits it would produce, must look attractive. But HHC is unlikely to want Ladbroke's betting shop, casino and property interests.

The rest of the market managed modest gains with the FT-SE 100 index up 8.7 points to 3,707 and the supporting FT-SE 250 index stretching to another peak of 4,304.3, up 6.9. Turnover topped a billion shares with the pounds 463m Guinness buy-back through Cazenove making a significant contribution. There was also heavy trading in BTR, Prudential Corporation and Northern Foods.

The BSE disaster cut another 3p from Sims Foods to 19p and impacted on the dairy industry with Northern off 5p at 199p and Unigate 9p at 437p. Hopes of a switch from red to white meat lifted Bernard Matthews 14p to 16p. Electrophorectics, developing a BSE detection system, improved a further 13p to 165p.

T&N remained firm, up 7p at 184p, on gathering hopes of an asbestos insurance settlement.

Thorn EMI, on break-up and bid hopes, gained 25p to 1,668p and Vodafone firmed to 250.5p on vague bid speculation. Sun Alliance, said to be in talks to buy Friends Provident, lost early strength to end 1.5p down at 375p.

Abbey National enjoyed a strong session with Societe Generale Strauss Turnbull, forecasting profits of pounds 1.25bn this year and pounds 1.5bn next. The shares rose 15p to 575p. Wickes, the builders merchants, was little changed at 131p as Mees Pierson forecast a near pounds 10m profit advance to pounds 41m this year and pounds 52m in the following year.

MAID, one of the market's most volatile shares, added 17p to 245p. There was talk of another US tie-up.

National Express, said to have won the lucrative Gatwick Express rail franchise, motored 28p to 514p. But Go-Ahead lost another 12p to 297p following Thursday's profit warning.

Hard pressed Frost, the petrol retailer being squeezed in the war of the forecourts, shot ahead 17p to 133p. Mrs. EM Frost, wife of chairman James Frost, purchased 100,000 shares at 116p; she now has 260,000.

Nurdin & Peacock, the cash and carry group, improved 4p to 160p on continuing gossip that SHV, the Dutch investment group which has around 14 per cent, will soon move to push its holding above 50 per cent or even bid for full control. SHV is thought to be unhappy with N&P's recent performance.

Universal Ceramic Materials rose 4p to 108p It is placing nearly 4 million shares at 95p; CINVen, the venture capitalist, sold through stockbroker Beeson Gregory 6.4 million shares.

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