Market report: EMI dips as Seagram sounds cautious on takeover

JUST HOW much is EMI worth? As the stock market ponders whether a bidder will eventually materialise the shares, in often busy trading, dipped 15p to 575p. When the takeover approach was announced last week they touched 607.5p.

Decidedly cautious comments from Seagram, the Canadian drinks group which emerged as the favourite to pounce, has helped undermine the showbiz group's shares.

This week, to promote its results, Seagram held a telephone conference with analysts. Most, it appears, were left with the impression a bid was unlikely at anything near the price, say 700p, the stock market would regard as acceptable.

And Seagram apparently underlined its reluctance to get too deeply involved with Allied Domecq, up 6.5p at 627p. Seagram and Allied have come under intense pressure to do a deal since the creation last year of Diageo, the Grand Metropolitan/Guinness cocktail.

But Seagram is not interested in any arrangement which would undermine the dominant Bronfman family shareholding, which would seem to rule out a merger of Allied and Seagram's spirits operations. Distribution deals seems the extent of any Seagram involvement.

The Canadian group, if analysts read the message correctly, is unfazed by the creation of Diageo and, although it would welcome EMI, is unhappy about the price put on the showbiz group.

Credit Lyonnais, the investment house, believes without a bid EMI is worth only 468p. Even a bid, believes analyst Nick Ward, would be no more than 630p with a battle for control necessary to spin the price to 750p.

Blue chips suffered another downbeat session although mid and small cap shares were again resilient. Footsie lost 54.4 points to 5,938; at one time it was down 93. The mid cap index restricted its fall to 2.7 and the FTSE small cap index displayed utter contempt for its peers, jumping 9.8 to a peak of 2,685.9.

The market has been catching its breath, awaiting corporate action among the Footsie stocks. Little has occurred. Instead there has been a steady stream of takeover bids on the market's undercard, which has served to underline that, despite their recent strength, mid and small cap stocks remain under-priced.

The latest bid action involved American Port Services, Jeyes, Spargo Consulting and Zetters. APS rose 14p to 179p on the possibility of an offer from Associated British Ports, down 6p to 369p. Jeyes, famed for its disinfectants, jumped 51.5p to 241p as Irish group IWP International produced a pounds 51.25m share exchange offer. Many suspect a counter-bid will appear.

Zetters, the bingo and pools group for long in the bid arena, hardened 12p to 158.5p after admitting its wide-ranging talks could lead to an offer. Spargo Consulting, the computer group, improved 27.5p to 317.5p as it declared it was in bid talks.

BICC, the cable and construction group, was given another takeover whirl, up 7.5p to 181p. Sterling's less ebullient display also helped.

The Daimler-Benz $924bn merger with Chrysler continued to drive a coach and horses through accepted motor industry wisdom. Speculation about a variety of alliances helped a number of shares higher, including Rolls- Royce, which has acquired control of what remains of Fokker, the Dutch aircraft maker, and clinched a $275m US order. The shares climbed 10.5p to 298p.

The Lonrho rejig lifted the remnants of the international trading group 6.5p to 336.5p with debutante Lonrho Africa, representing the group's African non-mining interests, in line with expectations at 85p.

Geo InterActive Media improved 15p to 161.5p. It has signed distribution deals for Greece, Italy and Korea. The dominant shareholders, it seems, are keen to reduce their direct involvement and have been trying to sell shares to institutions. A fund raising exercise is also expected. Currently the Israeli group is 80 per cent owned by directors and associates.

European Colour jumped 10p to 71p although chief executive Mike Armitage said he was not in bid talks and no approach had been made.

Clyde Blowers was the latest high-flyer to feel the impact of over-optimistic hopes when it produced a profits warning. The shares fell 64p to 189p. Last year they were 380p.

Money broker Trio managed a 1p gain to 4.75p. It achieved a pounds 359,000 interim profit against a pounds 2m loss and chairman David Hagan lifted his stake to 9.92 per cent, buying 100,000 shares at 4.5p. The company has made losses for the last three years.

Five years ago the shares were 81p.