More names on the list as dealers wait for next big bid

MARKET REPORT

The market is starting to grow tired of waiting for all the takeover bids that are rumoured to be being put together behind closed doors in corporate finance departments right across the City.

Dealers expect that takeover action this year will be frenetic, but there is little else propping the market up at its current high level and share prices may be undermined if some big bid guns do not swing into action soon.

Only a sure-footed opening on Wall Street stopped the London market from finishing on a sour note in a week that saw records smashed. The FT-SE 100 share index showed a 20 point fall just 30 minutes before Wall Street's opening bell but by the close it showed a tiny gain of half a point to 3,734.7.

Trading volume in equities was good for a Friday, but there were plenty of signs of investors cashing-in on profits made in recent weeks. More than 730 million shares changed hands, and 33,000 deals were struck.

Several more names were added to the ever lengthening speculative list of takeover targets. The biggest name of the day to attract a bid rumour was P&O, up 13p to 542p. Share trading in the FT-SE 100 member was busy with the volume exceeding 6.5 million.

Where a bid would come from is anyone's guess. It just has all the classic break-up characteristics, and that, it appears, is a good enough reason as any for speculators to move in. P&O has an odd mix of businesses, from the ferry operations to Bovis, the construction company. Analysts at UBS reckon the sum of the parts, which also include road transport and exhibition halls, equated to 700p per share.

The takeover spotlight remained firmly fixed on Mercury Asset Management. Shares finished the session up 16.5p at 899.5p, valuing the fund management group at almost pounds 1.65bn. Royal Bank of Scotland, up 2p to 591p, and National Westminster, off 3p to 664p, are the firm favourites to mount an acquisitive strike against MAM, the second biggest operator in its field.

There is even some talk of a bid of pounds 10.50 a share being launched next week, which would provide the catalyst this market needs to keep moving forward. MAM, however, has been immersed in takeover speculation before, and there is still the issue of who is going to buy the rival Gartmore, which was put up for sale by its majority shareholder Banque Indosuez several months ago. The long wait may soon be over. Gartmore rose 4.5p to 246p yesterday, amid talk that Berliner Bank was close to finalising a pounds 600m takeover.

Elsewhere in financials, Standard Chartered, also talked of as a target for NatWest, gained 2p to 638p. The advance, though, was in reaction to Standard at last confirming it was in talks to sell its Asian securities business to Nava Finance.

Savoy Hotel group's shares climbed another 63p to an all-time high of pounds 12.43p. The company is "definitely" in play in the market's eyes with Granada a willing seller of the 68 per cent stake inherited from its pounds 3.9bn takeover of Forte. ITT Sheraton and Marriott, two of the world's biggest hotel groups, are understood to have approached Granada about buying the stake.

Granada climbed 10p as institutions clambered for a slice of a placing of 25 million shares at 693p. Total trading in Granada amounted to 52 million.

Forte will be replaced in the FT-SE 100 index on Tuesday by either Anglian Water, down 2p to 565p, Greenalls, also off 2p to 603p, MEPC, 4p lower at 404p, Next, up 2p to 456p, or MAM.

Interested buyers of the Forte hotels that Granada does not want are pouring out of the woodwork. Stakis yesterday said it was interested in some of the mid-market hotels. Profit-takers moved into Stakis, down 2p to 87p, after an upbeat trading statement. Better news from the casinos was welcomed most. Spend per head at the tables has risen from pounds 129 to pounds 134, and attendances improved 16,000 to 525,000 in the three months to December.

Trading news from J Sainsbury, however, was not so good. The company's first ever profits warning sent the shares scuttling back by 21.5p to 389p, wiping almost pounds 400m off the company's market value.

Renewed rumours about a counter bid from Gehe of Germany pushed Lloyds Chemists 6p higher to 426p. MAM continued to increase its stake, buying another 250,000 at 418p. Unichem, which has agreed takeover terms for Lloyds, firmed 2p to 255p.

Tottenham Hotspur celebrated its successful appeal against the one-year ban from European competitions imposed by Uefa with a 4p advance to 255p.

TAKING STOCK

oPan Andean Resources marched further forward, with deals struck as high as 28.5p. The price closed 1p firmer at 26p, amid talk that a bidder may be looking to buy the company cheaply ahead of the development of its Bolivian oil prospect. Pan Andean has a 20 per cent stake in the site, which has estimated reserves of 800 million barrels. Broken Hill owns the remaining 80 per cent. Drilling starts later this year.

oStanford Rook continues to go from strength to strength. The price of the AIM stock and biotech tiddler climbed 32p to 525p, almost triple the price they traded at only three months ago. Talk of an imminent joint venture deal with Merck, the giant US pharmaceuticals company, to develop its SRL172 drug for tuberculosis sparked yesterday's surge.