£400m brokers' merger is talk of traders

By Geoff Foster for MailOnline
Updated: 04:40 EDT, 12 January 2006

RUMOURS of a £400m London stockbroking bid swept dealing rooms just before the close. Numis Corporation, whose chairman is Michael Spencer, estimated to be the richest man in the City, advanced 12½p to 277½p on hot gossip that it is on the verge of bidding for Panmure Gordon, 15½p better at 218p.

Both brokers have carved out a niche in small and mid-cap research, sales and trading to institutional clients. The sector has enjoyed a strong performance over the past 18 months thanks largely to successful initial public offering issuance and the booming primary market, particularly on Aim.

Last April Panmure's chief executive Tim Linacre and Richard Wyatt, executive chairman, bought Panmure from Lazard, the merchant bank that owned it for about a year. Durlacher, which wobbled when the dot-com bubble burst, then acquired Panmure in what amounted to a reverse takeover. It has been onwards and upwards ever since.

Numis chief executive Oliver Hemsley and Spencer hold an iron grip over their company with 14.3% and 9.2% respectively. Both would surely head up an enlarged group which dealers believe should retain the Numis name.

Investment bank Investec, rumoured to be on HSBC's shopping list, soared 107p to 2687p. Cash-rich Evolution Group rose 212p to 138p on vague talk of a US bid. Collins Stewart Tullet, which held abortive bid talks with interested parties last year, gained 20p to 63312p on hopes another predator will soon show its face. Charles Stanley added 8p at 34612p.

It was takeover situations, either actual or rumoured, that also put a spring back in the Footsie's step. It retrieved Tuesday's entire 42.7 point loss to end at 5,731.5. P&O was lengths ahead at 49812p, up 2912p. Punters climbed aboard anticipating an exciting takeover battle developing between Singapore and Dubai for the 169-year-old ports and ferries operator.

Shares of the London Stock Exchange were also in strong demand, rising 43p to a record 658p after broker Credit Suisse First Boston lifted its target price to a heady 755p. Boss Clara Furse's shares are now worth £2m-plus.

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Walls ice cream-to-domestos consumer brands giant Unilever rose 10p to 591p. Bid rumours refuse to lie down. Traded option activity almost always precedes a mega takeover deal and there have been plenty of interest in Unilever's March 650 calls of late. Taking out a call option enables a punter to profit in a rising market without actually buying the stock.

Unilever is vulnerable and would be a tasty mouthful for a Philip Morris or Proctor & Gamble. Net profits fell 11% to £675m in the three months to end-September.

It recently scrapped plans to do a RoyalDutch Shell and bring an end to its 75-year-old dual stockmarket listing after a mega costly review of its operations. Shareholders were not happy.

British Airways flew 17¾p higher to 33912p after Cazenove said the risks to its earnings forecasts are on the upside after new chief executive Wiilie Walsh's new year message to staff said BA can achieve an EBIT margin target of 8.5%.

News that Apple sold a better-than-expected 14m iPods in the December quarter, helped Wolfson Microelectronics touch 385p to close 612p up at 377¼p. It supplies parts for iPods. Taking advantage of the strong share price, Cazenove placed 2.5m shares at 375p a share with institutional investors.

Systems Union rose 1312p to 15112p on an upbeat trading statement. Panmure Gordon lifted its target price to 175p from 155p. Z Group added 412p at 102p following the launch of Version 5.0 of ONSPEED, the web and email acceleration service. It can now deliver up to five fold speed increases for Broadband connections.

• RECENTLY floated on Aim at 60p, Independent Resources held rock steady at 64p. Rumours suggest the company is on the verge of a deal with a major European gas company.