Market report: Tuesday close

By Mickey Clark for MailOnline
Updated: 12:14 EDT, 24 January 2006

NEWS of Linde's rejected bid approach for industrial gases supplier BOC put the brakes on a slide in the wider market, but only for a time.

BOC responded to the offer with a leap of 238p, or more than 20%, to 1389p, after briefly touching 1422p where it is valued at more than £7bn. Just before BOC confirmed the approach, the FTSE 100 index was down 17.5 points, but that loss was reduced for a time before the index resumed its slide. Shortly before the closer it was off 27.1 points at 5633.8.

Thoughts that BOC had rejected an offer of 1500p from the German industrial giant had City speculators foaming at the mouth. They must be wondering which blue chip will be the next target of an overseas predator or private-equity team.

Some of the hot money was riding on BG, up 10p at 622p, which continues to be viewed as a target for the likes of Shell. Music group EMI, up 7¼p at 255p, was another singled out for attention amid mounting speculation it is lining up a merger with Warner Music.

Danish brewer Carlsberg ruled out the prospect of a merger with UK partner Scottish & Newcastle, up 1¾p 492½p.

Carlsberg chairman Povl Krogsgaard-Larsen left speculators nursing a hangover by saying: 'There are absolutely no thoughts with regards to merging Carlsberg with Scottish & Newcastle.' He said the brewer's present trust deeds stipulate the Carlsberg Foundation must have a majority stake in the Carlsberg Group at all times and there were no plans to alter the deeds.

The two companies were joined at the hip by way of their equal share in Baltic Beverages Holding (BBH), which was set up to operate in the fast-growing Russian beer market. US broker Lehman Brothers has repeated its overweight rating in S&N and raised its target from 510p to 530p following the integration of BBH. It says this could add further long-term value through accelerated market share gains.

British Energy closed unchanged at 619p ahead of Thursday's entry to the Footsie. It will replace mobile phones operator O2, which will be delisted after its takeover by Spain's Telefonica. O2 closed up ¼p at 200p.

GlaxoSmithKline advanced 2p to 1428p after a US regulatory panel unexpectedly recommended approval of its over-the-counter weight-loss drug Xenical after licensing the rights to a lower-dose, non-prescription version of the drug from rival Roche. There have been concerns about the effectiveness of the new 60mg dose, half the level taken on prescription, and worries that patients in the trials did not understand label warnings.

The US Food and Drug Administration still has to grant final approval. It voted 11 to three in favour of recommendation. If successful, the product, which Glaxo plans to market under the brand name Alli, will become the first FDA-approved over-the-counter weight-loss treatment. Analysts reckon it will eventually generate annual sales of around $500m (£281m), shared between Roche and Glaxo. Xenical works by inhibiting the absorption of fat, when taken as part of a diet.

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Rank, unchanged at 279p, failed to respond to reports it is about to become the target of a takeover by bookie William Hill, unchanged at 572p, or Hilton, 1¼p cheaper at 366¾p. The story is not new but speculation has been fuelled by recent heavy turnover in Rank shares. Brokers say that now it has disposed of the Deluxe film processing division, the group is vulnerable to takeover.

Supermarkets group J Sainsbury softened 1p to 301¼p. Deutsche Bank has cut from hold to sell and reduced its 12-month target from 300p to 270p. It says: 'Both bottom-up and down analysis of future profit potential suggests to us that recovery margins will not be high enough to support the current share price.'

One of the best moves on the day was seen in Meridian Petroleum, up 9.63p at 17.25p, on the back of good flow rates from its Calvin 36-1 well.

Drug developer Angle closed unchanged at 91.5p, despite winning an extension of its contract with the London Development Agency to generate 50 new technology products. The contract is worth £2.2m, of which Angle will get £800,000. Angle is behind Provexis, up 0.25 at 11p, whose shares have improved after winning contracts to supply its clot-busting CarioFlow juice drink to Sainsbury's, Waitrose and Tesco. Angle's initial £461,000 investment in Provexis is worth £3.9m. It invested another £1m, now worth £2.5m, in April's float.

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