Cable & Wireless gets dealers' lines buzzing

By Geoff Foster for MailOnline
Updated: 02:35 EDT, 22 March 2006

THE buzz just got louder as the day wore on. It appears Cable & Wireless's days of independence are numbered. Even though mobile phone giant Vodafone rubbished early rumours that it was stakebuilding or about to bid 130p a share, excited punters continued to chase C&W higher. Turnover swelled to almost 149m, almost five times Monday's total.

C&W closed 6 &frac34p up at 112 &frac34p as dealers later heard that a consortium of US private equity players are lining up a £3bn-plus cash offer. Thor Bjorgolfsson, Iceland's richest man, who has actively dealt in the stock before, was also said to be adding to his small shareholding believing that corporate fun and games are about to begin.

February's disastrous profits warning and ousting of chief executive Francesco Caio left C&W vulnerable. It is still having a bad time in the UK and recently announced plans to axe up to half its UK workforce, shedding 3,000 jobs. It is trying to sell its loss-making internet provider Bulldog, which it bought for £18m in 2004 and then spent a further £173m on it to compete with rivals.

Chairman Richard Lapthorne took some flak when he said private equity buyers would be attracted to the telecom group's lowly-rated shares. Fund managers said he was effectively hoisting the For Sale sign above the company.

Colt Telecom rose 4p to 74p on vague talk it could, with the help of private equity 'friends', launch a bid for C&W.

Profit-taking ahead of today's Budget clipped the Footsie's wings. It dropped 35 points before rallying on hot gossip that another constituent will shortly be on the receiving end of a bid, to close only 0.4 points easier at 5,991.3.

Wall Street jumped 52 points at the outset, shrugging off signals from new Fed chairman Ben Bernanke that US interest rates would continue to rise. Another 0.25% rise to 4.75% is nailed on for next Tuesday's Federal Open Market Committee meeting. An early rumour sweeping the US market suggested that Osama Bin Laden had finally been captured.

Reports of a overnight buy order for 5m shares and a Deutsche Bank recommendation for clients to buy up to 388p helped British Airways advance 8p to 362 &frac12p.

With Russia's Gazprom still mulling a possible cash offer, Centrica rose 3 &frac34p to 300p.

Vague gossip that it is about to sell or float Experian, its credit checking arm, prompted a 12p gain to 1092p in mail order giant GUS.

Online gaming group 888 Holdings jumped 15 &frac12p to 207p on talk that Ladbrokes is stakebuilding prior to launching a full-scale bid. 888's management have been banging the drum at various institutional meetings.

A shock profits warning saw shares of newspaper and magazine wholesaler John Menzies shredded 69p to 530p. Chief executive Patrick Macdonald warned that the group's performance for 2006 will be slightly behind the board's initial expectations. WH Smith declined 5 &frac14p to 424 &frac34p in sympathy.

Profit-taking following excellent results left social housing leader Mears 2p off at 312 &frac12p. The order book stands at a staggering £1bn and 87% of this year's turnover has already been secured. It stands an excellent chance of winning its biggest contract yet. It is one of three bidders for a Manchester City Council contract worth £400m over 10 years.

Investment company Judges Capital firmed 1p to 103 &frac12p in celebration of a maiden pretax profit. Chairman Alex Hambro said the company remains on the look out for new opportunities to achieve further consolidation within the instrumentation sector.

Retail Decisions edged up to 144 &frac12p on news of a new contract with First Data for its fraud prevention solution.

Despite announcing new contracts for its oil refining technology, John Gunn's Hydrodec eased 1 &frac14p to 35p.

Placed on AIM at 15p by broker Corporate Synergy, Kalahari Minerals touched 21p and closed at 18p. The company has an advanced portfolio of copper and uranium prospects in Namibia.