Market report: Monday Close

By Mickey Clark for MailOnline
Updated: 11:18 EDT, 27 March 2006

UNDER-SIEGE broadcaster ITV today nudged ¾p higher to a two-year high of 128½p as chief executive Charles Allen began a charm offensive designed to help the company retain its independence.

More than 34m shares changed hands as Allen began talking to institutional shareholders such as Fidelity, Brandes, UBS Global Asset Management and Legal & General, which between them own almost 30% of ITV.

His move follows reports that the consortium of US investment bank Goldman Sachs, and private-equity companies Apax Partners and Blackstone was considering a sweetened offer, having had its initial bid rejected. The consortium last week offered to inject up to £1.5bn of cash for a 48% stake. It would then give existing backers, holding the remaining 52%, a special dividend worth 86p and costing about £3bn. The ITV board booted this proposal into touch because it did not offer a cash alternative.

Speculators expect the consortium to put up new proposals although some critics say this version of events may be a non-runner because of the complexity of the deal.

Share prices generally made a lacklustre start to the week. The FTSE 100 index was down 64.1 at 5972.2. Alliance & Leicester, up 10p to 1168p, is being tipped as the next takeover target. The story doing the rounds is that the mortgage lender has rejected an offer of 1300p a share from Crédit Agricole. The bank is currently worth more than £5bn.

Mining stocks go from strength to strength but were unable to maintain their early pace despite a bullish review of the sector by US broker Citigroup. It says demand for raw materials continues to outstrip supply, and has upped its commodity-price forecasts.

Citigroup has raised Rio Tinto, down 25p at 2823p, from hold to buy with the target price jacked up from 3250p to 3400p. BHP Billiton, off 7p at 1014½p, is rated a buy with its target lifted from 1150p to 1200p. Xstrata, down 34p at 1838p, is lifted from 1800p to 2200p while Kazakhmys, off 24p at 952½p, is rated a sell although its target goes up from 700p to 800p.

QinetiQ came under fresh pressure, dropping 6¼p to 186p. Broker Credit Suisse has begun coverage of the former Ministry of Defence research laboratory with a neutral rating and 205p target. It reckons a 10% operating margin is achievable. QinetiQ was floated at 200p last month.

Dana Petroleum gushed up 35½p to 1009½p ahead of results tomorrow. Broker Merrill Lynch reckons the oil explorer has a 'compelling valuation' with a 15% discount to net asset value and says distinctive asset mix could make it attractive to a bidder or merger partner.

AIM-listed Inditherm rose to 22½p despite news of a breakdown in bid talks. It was the first day on AIM for O Twelve Estates, a Guernsey-based company looking to invest in commercial property in the Thames Gateway area, after a placing by broker Collins Stewart that raised £122m. The shares traded at 104½p.

Medical supplies specialist Bespak rose 2p to 567½p. Chief executive Mark Throdahl has bought 25,500 shares for £146,625, or 575p each, but still owns less than 1% of the company.