Investors turn on to ITV

By Geoff Foster for MailOnline
Updated: 02:23 EDT, 26 April 2006

LABOUR peer Lord Hollick has been managing director of US break-up specialist Kohlberg Kravis Roberts for a year. He joined with a view to building a presence in the UK media sector and said on his first day in the job that buying ITV 'would have a nice ring to it'.

There is no doubt that Hollick, who used to own the Anglia and Meridian ITV franchises before selling them to Granada, has kept the broadcaster on his radar screen.

With additional financial support from some heavyweight private equity 'friends', he is said to be ready to make a move. ITV firmed 1½p to 116p on turnover of £34m as talk of a 135p a share, or £5.5bn, cash offer did the rounds.

Eyebrows were raised early on when nosey buying of the group's May traded option series got the underlying stock moving. Any experienced professional will tell you that traded option activity almost always precedes a mega takeover deal.

Goldman Sachs Capital Partners led last month's uninvited private equity pursuit of ITV. The consortium's 130pa-share offer failed, but left ITV wide open to other bidders. Enter KKR's Hollick, who is said to have already got US value investor, and 7% shareholder, Brandes Investment Partners on side.

As the oil price initially traded above $74 a barrel, British Airways shrugged off higher fuel price fears and climbed 8¾p to 343¼p. A 25-page circular from Investec ahead of next month's annual results entitled Turbulent Times but BA's Health is Improving got buyers back on board.

The broker says management continues to keep a tight grip on costs and capital spending is being constrained. Settlement of the pension issue with staff could see a further re-rating.

BA has a pension deficit of £1.4bn. Management has put forward a proposal to eliminate the present actuarial deficit of just over £900m in the main fund - the New Airways Pension Scheme.

If agreed with staff BA would make a one-off payment of £500m into the NAPS fund, but seek changes to member's benefits that relate to future service.

The Footsie lost an early 30-point gain to finish 12.1 points lower at 6,086.6. London got the jitters when Wall Street replaced a 18-point rise with a 53-point fall. It followed unexpectedly strong housing and consumer confidence data which raised fears that US interest rates could go higher still and above the rumoured May 5% ceiling.

Oil stocks slipped up following uninspiring first-quarter figures from BP (10p down at 701½p) and a late dip in the oil price after President Bush said he will temporarily halt deposits being made into the Strategic Petroleum Reserve, in order to boost the amount of crude in circulation. Royal Dutch Shell shed 12p to 2030p and Cairn Energy 49p to 2370p.

Dixons and Currys electrical retailer DSG International sparked 2p higher to 185¼p. Lehman reckons the stock is a short-term play on the World Cup. Many football fanatics will be rushing out to buy a new flat-screen TV. Carpetright's (64p higher at 1234p) good results also showed that the consumer is back buying big ticket items.

Office rental group Regus gained 4½p to 112p on vague bid talk. It last week bought back 58% of its UK business from Alchemy Partners for £88m.

Aim-listed Central African Gold, chaired by former England cricketer Phil Edmonds, had risen 6½p to 23½p on heavy speculative buying before having its quote suspended just before the close. The company later said it is in discussions which may lead to a reverse takeover. White Nile, Edmonds' other more controversial Sudanese explorer, rose 4½p to 145¾p.

Placed at 64p by broker KBC Peel Hunt, Camco International raced ahead to 89p and closed at 82½p on heavy turnover of £9.6m. Camco develops projects that reduce greenhouse gas emissions.

• BUOYED by the bullish tenor of chairman Richard Wyatt's agm address, stockbroker Panmure Gordon advanced 6p to 231½p. Institutional equities is trading strongly with revenues well ahead of last year.

The corporate finance pipeline has strengthened since results in March. Altium's analyst Martin Cross says Lazard will sit on its 30% holding because M&A activity in the sector will increase in the second half.