VT Group, the shipbuilding to support services company which is mulling over a possible bid for Babcock International in alliance with BAE Systems, yesterday stoked up speculation about the division of the spoils if the two do mount a successful takeover.
VT announced a significant expansion with the £87m purchase of four vehicle support businesses from Aviva subsidiary, RAC. Neither VT nor BAE Systems has commented on how they would structure any bid for Babcock or the way in which the assets would be shared. They have been given until the middle of next month by the Takeover Panel to either put up or shut up.
However, VT's acquisition of Lex Transfleet, Lex Defence, Lex Defence Management and RAC Software Solutions will increase speculation that VT would take Babcock's support services business, with Babcock's shipyard operations and, potentially, VT's own shipbuilding business going to BAE Systems.
Yesterday VT shares were up 6.25p at 460p, BAE Systems was down 2.5p at 417.5p with Babcock International down 2.25p at 320p.
In the main market the FTSE 100 index closed down 36.9 points at 6023.1 as Wall Street opened weaker; Iran's refusal to cooperate with the Atomic Energy Agency weighed on sentiment. Over the week as a whole the index of leading shares has dropped 109.6 points. While that is less than 2% it does mark the index's biggest weekly fall since October last year. Fears that the bull market may be coming to an end saw Amvescap marked down 19p at 599.5p while Man Group lost 33p to 2527p.
Elsewhere, Yell Group eased 15.5p to 514p after the owner of Yellow Pages announced plans to buy Spanish rival TPI for €3.3bn. The bid has been long rumoured, not least by the Spanish press on Thursday, but as analysts crunched the numbers yesterday they were not exactly ecstatic. In a note, UBS pointed to Yell's assertion that the deal will enhance earnings in the year to end March 2008 and the return on investment capital will be 8% four years after the deal.
The broker warned, however, that although the deal will enhance earnings in the high single digits by March 2009, the return on capital does not look particularly compelling given the risks contained in the expansion and the higher financial leverage Yell must take on - which will limit the company's flexibility.
But shares in Standard Chartered were the day's biggest riser, up 41p at 1456p, on renewed talk that the bank has become a bid target for Singapore's state-owned investment company Temasek which last month paid £2.3bn to pick up the 12% stake in the business owned by the estate of Tan Sri Khoo Teck Puat, who died more than two years ago. Vague talk of a possible approach also stirred shares in Alliance & Leicester, up 11p at 1123p. Intercontinental Hotels powered higher early in the session on talk of a bid approach but ended the day up just 1p at 967p.
Shares in BSkyB were traded heavily yesterday as the market tried to work out exactly what had happened in the first round of the auction of Premier League TV rights and where that left the satellite broadcaster. Initial shock among Sky investors at news that the company had won just three out of six packages was replaced by relief when it emerged that the remaining three batches of games had gone to a second round of bids - rather than being lost to rival bidders.
That relief turned again to worry, however, when it emerged that the most important package of rights, consisting of 23 Sunday games, is one of the three packages still up for grabs. That means BSkyB's most important selling point - being the home of the Premier League - could still be wiped out by NTL. The deadline for bids for the last three packages is next week. BSkyB closed down 5p at 525.5p.
Away from the main index the FTSE 250 closed down 46.9 points at 9878.7 with the small cap index down 5.8 points at 3626.7. Crest Nicholson rose 19.5p to 555p on talk of a bid at 650p a share. Also buoyed by rumours of an imminent takeover were shares in Matalan, up 6.25p at 199p. But a dire profit warning from iSoft sent shares in the software firm crashing 23.25p at 117.5p - the biggest loser in the FTSE 250.
Among the small caps, shares in Clinical Computing, the US hospital computer system designer that announced an increased annual loss on Thursday, added 0.5p to 6.125 after chairman Howard Kitchner bought a million shares taking his holding to 8.48% of the business.
Down on Aim, shares in Dolphin Capital Investors, which invests in residential resort developments in south-east Europe, closed up 9p at a new high of 96p. The stock joined Aim at 68p back in December in an oversubscribed placing that raised £70m. There is talk that a further funding round is being put together and investor interest is strong.
Finally, champagne corks will be popping in the west country home of Tom Alexander this weekend. The chief executive of Virgin Mobile will rake in roughly £5m when the acquisition of the company by NTL goes through on July 4, according to the offer document posted by the company yesterday. NTL is buying out Mr Alexander's shares and share options at the offer price of 372p a share.
Blue times for Vert
Shares in Jacques Vert were left in tatters yesterday as the clothing retailer warned that its annual operating profits will be significantly below market expectations.
Its retail business - perhaps best known for dressing the mother of the bride - makes a large slug of its cash in March and April. Trading in these key months, however, has been disappointing.
The warning sent shares in the company down 2p at 13.5p and led Seymour Pierce analyst Rhys Williams to slash his earnings forecasts. For this year he has dropped his forecast to £3.25m from £5.5m, though he still rates the stock as a buy.
The only bright spot in Jacques Vert's update was news that the industrial disease claims related to its 2002 acquisition of William Baird are coming to an end.