Market report: Tuesday close
THE champagne corks were popping at the Bishopsgate offices of reinsurance broker Benfield today as directors and employees enjoyed a windfall by cashing in their chips.
Broker Merrill Lynch has placed a parcel of 11.48m shares, worth an estimated £39m, at 340p with various institutions following an accelerated book-building exercise.
The number of shares owned by directors and their families totalled 1.95m. Benfield shares dipped on the news, touching 340p, before rising 4¾p at 349p.
The shares belonged to directors and employees of Benfield who chose to cash in their options. Benfield was the subject of a management buyout in 1988 by a group of investors that included the late Chelsea FC boss Matthew Harding, who was killed in a helicopter crash in 1996.
Benfield floated three years ago with almost three-quarters of its shares owned by 600 of its 1600 employees. The were offered at 250p, valuing the company at £575m, and hit a peak of 394¾p last month.
A half-hearted attempt at extending yesterday's gains by the rest of the market ended in failure as prices lost ground in another day of thin trading. A poor performance by Wall Street overnight was matched by the Far East today as the US Federal Reserve's recent warning on inflation continued to weigh heavily on sentiment.
The FTSE 100 jumped by 25.60 points to 5651.7.
Recent ITV bid talk boiled over, the shares sliding 2¾p to 102½p, while Royal & SunAlliance came in for profit-taking, losing ¾p to 125¾p after news yesterday of 1500 job losses. US broker Bear Stearns has repeated its underperform rating on the insurer.
Oil explorer Cairn Energy fell 18p at 1920p. Finance director Kevin Hart is leaving to become chief executive at struggling Aim-listed rival BowLeven.
His departure is expected to follow the EGM called to approve Cairn's flotation of its Indian assets on the stock market in Mumbai, formerly Bombay. Broker Merrill Lynch continues to rate Cairn a buy, while Bridgewell argues the changes confirm the management's commitment to the Indian listing.
The sale of Emap's French business to Mondadori for £380m was given a cautious thumbs-up by the City, although shares fell 8p to 858½p. Some brokers claimed the price being paid was at the bottom end of expectations.
But shareholders will be pleased because the publisher and broadcaster has already committed to returning £285m of the proceeds to them via an issue of B shares. Broker Panmure Gordon continues to rate Emap a buy.
Worries about the prospects forwonder drug Sativex left GW Pharma down 3½p at 74½p. Sativex contains marijuana and is used as a painkiller by sufferers of multiple sclerosis. But scientists are divided about the merits of the treatment, and health regulators in various countries are dragging their feet about recommending it.
Deadlines in its development are being pushed back. Broker Evolution has cut its rating from add to hold and slashed its target price from 170p to 90p.
Chief executive Alan Parker, trying to break up Whitbread before others do it for him, has revealed ambitious expansion plans in China. The sale of 235 Beefeater and Brewers Fayre restaurants had also attracted a lot of interest.
Whitbread-owned Costa Coffee, in a joint venture with Chinese group Yuenda, will open its first outlet in Shanghai early next year and aims to have 300 branches in China 'in the next five years'.
Mitchells & Butlers is among those chasing the food pubs, put up for sale in April with a price tag of £400m. The future of Pizza Hut and TGI Friday's is still under review. Whitbread rose 20p to 1117p.
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