Dealers feast on Compass

By Geoff Foster for MailOnline
Updated: 07:17 EDT, 22 September 2006

BUYERS gorged themselves on Compass, the world's largest contract caterer, following a trade magazine report of a pending major strategic review of its brand estate which will result in the loss of three top executives and 200 management jobs.

More than 35m shares were traded and the stock touched 277½p before closing 7¾p higher at 272¼p.

In an interview published by industry magazine The Caterer, UK and Ireland chief executive Ian El-Mokadem revealed that a massive restructuring programme has been agreed and should be completed in the next six months.

Compass contains too many brands which need to be streamlined or rebranded.

It has appointed its first full-time marketing director, Rowena Edwards, to oversee the restructuring and the formation of a dedicated fine-dining division which will eventually appoint a new managing director who will report back to El-Mokadem.

All could be revealed in Wednesday's trading statement.

Richard Cousins, former boss of plasterboard group BPB, became chief executive of Compass in June on a £750,000 a year contract. He has wasted no time in bringing about changes at Compass following a disastrous 2005, which took in profit warnings and allegations of corruption.

Break-up bid rumours are never far away from Compass and yesterday's rise was again accompanied by revived mouthwatering gossip of a £3.8bn offer from US private equity firm Clayton, Dubilier & Rice.

Relieved that the Fed left US interest rates on hold at 5¼% and excited by continued gossip of a pending mega bid, the Footsie retrieved an early 17-point deficit to finish 30.5 points better at 5896.7.

Wall Street was dragged 67 points lower, not helped by a heavy fall in constituent Hewlett Packard.

The computer giant reacted to fears that chief executive Mark Hurd may be more entwined in the investigation of leaks from its boardroom than previously thought.

Michael Spencer's money broker ICAP rose 20¾p to 523p on buying ahead of forthcoming interim figures. Financial information giant Reuters gained 16p to 429¾p after Morgan Stanley upgraded to overweight with a target price of 475p.

Mortgage bank Northern Rock jumped 43p more to 1213p amid continuing speculation that it is about to climb into bed with Bradford & Bingley, 8¼p up at 471¾p.

Chinese stakebuilding speculation lifted mining giant Anglo American to 2225p before a close of 2195p, up 55p. Rio Tinto, which many feel could merge with Anglo American, advanced 41p to 2468p.

Support services group Paypoint jumped 35p in a thin market to 660p, Dresdner Kleinwort advised clients to buy and lifted its target price to 700p following a visit to the group's headquarters in Welwyn Garden City.

Buying ahead of next week's annual results helped investment bank Close Bros, whose jewel in the crown is the Winterflood Securities market-making operation, rise 42½p to 996½p.

A UBS upgrade to buy ahead of the secondquarter results on October 11, saw Carphone Warehouse buzz 10p higher to 306p.

Imperial Energy Corporation soared 95½p more to 698p after calling for an investigation into recent trading of its shares. The board said it is not aware of any company specific reason for recent significant price movements. Chairman and chief executive Peter Levine's purchase of 50,000 shares at 602p obviously helped bring about yesterday's improvement.

Griffin Mining advanced 6p to 82p after increasing throughput at its Caijiaying zinc and gold processing plant to 42 tonnes of ore per hour from 35 tonnes per hour.

Electrical equipment group Coe was another company to say it is unaware of any particular reason for the sudden strength of its share price. The statement prompted profit-taking and the stock moved from 46p to close at 36p, still 9½p up on balance.

TV Commerce, the interactive broadcaster, firmed ¾p to 4p after announcing a maiden interim profit and threefold rise in sales to £1m. The second-half has started strongly. Placed on Aim at 40p by Noble & Co, Network Data, which operates the largest mortgage broking network in the UK, closed at 42½p.

• ONLINE retailer of 'music fashion' EBTM (Everything But The Music) boogied ¼p

higher to 3¼p. The company, which sells tshirts and clothing from bands such as the Rolling Stones, Pink Floyd and Arctic Monkeys, increased sales during the summer. Net sales in August were £80,453, up from £7,460 last year. Former Lastminute.com director David Howell becomes chairman at the agm.