Market report: Yesterday's trading

By Geoff Foster for MailOnline
Updated: 02:21 EDT, 15 November 2006

Vaccines maker Acambis found itself in intensive care after being told it is no longer eligible for the smallpox RFPIII contract with the US government.

The slap in the face sparked heavy selling of the shares which crashed 59¾p to a year's low of 94¾p. Acambis was competing with Bavarian Nordic for the contract which, given its potential size, was expected to have been shared.

The US government had delayed awarding the the deal for two years and its decision is a massive blow to the Cambridgeshire firm.

Nomura Code's long-term bear, Dr Chris Redhead, says the US government's decision raises questions about the group's claim to be a premier supplier and developer of specialty vaccines. It will also exacerbate its cash problems.

Assuming the group now slashes its research and development spend in 2007 and 2008 to £30m and £20m respectively, Redhead estimates the net present value of its pipeline based on royalty income and its existing cash is around £50m. Together with some £50m for the manufacturing capability, fair value is £90-100m or 87-95p a share.

The Footsie was again off colour and closed 7.6 points off at 6,186.6. It was up 29 points at the outset in sympathy with good figures from mobile phone giant Vodafone (½p easier at 135½p) but later reacted to profit-taking when Wall Street replaced a 35-point gain with a fall of 46 points.

News of an unexpected 1.6% drop in US producer prices in October - matching the biggest monthly decline on record - was counterbalanced by disappointing thirdquarter figures from DIY giant Home Depot.

As US retail giant Wal-Mart proclaimed its UK supermarket subsidiary Asda has gained market share in the past 12 weeks thanks to new store initiatives such as organic food ranges and pet and baby departments, rival William Morrison lost 4¾p to 264¼p.

Panmure Gordon advised clients to sell on the back of Asda's ascendancy and also because half of the executive board of Morrisons have sold shares in the last few days.

Property director Roger Owen exercised options and then sold 200,000 shares at 272p, production director David Hutchinson also sold 200,000 at 273p and Mark Gunter, store operations director, let 400,000 go at 271.02p.

Analyst Philip Dorgan says Asda's performance cannot be good news for Morrison, where 'core sales' remain negative, primarily because of the shift in the chain towards the old Safeway strategy of Hi/Lo pricing.

Profit-taking ahead of today's interims left J Sainsbury 6¾p cheaper at 412½p. Earnings should please but what the market really wants to know is what Lord David Sainsbury's plans really are following his surprise resignation from the government last week.

His family holding of around 16% has always been deemed as the major stumbling block to any bidder, but the 66-year old is now rumoured to be a seller.

Supported of late on US takeover hopes, credit checker Experian advanced to 628p before closing 15½p higher at 615p. It has agreed to pay investors a fee in return for their agreement that the company's recent demerger from GUS was not a debt default.

Shareholders had previously refused offers to redeem or change the terms of GUS's 2013 sterling notes before the spin-off took place. With the uncertainty over, Home Retail, the other arm of GUS, added 8¾p at 415p.

With venture capital bidders crawling all over the group, Amec rose a further 13¼p to 428¼p. Martin Hughes' hedge fund Toscafund sold 10m shares at 422p on Monday via contracts for difference transaction, reducing its stake in the support services group to 19.43%. It still has shares and derivatives totalling 64.8m and is easily the biggest shareholder.

Printing group Xaar soared 66½p to 228p on news of a rejected bid approach from US company Danaher at between 200-220p cash a share. Aim-listed dental equipment designer and distributor Astek held at 5¼p but could be popular today.

Whispers suggest it has signed a five-year distribution agreement with Sultan Healthcare, a leading US manufacturer and distributor for infection control products, to distribute its propriety disposable air water syringe system known as Pro-Tip.

Placed at 100p by broker Panmure Gordon, shares of Prospect Epicure closed unchanged at 101½p. The Qatar Investment Authority holds 31.3% of the first fund offering investors the opportunity to plough cash into the Japanese real estate market.

• More than 31m shares in Aim-listed Buckland changed hands and the close was 0.0225p better at 0.11p.

Word is a management buy-out could be on the cards for the spark ignition equipment manufacturer, which has turned the corner after transferring its entire UK manufacturing operation to Bangkok.

Any deal is expected to value the group at £1.5m-plus and effectively turn it into an aggressive cash shell.