The takeover saga surrounding housebuilder Crest Nicholson staggered on yesterday. Castle Bidco, the consortium of HBOS and entrepreneur Tom Hunter proposing a £700m offer, had until 5pm last night to "put up or shut up", a deadline already extended from February 28 but 13 minutes before the cut-off point the Takeover Panel gave the two sides another 24 hours to come up with a deal.
Crest said it was in advanced discussions about the 629.7p-a-share offer, which includes the right to a 9.7p dividend, and intended to recommend the offer. Crest shares slipped 5p to 610p.
Elsewhere, leading shares struggled to find a direction, not helped by the fact that a number of major companies went ex-dividend.
After trading in a 60-point range, the FTSE 100 finally closed up 18 points at 6156.5. But the mood was calmer and traders pointed out that seven companies going ex-div accounted for a fall of 30 points. Without that the index would have seen a more positive outcome.
The seven included Lloyds TSB, down 24.5p to 539p, and Royal Bank of Scotland, 60p lower at £20.99. Others going ex-div were BAT, down 28p to £15.35, and Aviva, off 8.5p to 760.5p.
ITV was the biggest loser in the leading index, ignoring the dividend effect. It fell 3p to 108p after underlying full-year profits fell 19%. Citigroup issued a sell note on the business with a 95p target. "We buy into the turnaround argument," said Citigroup. "But argue that forecasts and valuation already discount this. We think risk-reward is still against the stock."
The hedge fund manager Man Group lost 5p to 524.5p in reaction to an 8.2% weekly fall in its key AHL Diversified Futures fund after the recent market turmoil. Evolution Securities said: "It seems trivial to be so swayed by AHL's short-term performance but it is very important for both profits and sentiment. The [share] price had run up to match our 600p [fair value target] which it has never done before, and now the short-term risk looks on the downside, despite last week's correction."
J Sainsbury fell 7p to 532p on doubts whether the private equity consortium stalking the supermarket group would make a bid. It has six weeks to come up with an offer. Meanwhile, property entrepreneur Robert Tchenguiz this week emerged as a 3% shareholder in Sainsbury's, and traders are wondering whether this portends a rival offer. The Tchenguiz family is part of a partnership that owns rival Somerfield, and has links with the Qatar Investment Authority which owns 1% of Sainsbury's.
Steve Davis, a Numis analyst, said: "Somerfield is the number-five player in the UK grocer market so there ought to be some buying synergies from putting the two together. Given Somerfield's relatively small market share, there ought not to be a substantial competition issue."
Morrison Supermarkets rose 5p to 304.75p as Dresdner Kleinwort said possible private equity interest should help support the share price, although it thought many in the City were being too optimistic about the supermarket's forthcoming strategic review. Many analysts are hoping next week's presentation will unveil plans to cash in on the company's property portfolio.
Other revived bid talk surrounded Debenhams, up 8.5p to 182.5p on suggestions of a private equity bid at about 220p a share.
Elsewhere, the construction group Balfour Beatty added 5.25p to 458.75p. The company reported profits up 13% and said it wanted to develop broadly based businesses outside the UK. Traders took that to mean acquisitions, and pointed to Germany's Bilfinger as a possible target, and that company's shares jumped nearly 5%.
Catering group Compass climbed 3.75p to 305p as Charles Stanley issued an upbeat note, telling clients to accumulate the shares. "Although the share rating appears high, the share price remains at a 10% discount to its peer group and the 3.4% dividend yield is well supported by free cash flow," said the broker.
French hotels and services group Accor reportedly hinted during a results presentation yesterday that it may sell its Brazilian catering business to Compass, its joint venture partner. Morgan Stanley was later said to be placing 23m Compass shares at 304p-306p.
Property companies were wanted after a note from JP Morgan. It said British Land, up 48p to £15.18, and Land Securities, 56p better at £20.67, looked "outright cheap" but advised clients against aggressively buying into the sector. Slough Estates, which HSBC recently upgraded from neutral to overweight, added 21.5p to 760.5p ahead of its results due today. Analysts are looking for a 5% rise in its net asset value and more details about the plan for its US operations.
Lower down the market, gaming software firm Playtech added 19.5p to 362p after signing its second contract in China in the last three months. It has inked a deal with the Foundation Group to supply software throughout the country.
Finally, mobile phone recycling group Fonebak, which this week delayed its results pending a review of its businesses, lost another 20p to 71.5p.
Lassie joins Basil
Entertainment Rights, the children's character specialist whose properties include Basil Brush, added 1.5p to 35p yesterday after Bridgewell upgraded from neutral to overweight and set a 40p short term price target. The broker said the recent acquisition of Classic Media, the US company with the rights to Lassie and Casper the Friendly Ghost, was "a step change in scale for the group, placing it firmly in the top tier of global kids' intellectual property players". It said the company should benefit from selling the Classic characters - which have not been properly exploited outside the US - through its international distribution network. The US would also be a ready market for its own brands. The enlarged group would be a more attractive target for a predator.