Yesterday's trading: S&N bid brews again

By Tamsin Brown
Updated: 02:51 EDT, 27 June 2007

Takeover rumours were doing the rounds at John Smith's and Foster's brewer Scottish & Newcastle, sending shares bubbling 10½p higher to 650½p.

Danish rival Carlsberg was the name in the frame once again after the chairman and chief executive were quoted as saying a major deal was likely and the brewer could raise £6.4bn to fund a major acquisition.

S&N and Carlsberg are seen as obvious partners because of their Russian joint venture Baltic Beverages Holding, which has become a major catalyst of both companies' growth. S&N has been a perennial target of bid speculation but the gossip has frothed up since Carlsberg overhauled its shareholder structure in a move that has given the opportunity for greater financial firepower.

Its chief executive Nils Smedegaard Andersen, who is leaving later this year, reportedly said a move for S&N was not 'inevitable' but the market will keep on hoping.

Fellow UK-listed brewer SABMiller rose 11p to 1281p after announcing a deal that will see Foster's brewed in the US for the first time in its 119-year history. Its Miller Brewing division in the US has signed a deal with Australia's Foster's Group to brew the brand across the Atlantic.

The FTSE 100 ended 29.1 points lower at 6559.3, weighed down by BAE System's 34½p fall to 407¾p. Wall Street made a strong start, with the Dow Jones Industrial Average rising 69.7 points to 13,421.8 after better-than-expected data on the housing market.

The pound hit a fresh two-month high against the greenback, staying above the $2 mark, boosted by expectations of a possible interest rate hike next week. But the prospect of higher borrowing costs took its toll on financial stocks. Prudential fell 15p to 719p, Friends Provident slipped 3.8p to 181.2p while

Lloyds TSB was down 7p at 560p. Media group SMG fell 2½p to 60½p. New boss Rob Woodward is expected to flesh out new plans for company today. His first act could be to spin off Virgin Radio, but investors are sceptical about the price he is asking.

Software firm Sage took a tumble, down 4¾p to 234¾p after Credit Suisse downgraded its recommendation to neutral from outperform. The broker doesn't expect the shares to rise much until there is clarity on a turnaround in margins at the group's North American business.

Star of the day was Intercytex, which has developed an artificial skin that has produced promising results in healing wounds in early clinical trials. Scientists reckon the advance - known only by its lab name of ICX-SKN - could mark a breakthrough in regenerative medicine. The City, meanwhile, thinks it significantly enhances the firm's prospects and pushed the shares up 9¼p, or 16% to 68½p.

While the market for a product such as ICXSKN is a relatively modest £400m a year, the only other alternative therapy is a painful and scarring skin graft. Broker Piper Jaffray said: 'The data is the first in an impressive pipeline of news expected over the next six months.' It rates the shares 'overweight' and reckons they are worth 110p each.

Shares in the Restaurant Group climbed 4½p to 322½p amid speculation it might be the next takeover target on the menu at Cafe Rouge-owner Tragus, which recently gobbled up Italian chain Strada. Numis reckons 500p would be a sensible take-out price.

A profits warning clobbered publisher Huveaux, sending shares down 11¼p to 41¾p. The group, which owns Dod's Parliamentary Companion and other political publications, has been hit by a downturn at its healthcare division in France. Abbot Group (up ¾p at 275¾), which designs, builds and runs oil rigs, received support from a buy note from ABN Amro. Oil and gas services group Hunting skidded 58½p lower to 708½p after it said capital expenditure would rise by 50% this year.

Orange grower Asian Citrus rose 7p to 248p on news it had collected £3.6m from preselling units on a plot of land that will become an agricultural wholesalers market market.

Software firm Advanced Smartcard Technologies surged 2.375p to 7p after agreeing to a £18.7m takeover by Trainline Investments. Fellow software group, Micro Focus was another big riser, up 19¾p at 270¼p, ahead of full year results on Thursday.

Among the new arrivals, investors piled into China Medical System, lifting shares in the Chinese pharmaceutical group to 146½p, from an issue price of 138p. Electronic signature provider Silanis closed at 49½p, up from an offer price of 46p. The flotation has raised £10m which will be used to beef up its research and development and to improve market efforts in the US and EU.

• Bunzl will celebrate its 50th anniversary as a public company today. The paper and packaging group may be seen as dull, but it has certainly been an exciting investment. If you ploughed £1,000 into Bunzl 50 years ago, you would now be sitting on around £230,000. Bunzl shares dipped 2½p to 697½p after it said trading this year had been in line with expectations. A strong performance in the UK and Ireland has offset weakness in the US.