Market report: Wednesday close

 

Scotland's richest man, billionaire Sir Tom Hunter, is trying to block Tesco's agreed £228m takeover of Dobbies Garden Centres.

His West Coast Capital vehicle yesterday bought a further 100,000 shares at 1480p, stretching his holding to 2.88m. or 28.6%, despite last week ruling out a rival takeover bid for Dobbies, down 20p at 1455p. This is in addition to the 75,000 shares he paid 1500p for on Monday.

Hunter will not accept Tesco's offer because he does not believe the price reflects the retailer's long-term potential. He can lift his stake to 29.9% before triggering a compulsory formal offer for Dobbies, and could return with an offer in six months should Tesco fail to secure more than 50% acceptances.

Tesco currently has acceptances totalling 34.4%, which includes its own 29.9% stake. Hunter owns Wyevale Garden Centres, which he bought for £311m earlier this year, and Blooms of Bressingham for which he paid £30m. He holds a near-30% stake in Flying Brands, the home shopping group that owns Flying Flowers.

Meanwhile, investors were taking another beating following the latest sell-off overnight on Wall Street, where fresh concerns about the deteriorating credit market and a profits warning from retailer Wal-Mart left their mark. Dealers were braced for further losses in New York this afternoon. In London, the FTSE 100 index fell 34.2 to 6109.3.

City speculators have convinced themselves Scottish & Newcastle will be the next bid target. Shares in the brewer were the best performing blue-chips with the price driven sharply higher for a second consecutive session. The price rose 13p to 593p as a further eightm shares changed hands.

Word is that joint-venture partner Carlsberg has been buying S&N shares in the market at 590p as a prelude to a full bid. The two companies are already connected via a joint venture in Russia.

Another blue-chip making headway was Lipton tea and Hellmann's mayonnaise supplier Unilever, up 26p at 1511p on the back of better-than-expected numbers from another European food supplier, Nestlé.

ITV put on 2.1p to 106.2p after Morgan Stanley raised its earnings estimate by 6% for this year and 9% for 2008 because of an improvement in the advertising outlook. This is the first upgrade by Morgan Stanley on the broadcaster since March last year.

The broker says that after an anticipated 31% decline in earnings in 2007, it expects growth should be 11% in 2008 and 20% in 2009. It has an equal-weight rating and a 117p target, but prefers rival Emap, off 5.5p at 818p, which it rates overweight.

Oxford Instruments lost 32¼p to 236¼p after warning that trading had fallen short of expectations, with first-quarter profits hit by a weaker dollar and yen. The company's expectations for the full year are unchanged.

Interactive Gaming, down 0.13p at 1.63p, has agreed to an interim funding facility of £400,000 provided by General Capital Venture Finance (GCVF). The online betting and gaming company said the funding, along with £450,000 of the £750,000 already loaned to it by GCVF, is expected be formed into two convertible debt facilities. Interactive also wants to appoint several new directors.

TAKING STOCK: Sectors at a glance

Banking & finance
Hichens Harrison has bought 51% of commodities consultant Global Traders Consultoria Internacional for about £125,000. The City broker will issue 34,916 shares at 358p. GTC had a pre-tax profit of $79,700 (£39,800) last year.

Building & property
KBC Peel Hunt warns buy-to-let growth is set to slow at Paragon because of problems in the mortgage-backed securitisation market. Lenders relying on security are usually first to suffer from increased supply and less demand.

Consumer
London-listed Californian company Cosentino Signature Wines has sold a number of wineries and leased them back. The move cuts debt by £10m and brings annual savings of about £155,000.

Economy
China's industrial production grew 18% in July, slowing for the first time in three months. Output rose 19.4% in June. The statistics bureau blamed a reduction in export incentives for the fall. However, with output still growing fast, fears of overheating remain.

Engineering
Siemens has won an order worth more than e334m (£227m) to supply components for 500 freight locomotives ordered by the Chinese railway. Siemens will build the locos with Chinese partner CSR Zhuzhou Electric Locomotive.

Health
Sinclair Pharma has been asked by Johnson & Johnson to include a preservative in its Decapinol mouth rinse. This product was close to being launched in the US but the addition of a new preservative and testing could take at least a year.

Industrials
Media packaging specialist Coral Products has agreed a sale and leaseback of its Haydock property, raising £3m, allowing it to repay bank borrowings and retain a cash surplus. Trading losses have reduced its cash resources.

Leisure
Scottish & Newcastle traded higher yesterday on revived talk that joint-venture partner Carlsberg is ready to offer 700p a share. It is not a new story, and dealers say that the credit crunch would suggest this is not the right time to make a major takeover.

Media
Screen FX has abandoned talks with an advertising company to sell its retail malls business. Interest is now being shown in its national advertising sales agreement tender and a new sales model.

Natural resources
Chromex Mining chairman Brian Moritz has picked up 50,000 shares in the AIM-listed company at 22p, lifting his stake to 5.05m, or 8%. Chromex is buying a 15 milliontonne chrome project in South Africa for £2.4m.

Retailing
WH Smith's profits will be at the top end, says Pali International, which has raised its forecast by £1m to £64m. The broker says the retailer is an attractive bid target for private equity, and has set a 460p target.

Support services
Norish shares have been admitted to trading on Plus Markets. The logistics and storage specialist says the move will enhance investor choice, improve liquidity for shareholders and provide greater access to investors. The shares will continue to trade on Aim.

Technology
Search engine Yahoo has beaten rival Google in the University of Michigan's annual US Customer Satisfaction Index. Yahoo scored 79 points out of 100 while Google notched up 78 points after a second straight yearly decline.

Telecoms
Telefonica O2 in Slovakia is to launch its own mobile phones network. The first 400 base stations will be functioning by September, and the operator will continue to use Deutsche Telekom's T-Mobile Slovensko unit's roaming network.

Transport
Merrill Lynch has repeated its buy rating and 1340p target on National Express after its East Coast rail franchise win. The broker values the franchise at £80m and says it may have to raise its 2008 year-end estimates.

Utilities
UBS says that with utilities underperforming the Footsie by 7%, there is an opportunity to buy stocks with good fundamental value without relying on M&A prospects for improvement. The broker is a buyer of British Energy, Centrica, Severn Trent and Northumbrian.