Market report: Thursday close

By Mickey Clark for MailOnline
Updated: 12:22 EDT, 14 February 2008

Former takeover target J Sainsbury rose 9¾p to 380p amid gossip that the Qatar Investment Authority has lifted its stake in the supermarkets chain from 25% to 29.9% after buying 40m shares, worth £148m, owned by property tycoon Robert Tchenguiz.

Mickey Clark of the Evening Standard

Word is Tchenguiz may use the money raised from the Sainsbury sale to increase his holding in struggling pubs chain Mitchells & Butlers, or even make a full bid.

At the last count, Tchenguiz owned 22% of M&B although his attempt to hive off its property portfolio of pubs was scuppered last year by the credit crunch. It means he is sitting on a loss on his original investment in the shares. The price of M&B has slumped from a peak of 898p last year to trade 4¾p higher today at 455¾p.

At the last count, Tchenguiz held a near-10% stake in Sainsbury, made up of shares and contracts for difference, bought last year. Sainsbury was at the time the subject of a bid worth 600p a share (£10.45bn) by the Qatari investment fund Delta Two.

Shares generally traded below their best levels following a sell-off among financials, marked by the news that Swiss bank UBS has notched up losses in the fourth quarter after taking a further hit on subprime mortgages. The FTSE 100 index dropped 0.8 points to 5,879.3.

Rumours were rife in the mining sector. Xstrata, already the subject of a £40-a-share offer by Brazil's Vale, spiked 100p at 3880p but finished up 72p at 3,852p. The gossips say 35%-shareholder Glencore has been bid 4800p a share for its holding.

There was also talk that bid target Rio Tinto, up 55p at 5555p, may use a poison pill to escape the clutches of BHP Billiton by bidding for, or arranging a megamerger with, Anglo American, up 69p at 3094p, which would create a £115bn mining giant.

Rio Tinto is the subject of an all-paper £75bn offer from BHP, up 24p at 1566p, which is offering 3.4 of its own shares for every Rio share. But the board of Rio has dismissed the offer as too cheap.

Goldman Sachs has added satellite broadcaster BSkyB, up 7p at 588p, to its conviction buy list with a 700p target. But it is bearish about the outlook for the world's biggest advertising agency WPP, which includes J Walter Thompson, and has added the shares, down 11½p to 604p, to its conviction sell list.

Sir Martin Sorrell, the boss of WPP, has made no secret of the fact that he shares Goldman's cautious outlook on the advertising industry.

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This year will be tough, reflecting the slowdown in global economic growth, but advertising revenues will be bolstered by the US Presidential election, the Beijing Olympics and the European Championships.

But further out, there is little to lift the spirits. Sir Martin has told me that he expects 2009 to be a difficult year for the group. Goldman has cut its target for ITV, 0.9p off at 71.1p, from 108p to 83p.

Ladbroke stood out with a rise of 9p to 321½p. There is talk the bookie has been approached by a private-equity outfit with a view to a bid. Brokers expressed scepticism about the ability of cash-strapped banks to provide the backing for such a bid.

The group has been under intense competition, which has been reflected in the dramatic decline in the shares since reaching a peak of 460p last year. The speculators say any offer would have to be pitched at around the 400p level and that would value the business at a hefty £2.4bn.

TOMORROW'S AGENDA

• Sugar giant Tate & Lyle, which was booted out of the FTSE 100 index in December, is expected to report improved trading in its thirdquarter update. The maker of Lyle's Golden Syrup endured a dire 2007, issuing three profit warnings in eight months, after being hit hard by the weakness of the dollar and by rocketing rawmaterial costs. The shares have staged something of a recovery so far this year in the wake of news that US hedge fund Harbinger has built a stake in the company.

• The Government publishes its latest bankruptcy figures tomorrow against a backdrop of slowing economic growth and continuing turmoil in the credit markets. The number of company windingup petitions presented to the courts increased slightly between the second and third quarters of 2007 - from 2660 to 2808 - and could have risen again in the final quarter as firms struggled to deal with higher costs, tighter credit and a slowdown in spending by businesses and consumers.