Yesterday's trading: Nestor in doghouse

By Geoff Foster for MailOnline
Updated: 02:29 EDT, 29 February 2008

It appears that Nestor Healthcare could soon find itself back in intensive care - which won't please 21% shareholder Schroders.

Whispers from the corporate waiting room suggest that private equity giant 3i has decided not to proceed with a bid for the struggling company, which provides GP and nursing services to NHS primary care trusts.

Indeed, confirmation that it has walked away should be imminent and could probably lead to heavy selling of the shares back to near the 30p level at which they were changing hands before the bid approaches were made. The close was ½p dearer at 63p.

3i, 34½p off at 850½p, already owns 23 healthcare companies with a total value of more than £300m. It was strongly tipped of late to be about to fork out £90m, or 80p a share, for Nestor but following completion of due diligence procedures it has now gone off the idea.

Around this time last year Nestor raised £30.4m via a deeply discounted rights issue at 130p to help finance bolt-on acquisitions in the old folks care sector.

Nine months late a loss-making Hertfordshire contract led to a disastrous profits warning and its revelation it had breached one of its banking covenants. The shares halved.

It has been on its knees ever since, but with 3i now apparently saying cheerio, Nestor will struggle to find another buyer. Dealers warn the pain could get a lot worse because next month's annual results could contain a health warning.

The Footsie closed under the weather at 5965.7, down 110.8 points. Yet another profits warning from ratcatcher Rentokil Initial (24½p lower at 80½p) and some scepticism about the results of Royal Bank of Scotland (8p easier at 402p) made for a dull start.

Sentiment soon deteriorated when dealers heard that Peloton Partners, a large Londonbased hedge fund, had liquidated its ABS Fund, which focused on mortgage securities, because of the credit crisis.

US Federal Reserve chairman Ben Bernanke then made matters worse by saying that there probably will be some US bank failures in the future. Wall Street showed its disgust with an early fall of 140 points.

More than 11m Carphone Warehouse were traded as the shares touched 318¾p before closing ¾p better at 310½p. Rumours of a bid from Best Buy of the US refuse to die down.

Co-founders Charles Dunstone and David Ross are said to want to sell all, or part, of their sizeable holdings before the punitive rise in capital gains tax to 18% in early April.

Drax sparked 38p higher to 579½p on vague talk of a bid from Centrica, ¼p easier at 323¼p. Rumours of a bid approach lifted insurer Jardine Lloyd Thompson 17¼p to 393½p.

After Caledonia Investments this week mopped up loose stock to take its shareholding up to 24.41%, satellite telecoms services company Avanti Communications rose 16p to 185p.

Scrappy selling left Mears 3¼p easier at 281p, but buyers should be back in force next week if, as speculation suggests, the group rolls out more lucrative contracts in the social housing arena.

Buyers at last responded to Ceramic Fuel Cells' announcement that it has received its first commercial order for its fuel cell powered micro-combined heat and power systems from Nuon, the Dutch utility.

The order is for 50,000 units to be delivered over a five-year period starting in the secondhalf of 2009. The close was 8¼p better at 29½p.

ANT, the provider of on-screen browser technology for Digital TV, soared 10p to 25½p after it said it has met each of its key revenue and cash targets for 2007.

Following a £7.5m placing with the Jinchuan Group to fund the Munali nickel project in Zambia, Albidon jumped 8p to 154½p.

Leed Petroleum gushed 5p to 40½p following an upbeat drilling report on a well in the Gulf of Mexico. Software company Iomart firmed 2p to 47½p on hearing it has won its first major contract for its London data centre. It is with a UK telecommunications company and is worth £6.75m over five years.

Down 30% already this year, shares of the London Stock Exchange fell 81p further to 1384p after Morgan Stanley downgraded to underweight and slashed its target price to £15 from 2020p. The broker is concerned that major 28% shareholder Borse Dubai could decide to reduce its shareholding.

Miner Xstrata shed 168p to 3969p on reports that Brazil's Vale has decided not to launch a £47-a-share bid.