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Yesterday's trading: Whitbread can smell the coffee

By Geoff Foster for MailOnline
Updated: 02:30 EDT, 24 June 2008

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There's an awful lot of coffee shops in eastern Europe and Whitbread wants to gobble them up.

Geoff Foster, Daily Mail

Tasty takeover rumours concerning coffee bar operator Coffeeheaven International have been simmering for months.

Up from a February low of 21¾p, the shares touched a high of 43p before boiling over to close 1¾p easier at 41¼p.

Impatient punters who trousered profits could soon be kicking themselves because hot gossip suggests leisure giant Whitbread (5p better at 1204p) is on the verge of bidding £71m or 55p a share in cash.

Whitbread owns Costa Coffee which operates more than 60 outlets across the UK. It also operates in the Middle East, Pakistan and India through franchise partners, and in China through a joint venture agreement.

It wants to expand in Europe and Coffeeheaven would be a perfect bolt-on. It has 87 trading sites across Eastern Europe including Poland, Czech Republic, Latvia, Bulgaria, Hungary and Romania. Last month it raised £3.5m in a placing at 30½p to help fund expansion plans.

The exalted price of coffee has not put the consumer off forking out £2 a time for a cappuccino. But the smoking ban, the cost of a pint and the deteriorating consumer outlook is definitely keeping more and more people away from the local rub-a-dub.

Punch Taverns, the UK's largest pub operator, continues to struggle and closed a further 25¼p down at a year's low of 338p. Punch, which has net debt of £3bn-plus, in March withdrew its proposal to merge with All Bar One Group Mitchells & Butlers, 3p easier at 210p.

The Footsie regained composure after Friday's sell-off, rallying 46.4 points to 5,667.2. Heavyweight oils led the recovery as the price of the black gold advanced to $137 a barrel despite a pledge by Saudi Arabia to boost oil production by 200,000 barrels day.

Wall Street, which dropped below 12,000 on Friday amid renewed fears of yet more asset write-downs in the banking sector, opened 43 points higher but soon hit a brick wall and traded 28 lower. Early enthusiasm followed news of a £2.4bn bid for Corn Products by fertiliser and oilseed processor Bunge.

The deal, which unites two of the oldest US agricultural businesses, left Tate & Lyle 18¼p up at 392½p.

Celebrating its return to the Footsie after a five year absence, electrical equipment group Invensys surged 17p to 298¼p. It flirted with the knackers' yard in 2003 under the weight of £3.3bn debts but has been nursed back to health by boss Ulf Henriksson. It is now debt free. Unhappy housebuilder Persimmon, which was booted out, closed 15¾p easier at a year's low of 355p. The high was 1273p.

Improved Vyvanse prescription trend data and a Goldman Sachs upgrade to buy from neutral lifted pharmaceuticals group Shire 45½p to 842½p. The US broker expects share gains to accelerate in the second-half of 2008 following the launch of the attention deficit hyperactivity drug in adults. It also expects the group to hold a Human Genetic Therapies business day during the second half of the year which could lead to a better appreciation of pill's commercial potential and the firm's late-stage pipeline.

Worries about falling commercial rents was behind a swingeing HSBC downgrade of the property sector. Land Securities collapsed 64p to 1275p after the broker moved to underweight and slashed its target price to 1195p from £15.

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After hedge fund Harbinger Capital Partner revealed, under new FSA rules that it has 3% short position in the stock, HBOS fell below the 275p rights issue and touched 268¾p before closing at 270¼p, down 12p.

Following Saturday's Daily Mail exclusive that struggling plumbing giant Wolseley is planning to sell one of its troubled US division for £700m-plus to bolster its balance sheet, the shares fell 15p further to a year's low of 430½p.

Expro International nosedived 45p to 1632p after US industrial giant Halliburton withdrew its offer, leaving the way clear for a leveraged buy-out team led by Candover Partners to complete their £1.81bn, 1615p a share offer. Halliburton had been prepared to pay 1625p a share.

Mediterranean Oil & Gas jumped 11½p to 166½p on a 400% reserve upgrade on the Ombrina Mare Oil Field development offshore Italy. Ombrina is the only development in offshore Italy to be controlled by an independent oil company and not a major.

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