FTSE in-depth: Morse warrants closer inspection

By Geoff Foster for MailOnline
Updated: 04:17 EDT, 9 December 2009

Although shares in technology consultancy group Morse eased a penny to 37¾p, the boys in dark glasses were adamant they warrant closer inspection.

Geoff Foster: Rounding up the news from yesterday's market

Rumours continue to do the rounds that a US cash bid worth £71.5m or 55p a share will be launched this side of Christmas.

The board received preliminary approaches at 25p a share in July, which they immediately kicked into touch, saying they 'significantly undervalued the company'.

Effectively, that hoisted a For Sale sign above the group's Brentford headquarters.

Sources now suggest leading shareholders led by Gartmore (28%) and UBS (11%) have agreed to sell their stakes to an American buyer, possibly Arizona-based Avnet, at a substantial premium to the prevailing market price.

Analysts agree that Morse's days of independence are numbered. Its share price has been battered by the onset of the downturn and falling demand. The group must appear attractive to peers looking to expand in the UK or business services groups planning to expand its IT division.

The Footsie fell 87.53 points to 5,223.13, tripped up by renewed fears about Dubai after credit rating agency Moody's cut the ratings of a raft of Dubai government-controlled companies, citing a lack of government support over the emirate's debt obligations. Dubai property developer Nakheel also wheeled out a £2.2bn loss for the first-half of the year.

Rumours of mass boardroom resignations at Royal Bank of Scotland, which is 83pc owned by the government, and ongoing concerns about its exposure to Dubai World, did sentiment no favours either.

As City bankers braced themselves for punitive tax measures in today's Pre-Budget Report, RBS shed 2.55p to 30.45p with some investors deciding to sell RBS stock to help them take up their Lloyds Banking Group's (up 0.08p at 53.8p) rights at 37p a share. The deadline is Friday.

Standard Chartered lost 551/2p to 1462.2p on selling ahead of today's pre-close trading statement.

Wall Street opened on a flat note following Federal Reserve chairman Ben Bernanke's cautious assessment of the world's biggest economy late on Monday.

Although he dampened speculation about an early hike in US interest rates, the Dow opened 90 points lower, unsettled further by a disappointing trading statement from global conglomerate 3M.

FT publisher and educational books supplier Pearson rose 9p to 870.19p following a bullish presentation by McGraw Hill overnight in the US. It guided analysts to US school market revenue growth of 10pc in 2010.

Pest control group Rentokil Initial lost 3.9p to 97.05p, further jeopardising its position in the Footsie. The axe could fall today.

Intermediate Capital rose 8.4p to 289.1p after selling its equity and mezzanine interest in Marken, a distribution services company to the pharmaceuticals industry for £170m, realising a tasty profit of £68m. Broker Noble said the news increases confidence that the group has got solid companies in its loan portfolio and cash raised can be put to work at significantly higher margins. It takes the valuation north of £4 a share.

To no great surprise as discussions had been going on for more than four months, Caledon Resources collapsed 19¾p, or 34%, to 38¼p, after terminating bid talks. Chinabased Green Dragon Gas eased a fraction to 7.075p but should soon prosper after raising £45m to wipe out debt and simultaneously issuing shares to Blackrock, making the fund manager its second largest shareholder.

Ocean Power Technologies advanced 20p to 552½p after signing a Memorandum of Understanding with the State of Oregon to set forth an approach for developing wave power projects within the coastal waters of Oregon.

Chased up to 15p, Baltic Oil Terminals closed 1½p dearer at 13½p. The company announced a trading joint venture with Exoy Holding AG, a Swiss-based trader of refined oil products.

Workspace, the property company that rents secondary offices mostly to small businesses, firmed 1¼p to 21¼p following a £18.9m placing at 19p.

Funds raised will help finance the purchase and debt repayments of the 50% interest it does not own in Workspace Glebe JV. Nick Roditi, the investment manager who used to work with George Soros, owns 24.5% of Workspace.