FTSE in-depth: Norcros shows it is no shower

By Geoff Foster for MailOnline
Updated: 04:16 EDT, 10 December 2009

Showered with leaks over the past week, the Chancellor's pre-Budget Report unsurprisingly left dealers underwhelmed.

Geoff Foster: Traders had other, sexier things on their minds

They had other, sexier things on their minds, including a possible £30m bid for a branded business that has taken a bath during the recession.

Norcros, the Triton showers and Johnson tiles group, put on 0.5p to 7.5p amid gossip it is on Topps Tiles' Christmas shopping list.

Shares of the tiles and wood flooring group dipped 2.75p to 82.5p on speculation it is lining up a £30m, or 20p-a-share, cash bid. Topps raised £15.4m in November to bolster its balance sheet and pave the way for an acquisition to help cement its future.

Topps has 321 stores in Britain and Holland and a 23% market share of the tile and flooring market. Norcros would fit like a glove. It would also prove to be a good defensive move against a possible takeover bid with Carpetright (14p cheaper at 891p) rumoured as a potential Topps suitor.

Norcros raised £30m at 7p a share last month, a move which freed management to capitalise on the market opportunities that are apparently out there in the marketplace.

Lifestyle Investments, a fund controlled by former joint venture partner HRJ India, holds all the aces. It owns 29.9% of Norcros and will not sell out on the cheap. HRJ India is involved in the manufacture and distribution of ceramic tiles in India.

Sports retailer JJB fell 3.25p to 25.5p after rival JD Sports (27p down at 483p) sold its 10% stake - 65m shares - at 25p, realising £16.3m. JJB's two other major shareholders, Harris Associates and Crystal Amber Fund, apparently mopped up loose stock.

JD Sports bought 25m JJB shares at 32.25p a share in November 2008 and later participated in a fundraising at 25p. It built up the stake so that it could have a seat at the table after rival Sports Direct (2p off at 106p) also acquired shares. Sports Direct, which reports today, said cheerio to its JJB shares in May, but still retains a 13% shareholding in JD.

BGC Partners' equity guru David Buik summed up the Pre-Budget Report perfectly. 'A complete non-event,' he said. Other commentators agreed and the Footsie drifted in thin trading to finish 19.24 points lower at 5,203.89. The FTSE 250 lost 112 points at 8,919.49.

Wall Street traded 43 points down initially with an unexpected rise in October wholesale inventories offset by continued concerns on foreign debt. News that the US Treasury is to extend the $700m Troubled Asset Relief Programme until next October was expected. TARP was passed on October last year to prevent a collapse of the financial system.

Champagne corks popped at the Glasgow headquarters of Aggreko(3.5p cheaper at 794p) after the temperature control equipment rental company was admitted to the Footsie for the first time. It takes the place of rat-catcher Rentokil Initial, 0.5p off at 96.6p.

Relieved at escaping a windfall profits tax and unaffected by the imposition of a tax on staff bonuses, Lloyds Banking Group, 43% owned by the UK taxpayer, firmed 0.92p to 54.69p.

Scrappy selling left drugs giant GlaxoSmithKline 13p lower at 1280p ahead of today's Emerging Markets Day seminar, hosted by Abbas Hussain, who is spearheading its push into the new powerhouse economies of the world. GSK recently took a 19% stake in Africa's biggest generic drugmaker, Aspen Pharma.

Reflecting disappointing news that its flagship AH1 fund fell 4.3% last week and 14.6% on the year to date, hedge fund giant Man Group declined 12.4p to 304.3p.

Morgan Stanley expects to see some festive cheer at Marks & Spencer, up 0.6p at 400.1p. It is the broker's preferred Christmas play, believing the arrival of former Morrison boss Marc Bolland, to replace Sir Stuart Rose, suggests the performance of its shares is now not entirely reliant on the British consumer's spending habits.

ATH Resources, one of the UK's largest coal producers, jumped 7p to 72p following good annual results. The core surface mining business performed well and debt levels have been reduced.

Aurelian Oil & Gas gushed 6.75p to 28.75p after an upbeat report by Gaffney Cline. Pan Andean Resources rose 3p to 15.5p in response to a 15p-a-share offer from Petrominerals, which will keep the Colombian and Peruvian assets. Hydrocarbon Exploration, a new vehicle, will retain US and Bolivian assets for existing shareholders.

• Tenon eased 1.25p to 48.25p on news of the placing of 88.9m shares at 45p to raise £40m and help fund the £76.3m acquisition of RSM Bentley Jennison, a UK-based professional services firm.

The deal will create the seventh-largest accountancy and financial advisory firm in the UK by fee income, the third outside the 'Big Four', with access to a major international network. Broker Hoodless Brennan says buy.