FTSE in-depth: Germans move in on TUI travel

By Geoff Foster for MailOnline
Updated: 03:44 EDT, 16 June 2011

It's going to happen one day so why not soon.

Foster: Bears came out to play again amid revived Eurozone debt fears.

Well above average turnover of 13m-plus in TUI Travel and a closing gain of 3.8p at 215.10p in an otherwise weak market was sparked by revived chatter that German parent TUI AG - which holds 55% of the Thomson and First Choice package tour group - could be lining up a 350p a share cash bid for the outstanding 44.9% it doesn't already own.

Punters' appetites were whetted by Tuesday's news that Avis Europe, unchanged at 310.70p, is being acquired by Avis Budget in a mammoth £636m deal after 25 years as separate entities. The US counterpart is paying a very generous 60pc premium for the privilege.

TUI AG has long been tipped to pounce but would wait until it floated its near-half share in container shipping group Hapag-Lloyd. That has now been put on ice and dealers now hear gossip the Germans are ready to take the bull by the horns and make the company based in Crawley, West Sussex, its next destination.

Analysts reckon TUI AG could justify a bid through hard cost savings, utilisation of tax losses, and access to TUI Travel's significant cash flow. A deal could create annual synergies of a combined £700m-plus.

Bears came out to play again amid revived Eurozone debt fears. Some '95bn of Greek debt needs to be financed between now and the end of 2013 and with Eurozone officials still failing to forge a deal about Greek aid, growing worries about a possible default dragged the Footsie 60.58 points lower to 5,742.55.

Wall Street didn't help London's cause by falling 123 points in early exchanges. Neill Mackinnon, economist at VTB Capital, believes the Greek situation is likely to keep equity markets nervous until a clearer picture emerges on any short-term loan compromise.

But he says sovereign debt worries are not confined to the Eurozone as the US needs to agree budget cuts ahead of the August deadline on lifting the debt ceiling.

Break-up bid favourite Whitbread, the Premier Inn-to-Beefeater and Brewers Fayre leisure group, resisted the malaise. It firmed 9p to 1536p on small buying ahead of Tuesday's first-quarter trading update.

Property giant British Land improved 2.5p to 591.5p after touching 605p on the decision by Culture Secretary, Jeremy Hunt, that 1-4 Broadgate in London should not be listed.

British Land and Blackstone can now proceed with plans to build a new world class office building for Swiss broking giant UBS at 5, Broadgate. The building represents a total investment of £850m, and secures 5,000 construction jobs, which will be created over the next five years.

Controversial commodities trader Glencore slumped 27p to 473p as investors continued to vote with their feet after it missed firstquarter earnings forecasts. The shares now trade 11pc below the flotation price.

Barclays shed 7.15p to 257.4p ahead of last night's Mansion House dinner at which Chancellor George Osborne was expected to confirm that he intends to make High Street banks ring-fence their retail operations from riskier investment banking businesses.

Experian slipped 15.5p to 785p amid reports that regulation in the US is set to be extended to credit bureaux operating in the UK.

Broker Shore Capital agrees that from 2012, Experian and its peers are likely to come under a similar regulatory umbrella to their clients in banking and financial services. But it is not something to be feared for investors and any impact on earnings will be limited and manageable.

Jam tomorrow energy and industrial technology group Pursuit Dynamics plummeted 38.5p for a two-day decline of 84p to 260p.

Investors have exited stage right on hearing that half-year losses have widened to £7.2m from £3.6m.

An Investec downgrade to hold from buy and reduced target price of 240p prompted selling of media and events group ITE, 16.3p down at 222p. The broker is concerned about new competition for Mosbuild, Russia's largest trade exhibition, from Buildex, a joint venture between venue operator Crocus and event organisers Media Globe and IMAG.

European Goldfields sparkled at 655p, up 5p, after saying Greece would decide within three weeks on awarding the miner a permit to run two gold mines.

Eros International, a global company in Indian filmed entertainment, eased 1.5p to 209p despite announcing outstanding first week box office receipts of $25m for its film Ready.

Superyacht specialist YCO cruised 2.25p or 18% higher to 14.25p after being contracted to build a new 80-metre vessel.